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The President's Arbitration Guidance: A Summary

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The President of the Family Division, Sir James Munby, has issued Practice Guidance on Arbitration in the Family Court under the Arbitration Act 1996 ('AA 1996'). Charlotte Trace of 29 Bedford Row summarises the main points.


  • Charlotte Trace, 29 Bedford Row

    The guidance was issued on 23 November 2015, at the start of Dispute Resolution Week, and the full document can be found here

    The Guidance deals with various matters that are summarised in turn below. It also includes three arbitration-specific standard form orders and recitals to use where "omnibus" orders to reflect an arbitral award are sought for either Financial Remedy or Children Act Schedule 1 Final Orders. 

    A. Where there are subsisting proceedings seeking the same relief as is in issue in the arbitration

    Stay

    If Form A has already been issued, it is necessary to stay the financial remedy proceedings pending receipt of the arbitration award. In order to do this, the following should be lodged with the court where the proceeding were issued:

    (a) clear evidence of the agreement to the stay order or lack of opposition to the stay;

    (b) a copy of the signed arbitration agreement, for example, the IFLA Form ARB1;

    (c) the standard form stay order (attached to the Practice Guidance at Annex A) signed by both parties or their representatives. 

    Where the application for stay is by consent it will be dealt with on paper (save for circumstances where a need for a hearing is indicated). The Family Court has an obligation under FPR 3.3(1)(b) "where the parties agree, to enable non-court dispute resolution to take place" and section 9(4) of the Arbitration Act 1996 requires that the court "shall grant a stay unless satisfied that the arbitration agreement is null and void, inoperative, or incapable of being performed". 

    Applying for a consent order to reflect the award (consent)

    The terms of a proposed consent order should be drafted to reflect the decisions contained in the arbitration award and when the award concerns financial remedy orders, the standard form family orders should be used with appropriate recitals for an arbitration award case. To use the accelerated procedure the following should be lodged:

    (a) A signed copy of the proposed order in the terms agreed;

    (b) Forms A and D81;

    (c) A copy of the arbitrator's award;

    (d) A Form ARB1.

    Unopposed applications for a consent order will be dealt with on paper by a District Judge but the court is able to raise questions in correspondence or list a hearing if necessary. As the President set out in S v S [2014] EWHC 7 (Fam) and reiterates in the Guidance, "where the parties are putting the matter before the court by consent…it can only be in the rarest of cases that it will be appropriate for the judge to do other than approve the order."

    If parties are anxious to preserve their privacy they should lodge it in a sealed envelope which is clearly marked with the name and number of the case and with the words: "Arbitration Award: Confidential – not to be opened without the permissions of a judge of the Family Court". The request for the award to be sealed once the order has been approved should be made prominently in the covering letter. 

    Applying for a consent order to reflect the award (opposed)

    Where the other party opposes the arbitration award being reflected in a court order then it is necessary to use the "notice to show cause" procedure. Similar documentation should be submitted with the application except that the order will have been unilaterally drafted on behalf of the party seeking to obtain the order. The application will be listed for a hearing before a Circuit Judge or High Court Judge. In terms of the attitude likely to be adopted by the court in opposed cases, the President draws attention to his observations in S v S: "The court will no doubt adopt an appropriately robust approach, both to the procedure it adopts in dealing with such a challenge and to the test it applies in deciding the outcome…The parties will almost invariably forfeit the right to anything other than a most abbreviated hearing; only in highly exceptional circumstances is the court likely to permit anything more than a very abbreviated hearing." It is not necessary for the parties to attend a MIAM prior to making this application.

    B. Arbitration claims

    Currently arbitration claims cannot be launched in the Family Court (pending changes to CPR PD62 and/or the High Court and County Courts (allocation of Arbitration Proceedings) Order 1996 ('the 1996 Order')) and should instead be issued in the Commercial Court and bear prominently upon them a request for a speedy transfer to the Family Division of the High Court (or in the case of a TOLATA claim which does not also invoke family court jurisdiction, to the relevant county court). The Form N8 initiating such a claim should include the words: "Family business: directions sought for transfer to the Family Division of the High Court" and should set out the case title and number if there are subsisting Family Court proceedings. 

    The provisions in relation to which an "arbitration claim" is most likely to be sought in the course of an ongoing post-separation financial arbitration are: (a) enforcement of preemptory orders of the arbitrator (section 42, AA 1996); and (b) order securing the attendance of witnesses (section 43, AA 1996). 

    C. Arbitrations conducted when there are no subsisting proceedings seeking relevant relief

    Stay

    An application to stay legal proceedings under section 9 of AA 1996 is in effect excluded from the definition of and procedural requirements for "arbitration claims" by CPR rule 62.3(2), which provides that such application must be made by application notice to the court dealing with those proceedings. 

    In the case of an IFLA Scheme Arbitration the parties will have agreed (by para 6.2 of their Form ARB1) that they "will not commence court proceedings…in relation to the same subject matter". If they are initiated by one party then it is open to either to apply for a stay. If the stay remains opposed then an early hearing will be necessary to determine the application. 

    Applying for a consent order to reflect the award (consent)

    The principles set out above in relation to applying for an order to reflect the award by consent where there are subsisting proceedings apply save that if the award sought to be reflected includes one or more financial remedies then proceedings for divorce or dissolution need to be initiated and decree nisi needs to be obtained. 

    Applying for a consent order to reflect the award (opposed)

    The "notice to show cause" procedure applies. It is necessary for decree nisi to be obtained if financial remedy orders are to be made. It is necessary for FPR Part 18 procedure to be adopted in order to bring the arbitration claim before the Family Division. 

    D. Enforcement

    Rules 62.17 and 62.18 of the CPR make provision for the direct enforcement of awards. It may also be possible to pray in aid section 66 of AA 1996 to enforce an award in some situations. With the court's permission awards can be enforced in the same way as a judgment or order of the court to the same effect. Proceedings should be started in the county court. This may prove effective in the case of a TOLATA award but is not appropriate in the case of a financial remedy award. 

    E. Challenging the Award under section 67 to 71 of the Arbitration Act

    Some very specific bases for challenging arbitrations are contained in section 67-71 of the AA 1996. The commercial experience in arbitration is that they are relatively rarely successful. In relation to an arbitration dealing with family financial issues it would ordinarily be appropriate for a High Court Judge of the Family Division to hear them and thus it is to be expected that applications commenced pursuant to these provisions will be transferred to that court. 

    The tone of the Practice Guidance is an endorsement of the Arbitration process by the President (following his initial endorsement in S v S). In light of the encouragement of alternative dispute resolution in the FPR 2010, and the judicial support for the same, it will be interesting to see whether this Practice Guidance, and further endorsement, from the President makes Arbitration more popular as an alternative way to resolve family law disputes. 

    There is a clear message that the Court will hold parties to agreements reached in arbitration other than in exceptional circumstances. Thus, the majority of those who use the arbitration process will walk away with an award the court will uphold, and will be able to turn the awards into enforceable court orders. Arbitration seems to be an attractive option as it is quick and flexible and avoids court delays. It also allows for confidentiality, which may be an appealing factor in light of the recent debates about more transparency in the family courts.  

    One of the problems with the current procedure is that it is not possible to issue arbitration claims in the Family Court and instead a more complicated process of issuing in the Commercial Court and requesting a transfer to the Family Division of the High Court is necessary. However, the President hints at changes being made to the CPR PD62 and/or the 1996 Order when he writes that the rules do not "currently" cater for claims to be launched in the family court "pending changes" made to CPR PR62 and/or the 1996 Order.


Published: 30/11/2015

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