Arbitration: it's not just for the big guys!

Having recently completed my first full arbitration, I thought it might be useful to share the experience from my point of view, as the arbitrator.

Many of you may have perhaps, quite understandably, felt that arbitration is only for "big money" cases. Certainly a number of arbitrators are retired High Court judges or QCs, excellent litigators in their own right, well suited to providing an efficient and expert solution to complex financial divorce cases, especially where privacy is essential.

However, there are also a number of equally excellent arbitrators (if I may be so bold as to include myself in that description!) who have backgrounds as solicitors, mediators and/or collaborative lawyers and are fast becoming aware that, in fact, arbitration is at its best when used in lower to middle income cases.

To my mind, it's people with less money who need the speed and cost savings that arbitration can provide, and this recent case is a classic example.

The case

The case involved a marriage of 20 years. There were two children (now aged 20 and 17) who live with the wife. The couple had been separated for two years by the time they came to arbitration. They had attempted mediation, but it had broken down as the husband had not been able to cope with facing his wife (he was living with guilt resulting from an affair).

The solicitors had entered into correspondence about trying to achieve a settlement, but the couple were simply unable to agree. At this point, much credit should be given to the solicitors involved, who were brave and creative enough to consider arbitration as a solution (I attribute this to the fact that they are both from Yorkshire, so thinking outside the box comes naturally!).

The couple themselves simply wanted a decision so that they could move on with their lives, and not cost themselves an arm and a leg in the process.

The assets involved were modest - a house with £86,000 equity, two endowment policies worth £14,500 and £2,800 and pensions with combined CETVs of £57,000. The husband earns £33,000 gross per annum, and his new partner (with whom he lived) earns £20,000. The wife earns £20,000 gross per annum and has tax credits and child maintenance, which will end in 12 months’ time. The wife had also inherited £35,000 from her mum, who had died shortly before the couple separated.

The process

The process began with the solicitors completing the very straightforward ARB1 form, and submitting it to the Institute of Family Law Arbitrators (IFLA). In this case, they had chosen to use me as their arbitrator having heard me present on the subject, but they could equally have asked IFLA to select an arbitrator if they had had any issues deciding who to appoint.

I received the ARB1 from IFLA and accepted the appointment. Both clients were asked to sign my terms and conditions, which set out my charges, and were also asked to make a payment on account.

Once that was done, the process began. As both solicitors and I are based in three different locations, I suggested a directions appointment by telephone. Consider the alternative had these people been in court: the clients would have had to pay their solicitors to travel at least an hour to court, then no doubt wait for at least another hour for a 10 minute appointment with a judge. Instead we had a three-way telephone appointment, which took 10 minutes in total and cost the clients very little.

During that directions appointment, we discussed how the arbitration would proceed.  The husband was extremely reluctant to see his wife face to face. Although the wife, through her solicitor, expressed a preference for a hearing, she did accept that the husband was unlikely to engage, and it was agreed that the arbitration should proceed on the papers only. There was also a cost saving for both of them by dealing with it on this basis.

We therefore scheduled dates for the submission of Forms E, which we all felt would be the most appropriate way forward as we were dealing with the full financial settlement. Had we been dealing with a discreet issue - such as the term of a spousal maintenance order - we could have agreed alternative methods of disclosure more appropriate to the issues in hand.

Following exchange of Forms E, a second telephone directions appointment was held.  Some issues of valuation were cleared up, both solicitors were content with the disclosure and there was no need felt for any further information. I therefore ordered the submission of narrative position statements and scheduled in time for me to make the award within 14 days of receipt.

Some email communication took place afterwards to agree time to file a response to the position statements, and the documentation was duly filed. The husband chose to instruct counsel to prepare his position statement; the wife used her solicitor.

The outcome

I made my award, which contained a full summary of the case, analysis of each person’s position and a reasoned judgement. I was conscious when writing the award of my work as a mediator, and how this influenced my decisions and my need to balance the interests of each person rather than their stated positions, which were poles apart.  

By writing the award in such a way, I hoped that the couple would be able to recognise the reasoning behind the decisions made. This contrasts starkly with some of the judgements I have read from court orders.  

Overall, my costs for dealing with this matter in arbitration were £1,250 plus VAT (£625 per client), plus the cost of the conference calls. The whole process took less than six months (and could have been done much quicker, but the couple were in no hurry).

Food for thought…

Clare Thornton is a partner at Thornton Jones Family Law in Wakefield. Clare will be running a workshop on family arbitration at the 2015 Northern Lights conference in York on 2 October for family law practitioners. Find out more here.
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