Litigation in the family court is increasingly associated with delay, cancelled hearings and lengthy waits in draughty corridors, as well as the risk of publicity. Over the past few years, two options have developed for privatising parts of the court process, enabling parties to maintain a structure to bring their matter to a conclusion, whilst avoiding the downsides associated with going to Court. These are private FDRs and arbitration.

Private FDRs

The FDR (Financial Dispute Resolution hearing) is a stage in the court process at which a judge aims to assist the parties in reaching a settlement by listening to both sides’ barristers and then indicating their view on the likely outcome (often referred to as “the indication”), and asking the parties to use that indication to try to reach a negotiated agreement. Extensive negotiations should then follow.

The hearing is “without prejudice”, meaning that the judge’s indications and any proposals made cannot be referred to later in the proceedings, giving the parties space to explore whether common ground can be found. If agreement is not reached, the case proceeds to a final hearing, and the FDR judge can have no further involvement in the case.

If both sides agree, a private FDR (pFDR) can replace the court FDR, with an agreed specialist family lawyer being paid to take on the role of the judge. Like a court FDR, the hearing is “without prejudice”, and no solution can be imposed if agreement cannot be reached – the matter will return to court (or, if preferred, arbitration) for a final hearing.

In our experience, pFDRs tend to have a higher success rate than court FDRs. This view was also expressed by Mr Justice Mostyn in AS v CS [2021] EWFC 34; he said “Private FDRs are to be strongly encouraged. They seem to have a higher success rate than in-court FDRs. This may be a result of more time being available to the judge both for preparation and in the hearing itself”. At a pFDR, it can be guaranteed that the judge will have read the papers in full, and be available all day to give further indications on any issues causing difficulty in negotiations, which cannot be guaranteed in a court FDR.

pFDRs can also be used where the parties are engaging in voluntary negotiations outside court proceedings and consider a pFDR will help them reach a solution.

Arbitration

Arbitration is a process in which the parties jointly instruct an arbitrator – a specially trained family law expert – to determine their dispute, agreeing to be bound by the arbitrator’s decision. Initially developed in the context of commercial disputes, it has been possible to arbitrate financial claims on divorce since 2012, and to arbitrate arrangements for children since 2016. It was slow to take off in family law, but the disruption to the court service flowing from Covid-19 has led to a significant increase in its use.

The process starts with both parties signing an agreement to arbitrate. This agreement is binding; once the parties have signed it, they cannot avoid arbitration unless both parties agree.  The parties can choose their own arbitrator or (more rarely) agree to have one appointed for them, and the arbitrator will remain with the case for its entire duration (a marked contrast to most court proceedings) and have wide-ranging case management powers to move the case forward.

Arbitration is flexible, and can be used as an alternative to the entire court process, or to resolve discrete issues arising at any stage in proceedings. The procedures used can be adapted to the needs of the case, and the parties have more control over the pace of the case than in court proceedings. Privacy is also guaranteed.

When the arbitration is concluded, the award should be submitted to court to be converted into a court order. Whilst it was previously the case that it was more difficult to challenge an arbitral award than a court order, following the landmark case of Haley v Haley [2020] EWCA Civ 1369 that is no longer the case. It is now clear that, for financial cases at least (and likely for children cases as well), parties to arbitration are bound by the arbitrator’s decision to precisely the same extent as parties to court proceedings are bound by a judge’s decisions – both can be appealed on the same grounds. An appeal against an arbitral award will be heard by a judge in the family court – meaning privacy may be lost at that stage.

In her judgment in Haley, Lady Justice Black referred to a “common misconception that the use of arbitration, as an alternative to the court process in financial remedy cases, is the purview only of the rich who seek privacy away from the courts and the eyes of the media”, adding “If that was ever the position, it is no more”.

Considerations

It is important to remember that these processes require the consent of both parties and so cannot be used where one party objects. However, where both agree, their buy-in to the process can help the case progress more smoothly. Identifying a barrister who is mutually acceptable as a pFDR judge or arbitrator can sometimes be challenging, and popular choices do get booked up far in advance which can also create delay.

pFDRs and arbitration both involve the additional cost of paying for the time of the arbitrator or pFDR judge. However, the cost is often saved in the long run by concluding proceedings more efficiently, and the overall experience can be a significant improvement on the court service.

If you’d like to know more about pFDRs, arbitration, or other methods of resolving disputes on relationship breakdown, contact Nicole on 020 7412 0050 or Nicole.Derham@hunterslaw.com.