Football & Family Arbitration: When can you appeal a bad result?

No one likes to pay for a bad result. Any Arsenal fan who paid £14.95 to Sky Box Office last weekend to see their team beaten at home 0-3 by Aston Villa will tell your that (if you have the courage to ask them).

In family law, parties litigating their divorce have the option to pay for a resolution out of court by using the Family Law Arbitration Financial Scheme. This is where the parties agree to appoint an independent third party, usually a practising barrister, to hear their case and make a binding decision (an award) which is then converted into a court order. This not only eases the burden on an overloaded Court system but usually allows for a much quicker and less stressful process which is kept private - an important advantage for high profile people who want to avoid making headlines with their personal affairs. A recent case, however, may have dramatically changed the nature of family arbitration.

In Haley v Haley [2020] EWCA Civ 1369, Lady Justice King considered what the correct test is when one party challenges the outcome of the arbitration and refuses to consent to the arbitration award being made into a financial order. Should the test be under the Arbitration Act 1996, from which the Family Law Arbitration Scheme derives its authority, or the Matrimonial Causes Act 1973, under which the financial order is made?

If the correct test is under the AA 1996 then the circumstances in which the award can be challenged are extremely limited. A party would have to establish that:

a.    the arbitrator had a lack of substantive jurisdiction (s67); or

b.    there has been a serious irregularity affecting the tribunal, the proceedings or the award (s68); or

c.    the award was [obviously] wrong on a question of law (s69).

There is no scope to challenge a finding of fact or to question the fairness of the award. It is very difficult to challenge an arbitration award on these grounds. This was an intentional outcome of the AA 1996 in order to promote certainty in commercial disputes.

If the correct test is under the MCA 1973, then award would be treated as if it had been made by a judge in the Family Court at a final hearing and the party appealing the decision would need to establish that the there is a real prospect that the award was:

a.    wrong; or

b.    unjust because of a serious procedural or other irregularity in the proceedings.

In applying this test, the court can consider the fairness of the award and whether the outcome is unjust. This provides a much wider scope for challenging an arbitration award.

In support of the test under the AA 1996, it was argued that the parties had agreed to the terms of arbitration under the AA 1996 and had therefore “[bought] the right to get a wrong answer”.  In other words, they had agreed to be bound by the result of the arbitration even if they felt it was unfair or unjust.  Lady Justice King disagreed. She found that the correct approach is the ‘appeals’ approach under the MCA 1973. In doing so she relied on the “fundamental tenet of fairness which has informed every decision made by the courts since the landmark case of White v White [2001] UKHL 54.” (para 92)

So what does this mean?

It means that there is wider scope to challenge an arbitration award notwithstanding the fact that the parties had agreed to accept the award as being binding. The next question is whether this is a good thing or a bad thing for family arbitration?

On the one hand, the appeal system exists because sometimes, for whatever reason, the court does not come to a fair decision. The same must be true of arbitration awards, sometimes they will be unfair. Why should the party who decided to take their case out of the court system and arbitrate be denied the same right of appeal as someone who has their case heard before a judge?  On the other hand, by using fairness rather than the strict terms of the AA 1996, the benefits of privacy and certainty, that arbitration promised, are now significantly diluted.

Where do we go from here?

As a result of Haley v Haley, some people may now be put off arbitration because it can no longer offer the privacy and finality of an equivalent commercial arbitration. On the other hand, others may be encouraged to arbitrate knowing that if they think the result is unfair, it can be challenged in the same way that a judgment at a final hearing can be challenged.

So, unlike football fans, who always run the risk that they might get a bad result when they pay to watch their team play, if you do pay for a result through family arbitration then you now have a better chance to challenge that result if you think it is unjust or unfair.

If nothing else, this case reminds us that if you are considering arbitration as an alternative to litigation, then it is essential that the clients understand exactly what they are signing up to.

The full judgment in Haley v Haley can be found on BAILII here.

Don't Waste My Time: There are (almost) always alternatives to going to Court

It is never pleasant when a Judge criticises you in Court, particularly in front of your client and the other side and their legal team. Even if, as a solicitor, you have the cushion of a barrister taking the brunt of the punishment it is an experience to be avoided if at all possible. It must have been an uncomfortable day in Court for those representing the parties in Re B (A Child) (Unnecessary Private Law Applications) [2020] EWFC B44.  The matter was considered by His Honour Judge Wildblood QC who was considering a appeal of a decision made by a Legal Adviser for disclosure of 5 years worth of medical records of the mother. HHJ Wildblood QC was quick to clarify that the publication of his judgment was not related to the legal issues of the appeal but rather "to highlight the extent to which court lists are being filled by interim private law hearing that should not require court involvement."

Some reminders:

• A private law case is one which is brought by a private individual, usually a parent of the child in question, whereas a public law case is one involving a local authority, for example, an application for a care order.
• An interim hearing is a hearing listed prior to the final hearing or conclusion of a matter, usually to address an issue that needs to be resolved before the matter can proceed, for example, disclosure of evidence (as in this case).

It is often said that going to Court is a last resort and every effort will be made to resolve matters by agreement.  That can be difficult in cases where there is high conflict or emotion and where any concession can feel like admitting defeat.  HHJ Wildblood QC, however, is making it absolutely clear that certain matters should always be resolved outside of Court and to do otherwise amounts to "an inappropriate use of limited court resources" (paragraph 3 of the judgement) which is contrary to the overriding objective set out in Rule 1 of the Family Procedure Rules 2010. The Judge helpfully gave the following examples of matters which would count as inappropriate applications:

1. At which junction of the M4 should a child be handed over for contact?
2. Which parent should hold the children's passport?
3. How should contact be arranged on a Sunday afternoon?

The Judge stated that those representing parties must steer their client away from bringing such disputes to Court and said that if such matters were litigated then "criticism and sanctions" may follow.

It is clear that everything must be done to try and keep such disputes out of Court including making the consequences of taking the matter before a judge clear to the parties. But what about those cases where even the smallest of issues is impossible to resolve without a third party stepping in to assist? Well there are alternatives and it is important to consider them particularly in light of this recent judicial warning. If negotiations are not working then mediation can be a helpful tool and HHJ Wildblood QC references this towards the end of his judgment. But mediation is not always appropriate particular if there have been allegations of domestic abuse. Another option is arbitration. 

Arbitration involves a third party selected by the parties (usually a practising barrister or judge) who will consider the issues and make a binding decision. Arbitration can be used to resolve all matters in dispute it should not be forgotten that smaller issues, such as those complained of by HHJ Wildblood QC can also be resolved through arbitration. The parties are in control of the process and it may even be possible to have the matter resolved without the need to attend a hearing. Whilst the parties will have to meet the cost of the arbitrator, considering the possible costs of a court hearing (in Re B the costs ran to thousands of pounds) it could be a more cost effective process and will certainly be a quicker way of reaching an outcome which would allow the matter to proceed and avoid taking up precious Court resources.

It would therefore be prudent to keep Re B in mind when considering whether to take an interim matter to court in private law proceedings as, not only are you likely to be criticised by the judge, but there could be a lot more lost than simply your client's preferred junction of the M4 for handovers.

What are your thoughts?