At a time when court delays and the administration of family justice has deteriorated further as a result of the Covid-19 crisis and the move to remote family courts, arbitration, the only adversarial alternative to the court process, has had a very welcome reprieve in the case of Haley v Haley  ECA Civ 1369. It has, by any view, removed the highest hurdle for family arbitration, namely the ability to appeal an unfair award. This decision is particularly helpful for High Net Worth clients, and those with complex cases, who are seeking privacy, efficiency and fairness.
Family arbitration has been an available form of alternative dispute resolution for over eight years in England and Wales. Unfortunately, and despite the very significant delays caused by the underfunding of our family justice system and a lack of judicial availability, family lawyers have been reluctant to refer cases to arbitration primarily because arbitral awards have, until now, been notoriously difficult to appeal.
The Court of Appeal has confirmed that arbitral awards in family law matters should be subject to the same rights of appeal as judicial decisions made at first instance. The decision in Haley v Haley will fundamentally change the way in which family arbitral awards are challenged and significantly lower the height of the hurdle that had to be scaled to appeal the awards before now. It is widely thought that the lack of routes to appeal an arbitral award may have discouraged couples from engaging in arbitration in the past.
Arbitration is a method of alternative dispute resolution, which allows parties to resolve disputes without going through court proceedings. An arbitrator, jointly appointed between the parties, considers the facts of a case, or a specific issue in dispute, and provides a binding arbitral award. The arbitral award is then put before a court for approval in the form of a Consent Order.
Until the recent decision in Haley, financial remedy arbitral awards could only be appealed in very limited circumstances, for example, a party may have argued that there was “serious irregularity affecting the tribunal, the proceedings or the award” or that that the award was “obviously wrong” on a question of law.
Haley v Haley has confirmed that arbitral awards can now be challenged if there is a real prospect of success that the award was wrong, which significantly widens the scope for challenge.
Furthermore, whilst an appeal does not offer the parties a “second bite of the cherry”, the Court of Appeal has confirmed that the error of law need not “leap off the page” to allow a party to appeal an award which is unfair.
The decision in Haley v Haley is in stark contrast to the 2019 High Court decision in BC v BG  EWFC 7 in which Deputy High Court Judge Ambrose emphasised the mandatory nature of the Arbitration Act 1996 and the difficulties of challenging an arbitral award.
Both Haley and BC v BG highlight the flexibility and efficiency of arbitration and favoured the service. The Court of Appeal decision, however, has strayed from the decision reached in the High Court in relation to the issue of appeals.
BC v BG emphasised the advantages in relation to the finality offered by arbitration and made attempts to entrench the high standards of appeal set out in the Arbitration Act 1996, and which also apply to commercial cases, whereas the recent landmark case of Haley has confirmed that additional rights of appeal should be available to financial remedy arbitral awards.
Arbitration has only been available in financial remedies cases since early 2012 (extended to children’s matters in mid-2016 and expanded to include temporary and permanent relocation matters earlier this year). Whilst arbitration offers efficiency, autonomy and privacy and provides an opportunity for the parties to agree and jointly appoint an arbitrator, there has been a disappointingly low uptake in the service as lawyers have, understandably, been cautious to advise their clients to enter into a process which virtually impossible to appeal.
Thankfully, the alignment of the test to challenge an arbitral award in financial remedies cases with that of a first instance court decision makes family arbitration much more attractive from the point of view of clients and practitioners alike. Arbitration is particularly helpful in the face of the considerable backlogs currently troubling the court system and the ability to undertake arbitration remotely.
This is a very welcome outcome, which it is hoped will encourage parties to use arbitration in financial remedies proceedings, and wider family law proceedings, including children’s matters and discreet issues in dispute, going forward. It is a timely reminder that arbitration has the support of the family courts and that the service should be considered by practitioners and clients alike.
Partner James Stewart MCIArb, who is a chartered arbitrator and often advises on cases involving arbitration comments:
“The decision in Haley provides a much needed ‘shot in the arm’ for family arbitration in England and Wales. The ability to appeal against an improper or erroneous decision is fundamental to due process. I am delighted that we now have the benefit of an arbitration scheme which we can be proud of and can commend to clients. At a time when our family justice system is under great strain, arbitration is an effective and confidential alternative to court.”
If you would like any further information on arbitration or on issues involving family law, please contact a member of the Penningtons Manches Cooper Family Law team. We have significant arbitration experience and would be happy to discuss any queries with you.
Further information on family arbitration and arbitrators can also be found on the Institute of Family Law Arbitrators’ website.
This article was co-written by trainee solicitor Hannah Hayward.