In this day and age, parties to a family law matter may need to wait for their day in court for up to three years or more.
One of the ways to expedite the resolution of a financial family law matter that has not been resolved amicably is to consider arbitration.
Arbitration is in effect a privately-run trial funded by the parties and conducted by an arbitrator to make binding final decision on the parties’ property and financial issues.
Section 10L of the Family Law Act 1975 defines arbitration as a process (other than the judicial process) in which parties to a dispute present arguments and evidence to an arbitrator, who makes a determination to resolve the dispute.
Section 13A(1)(c) of the Family Law Act 1975 provides that one of the objects of the legislation is “to encourage people to use, in appropriate circumstances, arbitration to resolve matters in which a court order might otherwise be made, and to provide ways of facilitating that use.”
Arbitration can be organised in relation to the interim orders, a specific part of the property matter such as sale of a business, or alternatively, the parties’ financial dispute in its entirety. However, arbitration can only occur on a voluntary basis.
The arbitrator is usually a senior family counsel, a Legal Practitioner as a Family Law Specialist, or a former family law judge instructed jointly by both parties. The arbitrator will determine the matter and provide his or her written decision.
Section 13H of the Family Law Act 1975 provides that once an arbitral decision is made, it takes effect as if it were a decree of the Court.
There are two types of arbitration as determined by the legislation.
- Court-referred arbitration under Section 13E of the Family Law Act 1975. (1) With the consent of all of the parties to the proceedings, a court exercising jurisdiction in: (a) Part VIII proceedings; or (b) Part VIIIAB proceedings (other than proceedings relating to a Part VIIIAB financial agreement); may make an order referring the proceedings, or any part of them, or any matter arising in them, to an arbitrator for arbitration. (2) If the court makes an order under subsection (1), it may, if necessary, adjourn the proceedings and may make any additional orders as it thinks appropriate to facilitate the effective conductRegulation 67D of the Family Law Regulations 1984 provides that an application for the arbitration under section 13E must be made jointly by all parties to the proceeding.In circumstances that the Court makes an Order by consent under section13E, the parties are committed to the arbitration similar to a consent order in the property matter. However, the court has the discretion to revoke the arbitration.
- Arbitration may also be initiated by the parties in relation to property or financial matters without a referral from the Court. However the consent of both parties is required.
The costs of the arbitration are generally shared by both parties unless otherwise agreed.
Advantages and Disadvantages of Arbitration
Arbitration is a cost effective and expeditious alternative to the court system. Accordingly it could be both beneficial to the litigants and the Court in so far as it saves money for the litigants and time for the Court.
Arbitration provides a more flexible resolution in the process of decision making, particularly in circumstances where the parties may agree to appoint a suitable arbitrator for their case on the basis of a matter’s factual circumstances and particular expertise requirements.
Further the parties’ legal practitioners may liaise with the arbitrator in a less formal manner to provide the evidence and witness required for the determination of only the contentious issues.
However the process of arbitration could be unproductive and a burden on the parties’ legal costs if one or both parties use the process as a rehearsal test or otherwise if one or all of the parties are not genuinely interested in resolving the matter expeditiously. It may potentially cause greater delay in the process of final resolution of the matter.
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