Separating couples have a number of options to resolve family law property disputes including mediation, arbitration and litigation. It is generally accepted that Court proceedings should be a last resort and only if all other dispute resolution methods have failed, or if an urgent issue arises.
The COVID-19 pandemic continues to impact all aspects of daily life. It has recently prompted significant changes in the family law system, both locally and abroad. In doing so, separating couples and family law litigants are being strongly encouraged to consider alternative forms of dispute resolution as a means of achieving an early and cost-effective solution of the issues in dispute.
The arbitration process
The Family Law Act 1975 (Cth) 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.
Arbitration is a voluntary process, and can be ordered by the Court (by consent) or entered into voluntarily during or instead of litigation.
The scope of an arbitrator’s jurisdiction depends upon whether the arbitration is referred by the Court or agreed to between the parties privately.
Property disputes between married and/or de facto couples can referred to arbitration by the Court, however superannuation splitting and disputes regarding the interpretation or validity of Binding Financial Agreements can only be referred to arbitration by private agreement.
Parenting and/or child support proceedings are not matters that can be dealt with in an arbitration.
Benefits of arbitration
The benefits of arbitration generally include greater flexibility, cost and time effectiveness in the process of obtaining a binding decision (known as an Award), as compared to litigation.
Arbitration offers the ability to jointly appoint the decision-maker and to agree upon the format for hearing of evidence and submissions. For example, parties may agree to dispense with the rules of evidence and elect for the dispute to be determined by way of written submissions, oral evidence, or a combination of both.
The scope of the issues in dispute may also be broad or limited to specific issues and assist to progress matters to a formal mediation and/or continuing negotiations in the substantive proceedings. For example, parties may elect to refer a specific issue regarding the value of an asset, or the inclusion or exclusion of an asset or liability in the pool of assets available for distribution, to arbitration. Alternatively, parties may elect to defer their substantive family law property dispute to arbitration to avoid possible litigation in the future, for example, by seeking determination of the division of assets and liabilities and/or spousal maintenance arrangements.
While the timeframe for obtaining an Award depends upon the facts of each case, it is generally accepted that arbitration offers greater efficiency given the current delays in reaching a final hearing in the family court.
Either party may apply to register the Award with the Court and may seek to enforce the Award in the future, if necessary.
Either pay may also seek a review of the Award on the basis of alleged error of law. Parties may otherwise seek to set aside or vary the award in limited circumstances. A review of an Award is subject to strict time limits and should be carefully considered on a case by case basis.
Disadvantages of arbitration
One of the key considerations when deciding whether arbitration is appropriate is the binding nature of an Award.
While a review on an alleged error of law may be sought, an Award may only be set aside on very limited grounds. For example, the Court may set aside an Award if it is satisfied of either of the following circumstances:
- The Award was obtained by fraud (including non-disclosure of a material matter); or
- The Award or agreement is void, voidable or unenforceable; or
- In the circumstances that have arisen since the Award or agreement was made it is impracticable for some or all of it to be carried out; or
- The arbitration was affected by bias, or there was a lack of procedural fairness in the way in which the arbitration process, as agreed between the parties and the arbitrator, was conducted.
Given the high evidentiary threshold to succeed in an application to set aside an Award, parties are encouraged to carefully consider the terms of the Arbitration Agreement to obtain independent legal advice prior to formally engaging in arbitration.
Where to find an arbitrator
A National Arbitration List was established in the Family Court of Australia and Federal Circuit Court in April 2020 to encourage the use of arbitration. Given the further anticipated delays due to the COVID-19 pandemic, family law litigants are encouraged to consider all methods of alternative dispute resolution, including arbitration, in appropriate circumstances.
The Australian Institute of Family Law Arbitrators and Mediators (AIFLAM) is the body nominated by the Law Council of Australia which maintains a list of qualified arbitrators. All the listed arbitrators and their contact details can be accessed via the AIFLAM website via www.aiflam.org.au.
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This article was written by Stefan Pantellis (Senior Associate) and Monica Blizzard (Director).
