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07 February 2017

Considering Arbitration?

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Delays in the Family Court and in the Federal Circuit Court are at an all-time high. With insufficient numbers on the Bench and overwhelming workloads for Judges in both Courts, it is becoming increasingly common for matters to be in the system for up to 3 years before judgment issues.

I have attempted to answer some of the questions put to me by clients when deciding whether or not to pursue arbitration as an alternative to litigation.

What is arbitration?

Arbitration is probably best described as private litigation. It is a process where the appointed arbitrator (usually an experienced family law barrister or retired Judge) steps into the role of decision maker and determines the outcome of your dispute.

Can I choose to arbitrate?

Both parties must consent to arbitration. The Court currently has no power to order parties to arbitration without consent of the parties. Parties can only arbitrate under the Family Law Act 1975 on disputes between them about property and/or spousal maintenance. Property matters which involve third parties in some circumstances are excluded. Parties can also choose to arbitrate particular aspects of their dispute.

Will it be quicker?

Invariably yes. Once appointed, most arbitrators seek to have a decision delivered within a 3 month period.

Will it be cheaper?

That will be dependent upon the complexity of the matter but in general, yes. While the upfront costs in arbitration can be significant they are likely to be much less than the costs involved in protracted litigation. For example, if your matter is in the Court system for 3 years, the landscape of the case will change. Affidavit material and valuations will require updating and it is possible that there will be applications brought before the Court in relation to interim matters pending trial. With arbitration, this is unlikely to happen as the time frame for completion is months and not years.

Is the decision final?

The decision is final and can only be challenged in the following circumstances:

  • The decision can be reviewed on a question of law;
  • The decision can be varied by a Judge where:-
    • the Award or Agreement was obtained by fraud; or
    • the Award or Agreement is void, voidable or unenforceable; or
    • in 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.

Will the Award have the same effect as an Order of the Court?

Once the arbitrator makes a decision, an Arbitral Award is registered in the Family Court. This has the same effect as an Order of the Court. This means that the Award can be enforced and parties receive the same Capital Gains Tax rollover relief and Stamp Duty exemptions that apply when transferring property pursuant to a Court Order.

There is no requirement that an Award be registered. Often parties will implement the Award without registering it, however it is advisable to register the Award as there is currently some debate as to whether the Stamp Duty exemption will apply to an Award that has not been registered.

If you wish to discuss whether your matter is suitable for arbitration, please contact us to discuss your situation.

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