Arbitration – what is it and what does the recent Court of Appeal case mean for future arbitral awards

The recent Court of Appeal case of Haley v Haley [2020] EWCA Civ 1369 has allowed an arbitral award in financial matters arising on divorce to be appealed. Prior to this case the ruling in arbitration was invariably  final and binding and an appeal’s seldom succeeded.

What is Arbitration?

In family arbitration you and your partner appoint an arbitrator, who will make a decision, which until the recent case, would be final and binding between the parties, on any financial and property disputes or some child-related issues arising from family relationships.

Why choose Arbitration?

Couples often choose arbitration to avoid lengthy court delays, to ensure continuity of judge/arbitrator, to limit wasted costs involved in hearings being vacated by the Court at the last minute, to give certainty with hearing dates and to enable you to choose your judge/arbitrator. Like Court hearings, the ruling is binding and until recently the decision was rarely capable of appeal.

Haley v Haley

The parties in this case decided to use arbitration when the final hearing in Financial Remedy Proceedings was cancelled a week before. No doubt at a time when £10,000’s had already been spent preparing and paying for barristers whose fees often fall due a few weeks in advance of any such case.

After the arbitration, the husband sought to challenge the arbitrator’s assessment of his ability to rehouse himself to an acceptable standard; the distribution of the parties’ pensions and the periodical payments to be made to his wife. He applied to the Court to set aside the award on the grounds of “serious irregularity” under the Arbitration Act 1996 and asked that the Court agree not make a final order in the terms ruled by the arbitrator.

His arguments were rejected at first instance with the presiding Judge making an order in same terms as that of the arbitral award. The husband then sought to appeal this decision to the Court of Appeal after having received leave to do so. The reason the leave to appeal was granted was due to an “important point of principle as to the proper approach which the family court should take to arbitral awards when making a financial remedy order.” – Moylan LJ.

The Court of Appeal has now confirmed that the correct test is the appeal test, i.e. whether the husband would have a ‘real prospect’ of succeeding in an appeal against the award made for the reasons he had submitted. The Court confirmed that this test was satisfied and that the matter must now be remitted to a Circuit Judge for reconsideration (at great expense to the parties).

The consequence of the decision is that it will now be easier to challenge an arbitral award through the courts. This will be unwelcomed by many who have made a conscious decision not to involve the Courts and adopt alternative disputes methods. Also for those wishing to use this process to preserve their anonymity.

For us the jury is out. Putting arbitral awards on the same footing as decisions made in the Court process somehow feels like it dilutes some of the positive reasons to use arbitration. However, for as many people who feel this is a disappointing outcome, there will be many who see it as positive.

IBB Family law can advise you on all aspects of divorce and financial matters, including whether alternative dispute resolution methods should be used or the traditional court route adopted

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IBB Law’s family law practice can provide expert advice on all family law issues. To contact the family law team please email familylaw@ibblaw.co.uk or call 03456 381381.