When should you be recommending arbitration?
Most solicitors have matters on their books right now that should be arbitrated. The question is which ones.
What it gives a client
It is often said that delay suits one party. Occasionally it does. More often it is a lawyer’s fallacy. Parties want their matter finalised, and to move on with certainty and dignity.
An arbitrator determines a financial dispute under the same law a judge would apply. The award is registered with the court and enforceable as an order. What changes is not the result but how the client reaches it.
The hearing is arranged around the parties rather than a court list, and takes whatever form the dispute actually requires: on the papers, on submissions, or a full hearing with oral evidence. The date is agreed, with no over-listing. The biggest delay is how fast the parties can get ready.
The award follows within weeks. For a client, that is the difference between waiting on a system and getting on with their life.
A fuller comparison with mediation and litigation is set out on What is arbitration.
Where it makes the most difference
Almost any financial matter can be arbitrated. These are the ones where it makes the most difference.
A mid-range pool
Where the cost of the court process, and of waiting, is out of proportion to what is in dispute.
The parties are ready and the court is not
The preparation is done. Arbitration takes the matter to hearing without waiting for a date to become available.
The matter has lost its hearing date
A fixed date, arranged around the availability of the parties and their counsel.
A single discrete issue
A valuation, the characterisation of a contribution, or a question of law. Often capable of determination on the papers.
Most of the facts are agreed, but the outcome is not
Where credit is not in issue, the hearing can be shorter, narrower and cheaper than its court equivalent.
The parties need the process fitted around them
Online, in a regional centre, or outside ordinary sitting hours. The hearing is arranged around the parties rather than a court calendar.
The trade-offs
Two things a client should be told before they agree.
Cost
The parties pay for the arbitrator. A court hearing carries no equivalent fee. The case for arbitration is that the saving in delay and in interim court events usually exceeds that cost, but it is a real cost and it is paid up front. However, the costs of arbitration overall can be less because of the number of events and delay in court. A party’s share of a full day of arbitration can cost less than briefing a barrister once for a mention.
Finality
There is no rehearing because a party is unhappy with the result.
A court can only review a registered award on a question of law. This is narrower than traditional appeal grounds.
An award can also be set aside, but only where it was obtained by fraud or non-disclosure, where it is unenforceable, where changed circumstances make it impossible to carry out, or where the arbitration was affected by bias or unfairness.
When arbitration is not suitable
Arbitration depends on both parties agreeing to it and on each being able to participate properly. It is not the right process where there is a power imbalance that cannot be managed, where a party cannot give proper instructions or appear satisfactorily, or where the rights of a third party are genuinely in issue and cannot be dealt with.
Parenting matters cannot be arbitrated and remain with the court.
Where a matter is not suitable, Robin will say so.
How to propose arbitration
Parties must take genuine steps to resolve a dispute before instituting proceedings unless an exception applies, and the Court encourages parties contemplating a private arbitration to do the same. An application for a court-ordered arbitration filed without compliance may be stayed.
Where a referral is sought from the court, the parties must tell the court before the first court event who the proposed arbitrator is or how one will be nominated, the end date by which the arbitration is to be concluded (which cannot be more than six months from referral), the anticipated date of the first preliminary conference, and, where available, an executed copy of the arbitration agreement.
A checklist for proposing arbitration, a draft arbitration agreement and an indicative timetable are below.
Appointments and fees
Robin accepts appointment as arbitrator in all family law arbitrations. Appointments are accepted in privately arranged arbitrations and on referral by the court, throughout Australia, in person or online. For current availability, contact chambers.
The costs of an arbitration are shared equally between the parties unless they agree in writing otherwise. Prior to a preliminary conference, a costs agreement and disclosure statement will be forwarded to both parties.
Robin continues to practise as counsel. He will not accept an appointment where he has acted for or against a party or their solicitors in circumstances affecting his independence. Any potential conflict is disclosed before appointment. A conflicts check can be run before a proposal is put to the other side: contact chambers with the names of the parties and the solicitors on the record.
