Disputing family arbitration awards

28 Jan 2019 | 3 min read

In BC v BG [2019] EWFC 7 the court was concerned with the general (and novel) question as to the effect that should be given to an arbitration award made when parties agree to arbitrate disputes that arise in proceedings for financial remedies following a divorce.  The question related to an award made under the Institute of Family Law Arbitrators (IFLA) financial scheme. 

Guidance was issued in 2015 by the then President of the Family Division, Sir James Munby, on the interface between the Family Court and certain arbitrations involving parties to a post-relationship breakdown financial dispute (here), with further support given to family arbitration by Mostyn J in DB v DLJ [2016] EWHC 324 (Fam).

In BC v BG, the wife's position was that the award made in arbitration should not be made an order of the court, and that a direction be made for the dispute to be remitted back to the Family Court for reconsideration, or back to the arbitrator, if the parties agreed this. The husband's position was that the court should decline the wife's application and make an order giving effect to the award.

The wife's submissions for the court's consideration were in summary:

  • whether her assertion that she had no mortgage capacity amounted to a supervening event
  • whether the husband’s alleged non-disclosure that his pension contributions were voluntary and not obligatory provided a further reason not to convert the award into an order
  • whether the arbitrator had fallen into error in his application of the law by failing to attach proper weight to an express declaration of trust relating to the family home, and
  • whether the arbitrator fell into error by failing to take into account the excessive spending and debts incurred by the husband, as alleged by the wife

Consideration was given to the relevant law, including the approach of Munby P in S v S (ancillary relief) [2008] EWHC 2038 (Fam) that an arbitral award of the kind produced by the IFLA scheme was 'a single magnetic factor of determinative importance' and that 'There is no conceptual difference between the parties making an agreement and agreeing to give an arbitrator the power to make the decision for them. Indeed, an arbitral award is surely of its nature even stronger than a simple agreement between the parties' (para [19]).

Clare Ambrose, sitting as a deputy High Court judge, concluded that the wife had failed to satisfy the court that it should not make an order giving effect to the award.  The wife's application was therefore rejected, and the husband was entitled to an order giving effect to the award. The judge invited the submission of a draft order for approval (para [87]).

Practitioners should note that an award of costs was made in favour of the husband, as Family Procedure Rules 2010, SI 2010/2955, 28.3 (ie as to no order as to costs) does not apply to interim orders, and the court therefore has a discretion to make an order for costs. The wife's costs were £21,000, with the husband's costs to be assessed if not agreed.  

The judgment can be accessed here:  BC v BG [2019] EWFC 7.

Geraldine Morris is a solicitor and head of LexisPSL Family.

For practical guidance on family arbitration and other forms of non-court dispute resolution, see LexisPSL Family. Click here to request a free one week trial.

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