Arbitration in family law: What is it and when should it be used

Arbitration has been available in family law matters for more than 25 years.  However, only following amendments to the Family Court Rules in 2016 which put a comprehensive system in place, have family law practitioners had confidence in this form of dispute resolution.

What is a family law arbitration?

Family law arbitration is a process where the matters in dispute are referred to an arbitrator who determines an outcome and makes any awards necessary to finalise the dispute between the parties.  An arbitrator can only be appointed if they meet the regulatory requirements to be appointed as an arbitrator under the Family Law Act.

Both parties must agree to ‘opt in’ to arbitration.  Parties can refer a matter to arbitration even if court proceedings have been commenced.  Arbitration is only available for property and financial matters – parenting matters cannot be resolved via arbitration. 

The “award” (decision) made by the arbitrator determines the issues between the parties on a final basis and is legally binding.  If a party does not comply with the award and it requires enforcement either party may apply to the court to register the award.  An award that is registered with the court has the same effect as an order of a court and may then be enforced through the courts.

The arbitrator will determine the dispute taking into consideration the principles under the Family Law Act and relevant cases.      

What type of matter is suitable for arbitration?

Really any property settlement matter could be referred to arbitration.  However, matters that will most benefit out of an arbitration process over the traditional court process might include:

  • Where parties want control over the way their hearing runs and where it occurs. Parties can even choose to have their matter determined “on the papers” through affidavits and written submissions, rather than through a litigated hearing that includes cross examination. This can be appealing when there are no significant factual disputes, but rather a disagreement about the weighting that should be given to the parties’ contributions and future needs.
  • Where there is significant difference between the parties’ respective applications. For example, if both parties genuinely seek 70% of the property pool and mediation (the first step in the traditional litigation process) is unlikely to result in a settlement, then the funds needed for mediation and/or a court application might be better spent on private arbitration.
  • Where parties have spent
  • significant fees on valuations, and want to have a hearing before those valuations become outdated. Arbitration can occur within 2-6 months, whereas a final court hearing may not occur for 2 years, meaning the parties would incur further fees to update valuations prior to trial.
  • Where the property pool is modest. It may be more cost effective for parties to invest their funds in obtaining a quick, binding decision rather than expending significantly more fees pursuing a lengthy court process, or through other dispute resolution paths like mediation.
  • Where there is a discrete issue that would prevent parties from resolving the matter through mediation. For example, both parties may strongly wish to retain the family home. An arbitrator could make a decision about this issue.
  • Where parties have a presence in the community, and want a process that provides the parties with confidentiality. Although publication of parties’ details is prohibited under the Family Law Act, the courts are not closed and members of the public can sit in the court room.
  • Where parties need flexibility for their hearing to occur outside normal court hours, for example if the parties have work commitments or a witness is located overseas and can only provide their evidence at a time when the court would normally not be sitting.

Parting thoughts

Enthusiasts for arbitration have compared it to the private health system.  Those who have the financial means to do so obtain private health insurance to give them access to quicker medical treatment.  So, why shouldn’t we do the same for our property settlements, particularly given the emotional and financial toll protracted litigation can have on parties. 

As the family court system continues to buckle under the weight of overwhelming workloads and lack of funding, arbitration looks set to gather momentum as an effective alternative for resolving family law disputes.