The agreement and the preliminary conference
Section 27 of the Family Law Regulations 2024 requires the arbitration agreement to record the date, time and place of the arbitration, the issues, the estimated time, how the arbitration will be conducted, the circumstances in which it may be suspended or terminated, and the estimated costs including disbursements, together with the parties’ costs arrangements and their agreement to pay within 28 days of the award.
Those particulars are settled at the preliminary conference, which also makes directions to hearing. The agreement is not executed at the conference itself.
The populated draft then goes to each party for advice. The agreement must contain a statement, for each party, that the party was given advice on a draft meeting the content requirements before signing, and that statement must be signed by the practitioner who gave the advice.
The requirement for legal advice does not prevent a party acting for themselves. A litigant in person can arbitrate, and obtain advice on only the arbitration agreement itself, but they will need a practitioner prepared to give that advice and sign the statement. This will need to be reflected in the agreed timetable.
To make the conference productive, parties should come prepared to address the issues in dispute, the evidence proposed, any expert evidence and how it will be dealt with, an estimate of hearing time, and the proposed model. Disclosure obligations apply before the conference: each party must have served a Financial Statement or equivalent and the documents required under the Family Law Rules.
A preparation worksheet is available for the parties from this website. The arbitrator may ask for it to be completed and provided before the conference, in which case it must be sent to both the arbitrator and to the other party.
Arbitration models
The model is agreed at the preliminary conference and recorded in the arbitration agreement.
On the papers
Documents, but no cross-examination or oral argument heard.
Oral submissions
Documents, with argument heard.
Full hearing
A hearing similar to court. Documents, with both cross examination and argument heard.
The choice usually turns on whether credit is in issue. Where the facts are largely agreed and the dispute concerns the assessment of those facts, or questions of law, a determination on the papers is often sufficient and substantially cheaper. Where facts are contested and the outcome depends on which account is accepted, oral evidence is necessary.
These models are points on a spectrum rather than fixed options. Oral evidence can be limited to particular witnesses or particular issues. The parties can agree that rules of evidence do not apply.
Conduct of the arbitration
Arbitration is not an unsupervised process. Applications for orders facilitating the conduct of an arbitration, and applications with respect to awards, are case managed by the Court through its National Arbitration List. The List is judge-managed, and orders can be obtained promptly where they are needed to keep an arbitration moving.
The duty of disclosure applies throughout an arbitration and does not close at any stage of the timetable. Unless the parties agree otherwise, the disclosure procedures in the Family Law Rules apply. An arbitrator may require a person, whether a party or not, to attend and give evidence or produce documents. A party may also apply to the court for leave to issue a subpoena, and the court may make orders to facilitate the effective conduct of an arbitration, including where a requirement or a subpoena is not complied with.
Documents produced for an arbitration may be used only for the arbitration, and may not be disclosed to anyone else without the court’s permission.
An application to facilitate an arbitration may be made by a party, jointly by the parties, or by the arbitrator. Where a question of law arises, the arbitrator may refer it to the court.
Where a party does not comply with a procedural direction, the arbitrator may suspend the arbitration. If non-compliance runs beyond a fortnight in a court-ordered arbitration, the arbitrator must refer the matter back to the court. Where a party lacks the ability to take part, because they do not understand the nature and consequences of the arbitration, or cannot instruct properly or appear satisfactorily, the arbitrator must terminate the arbitration.
The award
The arbitrator must make an award at the conclusion of the arbitration, including reasons and findings of fact. An award is registered with the court on application and, once registered, is enforceable as an order. Review of a registered award is available on limited grounds under s 13J of the Family Law Act.
An award must be typewritten, contained in a single document, and include a concise statement of the reasons and the findings of fact with reference to the evidence relied on. A copy goes to each party.
Either party may apply to register the award. The application is served on the other party, and if no response opposing registration is filed within 28 days, the court must register it. Once registered, the award is enforceable as an order.
A registered award may be reviewed on a question of law. It also may be set aside where obtained by fraud, including non-disclosure of a material matter; where it is void, voidable or unenforceable; where changed circumstances make it impracticable to carry out; or where the arbitration was affected by bias or a lack of procedural fairness. There is no rehearing on the merits.