Arbitration

Arbitration is a non-judicial option for parties to resolve property dispute if they cannot reach agreement quickly through mediation or negotiation. Section 10L of the Family Law Act 1975 defines arbitration as a process in which parties to a dispute present arguments and evidence to an arbitrator, who makes a determination to resolve the dispute. It can be done by agreement between the parties or by court referral, but is voluntary.

Why use arbitration?

Arbitration can be a cost-effective way to solve a property settlement quickly. It is best suited to simple matters that involve modest pools of assets. It can occur before or in place of proceedings, or by referral after proceedings have begun.

Advantages include:

• arbitration can result in a faster determination than via a court hearing;
• parties can jointly choose an arbitrator based on their needs and the dispute;
• parties exercise a high level of control and over the process;
• arbitration is highly flexible in when, where and how it is done;
• parties can avoid the costly formalities of court processes and delays;
• it is confidential, unlike court proceedings.

Disadvantages include:

• a limited right to appeal;
• the tendency for matters to become more complex than expected;
• in private arbitration, a party’s negotiating power may be limited by factors such as family violence;
• parties can become entrenched in their disputes, so a court hearing would be more appropriate.

Under section 12E of the Act a legal practitioner must provide certain information to a married person who is considering divorce or financial proceedings. Section 12B states this information must include:

• the legal and social effects of the proposed proceedings, including on the care, welfare or development of a child;
• the services provided by family counsellors and family dispute resolution practitioners to help people affected by separation or divorce;
• the steps involved in the proceedings;
• the role of family consultants;
• the arbitration facilities available to arbitrate disputes related to separation and divorce. 

When can arbitration be used?

Arbitration can be undertaken to resolve just one matter in a dispute, such as the value of an asset, or to determine issues of fact so settlement can be reached. In this way, arbitration can be useful to narrow the issues the court must determine and to avoid litigation. However, in family law, arbitration is limited to financial matters and cannot be adopted for parenting matters. It can be used to determine property settlements, superannuation splitting, spousal maintenance and financial agreements.

Once registered, a decision reached by arbitration becomes binding and enforceable as if it were an order made by a court.

How is arbitration conducted?

The scope and process of arbitration is decided by the parties and can be formalised in an “arbitration agreement” between them. There is a great deal of flexibility in the procedures that can be used. For example, witness statements can be taken rather than the witness having to attend arbitration, and the parties can decide what rules of evidence are to apply. Part V of the Family Law Regulations 1984 governs arbitration and provides rules for an arbitrator, including that they must:

• conduct the arbitration with procedural fairness;
• be free of bias;
• be satisfied that both parties have legal capacity to take part;
• deal only with the dispute referred to them for determination;
• ensure the award does not infringe public policy;
• ensure the award can be carried out and enforced.

Who can be an arbitrator?

An arbitrator is an experienced legal practitioner who has specialised training in arbitration. Conditions include that the arbitrator:

• is an accredited family law specialist; or
• has worked as a legal practitioner for at least five years and 25% of the work was in family law; and
• has completed specialised arbitration training at tertiary institution or a professional association of arbitrators; and
• is included on a list on a Law Council of Australia-approved legal practitioners who can provide arbitration services.

Arbitrators can charge fees for their services but must provide written information about them before arbitration starts.

How is an award contested?

A determination made by a family arbitrator is an “award” and can be registered by the court by either party to the arbitration. A party has 28 days to contest the registration by arguing why the agreement should not be registered.

A review of an order is generally available on the basis of an error of law only.

An error may be that the award was:

• obtained by fraud;
• void, voidable or unenforceable;
• affected by bias;
• affected by a lack of procedural fairness;
• correctly decided but is no longer practical due to a change in circumstances.

For advice or representation or representation in any legal matter, please contact Armstrong Legal.