There are very lengthy delays obtaining trial dates and judgments in the Federal Circuit and Family Court. To circumvent delays, arbitration can be an effective mechanism to quickly determine your family law matter and often at less expense. However, arbitration is generally limited to financial matters (excluding child support) and cannot be used to decide parenting disputes.
What is family law arbitration?
Arbitration is a dispute resolution process where parties make submissions to an arbitrator (typically an experienced barrister) who determines the outcome of the dispute. The determination is called an award and can be registered in court.
Registered awards have the same effect as a court order.
The parties to the dispute must consent to the arbitration. If one party does not consent to the process, then arbitration cannot occur.
What family law matters can be arbitrated?
Arbitration cannot resolve all family law disputes. In broad terms, arbitration can resolve:
- property settlement and superannuation matters
- spousal maintenance
- disputes about financial agreements (sometimes called ‘binding financial agreements’ or ‘pre nups’).
Arbitrators are unable to determine parenting or child support issues even with the consent of the parties to the dispute.
What are the advantages of arbitration?
From the beginning of a matter to the delivery of final judgment in the Federal Circuit and Family Court, parties could expect the process to take at least 18 months; much of the delay occurs as the parties wait for their trial date. Arbitration can occur as soon as the parties and arbitrator are available and ready. It is a significantly faster process.
Arbitration is more flexible. Parties can agree to either adopt the standard rules of evidence (as judges are required to apply in the Federal Circuit and Family Court) or they can opt out. The parties can make the make the process as simple or complex as they wish e.g. for a very straightforward property settlement dispute, they might agree that the arbitrator determine the outcome based on their written evidence and submissions without the need for cross-examination.
Arbitration may be less costly than a final hearing in the court system. The delays in the Federal Circuit and Family Court mean that parties typically need to provide updated disclosure and perhaps also obtain updated valuations before trial. Parties also often feel that they cannot move on with their financial affairs or business endeavours while their property settlement remains unresolved.
What are the disadvantages of arbitration?
An obvious disadvantage is that parties cannot resolve parenting or child support matters via arbitration. This means that if there are contested parenting and property/child support issues, parties may not want an arbitration to resolve their property settlement and then a separate court hearing to determine the remaining issues.
Australian family law arbitration is not commonplace. In my experience, some family lawyers are sceptical of arbitration (largely because it is unfamiliar to them) and they therefore either avoid the process or approach it the same they would the court system; meaning they do not take advantage of the unique benefits arbitration provides.
Parties are required to pay the arbitrator’s costs. Therefore, if the parties retain an experienced barrister, particularly for a complicated arbitration that may take many days, the costs can be considerable. While I would argue there is likely to be a significant benefit to parties to avoid the costs associated with updated disclosure and valuations due to delays in the Federal Circuit and Family Court, it is still a matter parties should consider when assessing if arbitration is appropriate.
How does arbitration work in practice?
Commonly, parties commence proceedings in the Federal Circuit and Family Court and schedule arbitration after disclosure is complete and they have attempted mediation. This way they avoid the long delay waiting for a trial date. Once the arbitration award is made, it can be registered by the Federal Circuit and Family Court and proceedings will end.
However, arbitration can be organised at any time. Arbitrators can make interim awards about certain financial matters and this can likely be achieved much more quickly than an interim hearing in the Federal Circuit and Family Court. Arbitration should not be avoided because there may be concerns about disclosure, as parties’ duty to provide full and frank financial disclosure in that process mirrors their obligations in the Federal Circuit and Family Court.
Family law arbitration is becoming increasingly popular due to delays in the Federal Circuit and Family Court and as it provides a tailored approach to resolving financial matters. Not all family law matters can be determined via arbitration, and parties need to consider whether the disputed issues in their matter are appropriate for arbitration.