Arbitration

Separating spouses (whether married or in a de facto relationship) can appoint a mutually agreed arbitrator to make a binding decision for the division of their property and payment of spousal maintenance. The arbitrator however cannot make decisions in respect of child support or parenting arrangements. The arbitrator must make their decision within the principles of the Family Law Act and in accordance with the case law of the Family Law Courts.

The arbitrator and spouses agree on what evidence and documents are to be provided and how the hearing is to be run. For example, it can be agreed that the arbitrator base their decision purely on written documents or with a short hearing for brief submissions. Alternatively, evidence can be given and parties cross-examined. Spouses may be able to agree on some issues and submit just the disputed issues to an arbitrator.

The flexibility of the arbitration process can allow a property settlement to be resolved quickly (typically within a few months rather than two to three years in court), privately and confidentially (no trips to crowded public court houses ) and at lower cost.

Arbitration is a good choice where:

1. negotiations are not possible or have not resulted in a complete agreement
2. mediation is not suitable, or has been attempted and no complete agreement reached.
3. Where parties want a neutral and independent third-party to make a decision for them in accordance with legal principles
4. where parties wish to use lawyers to ensure their cases are properly presented
5. where parties wish to retain some control over the process including timing and costs.

Arbitration can occur without any court proceedings being commenced, or alternatively during the course of court proceedings.

Parties must first agree on the arbitrator who must:

• be a legal practitioner
• the accredited by a legal professional body as a family law specialist, or have practised as a legal practitioner for at least five years doing at least 25% family law work
• have completed specialist arbitration training, and Australian Institute of Family Law Arbitrators and Mediators (which includes Matthew Shepherd).

The arbitrator will then arrange an arbitration planning meeting to discuss and agree on the  evidence model of arbitration to be used. The arbitrator will set a timetable for the exchange of relevant evidence and documents, and dates for the arbitration hearing and the issue of an arbitral award. Arbitration models include:

1. Arbitration on the papers. The parties provide agreed evidence and written submissions, and the arbitrator bases the arbitral award on the submitted documents without a further face-to-face meeting.
2. Arbitration on the papers but with a short hearing for the giving of oral submissions, and to allow the arbitrator to ask clarifying questions. The short hearing takes a few hours.
3. Arbitration with a short hearing for a limited cross examination, and oral submissions oral submissions. Such a hearing takes no more than one day.
4. Formal hearing with cross-examination of the parties and other relevant witnesses. The length of the hearing depends on the number of witnesses.

Following the completion of the hearing, the arbitrator issues an arbitral award and reasons within an agreed time – generally 14 days.

The job of the arbitrator is to make a decision based on the law as set out in the Family Law Act and consistent with the case law of the Family Law Courts. The arbitrator must be neutral and independent and cannot advocate for one spouse versus the other.  It is advisable therefore that parties have lawyers to ensure that the evidence and submissions they provide to the arbitrator correctly reflects the law and therefore persuasive on the arbitrator.

The arbitrator’s fees will depend on the complexity of the matter and the arbitration model used. As a guide, Matthew Shepherd’s fees for

1. Arbitration “off the papers” with planning meeting but no arbitration hearing generally around $4,500.
2. Arbitration off the papers with short oral submissions (half day) are around $6,700.
3. Arbitration for short hearing with limited cross examination and oral submissions (1 day) around $8,500
4. Formal hearing up to and including one day around $8,500, and $4,000 for each further day.

One or both parties can register the arbitral award with a court (whether court proceedings have been commenced) and the registered award takes effect as a decree of the court, and brings any court proceedings in respect of property division or spousal maintenance to an end.

There are two remedies available to a party unhappy with the  arbitral award.

Section 13J of the Family Law Act allows a party to seek a review of an arbitral award by a Family Law Court on questions of law only.

Section 13K of the Family Law Act provides grounds for a dissatisfied party to seek that an arbitral award reversed or varied.  The court must be satisfied that:

• the award was obtained by fraud (including non-disclosure of a material matter);
• the award is void, voidable or unenforceable;
• 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 conduct of the arbitration process.

These are the same remedies already provided under section 79A for the setting aside of court orders, but with the addition of bias and lack of procedural fairness.  Bias in arbitration generally occurs where there is shared interests or relationships between the arbitrator and the parties.  Procedural unfairness includes inadequate opportunity to present one’s case or lack of opportunity to correct or contradict matters prejudicial to one’s case.

• “Options for Clients When Property Mediation Results in Partial But Not Total Agreements.” Article in the May 2023 edition of the Arbitrator and Mediator Journal.
• “Family law property arbitration – the first five years and the next five years.” Conference paper given to the NSW Law Society Specialist Accreditation Conference August 2021.
• “Family Law Property Arbitration: The First 5 Years.” Conference paper co-presented  with Justice Michelle May at the Resolution Institute National Conference July 2021.
• “The new National Family Law Property Arbitration List.” NSW Law Society Journal June 2020.
• “Arbitration: Australian Law Reform Report Recommendations.” Australian Family Lawyer Vol 28/2. July 2019.
• “Family Law Property Arbitration: Progress and Reviews.” Australian Family Lawyer Vol 28/1. April 2019.
• “First Judicial Consideration of Family Law Property Arbitration reforms.” article in the NSW Law Society Journal December 2018.
• “Family Law Property Arbitration” article in the June 2017 edition of The Arbitrator and Mediator Journal.