Challenging arbitral awards

Insight

24.11.2023

Family law arbitration has been available for financial cases in England and Wales since 2012 and for children cases since 2016. One of the major benefits of arbitration is that a decision is made resolving all issues, and therefore proceedings can be brought to an end in a timely and cost-efficient manner. Initially there was some concern about what clients could do if the arbitrator "got it wrong"; the bases upon which an arbitral award can be challenged under the Arbitration Act 1996 ("AA 1996") are very limited indeed. Fortunately, the case of Haley v Haley [20201 EWCA Civ 1369, [20211 1 FLR 1429 brought much needed relief, clarifying the basis upon which arbitral awards can be challenged in family cases. However, confusion remained regarding the procedure to be adopted.

This column will briefly consider the impact of Haley, together with key cases reported since, which provide guidance on the procedural route to challenging an arbitral award in both financial and children cases.

The test for challenging an arbitral award

The Institute of Family Law Arbitrators ("IFLA") scheme derives its authority from the AA 1996. Under the AA 1996, the fact that an award was ‘wrong’ or even ‘unjust’ would not, of itself, provide any basis for challenging the award or intervention by the court. However, unlike other areas of law, in family cases, in order to achieve a clean break and dismissals of the parties’ respective claims against one another or to deal with matters such as the sharing of pensions, the arbitral award must be converted into an order of the court.

The conundrum for the Court of Appeal in Haley was therefore how the very limited grounds of challenge under the AA 1996 sat with the approach taken by the family courts – on what basis should the family court decline to make an order in the terms of an arbitral award? The answer was that a challenge to a financial remedy arbitral award should be dealt with in the same way, and subject to the same principles, as a financial remedy appeal in the Family Court from a district judge to a circuit judge. It determined that: "the logical approach" was to adopt the procedure and approach that would apply to an appeal, as set out in the FPR 2010. Therefore, the court would only substitute its own order "if the judge decides that the arbitrator’s award was wrong; not seriously, or obviously wrong, or so wrong that it leaps off the page, but just wrong" (para [741).

The court’s retention of its supervisory jurisdiction and the comfort provided to practitioners as a result, has contributed to a marked uptake in clients using arbitration as a means of resolving their family law disputes, both in relation to finances and children. However, there remained confusion regarding the correct procedural route that should be followed.

Two more recent judgments have helpfully provided more specific guidance on exactly how an individual can challenge an arbitral award or determination. As is the case with appeals, action must be taken quickly, and therefore it is important for practitioners to have a full understanding of exactly what is required.

How to challenge a financial arbitral award

In A v A (arbitration: guidance) [20211 EWHC 1889, Mostyn J took the opportunity to clarify the procedure that should be followed when challenging a financial arbitral award in an effort to end the "procedural chaos" that had ensued up until that point. The key points are as follows:

A Form A needs to be filed (if this has not already taken place). However, Mostyn J helpfully reiterated that it is not necessary to attend a MIAM. An arbitral award falls within FPR, PD 3A 13(2)(b), as "any agreement made in or in contemplation of proceedings for a financial remedy", and therefore parties involved in any post-arbitral award dispute are exempt, as set out in paragraph 18 of the Practice Guidance (Family Court: Interface with Arbitration) issued by Sir James Munby on 23 November 2015.
It is important to take action quickly, as would be the case with an appeal. An application in Form D11, using the Part 18 procedure should be made within 21 days of the arbitral award in its final form.
The grounds of challenge should be annexed to the Form D11 and should set out succinctly their complaints about the arbitral award. This should be done in the same manner as grounds of appeal; in respect of each ground, they must state whether the ground raises a challenge against a point of law or a challenge against a finding of fact, or an allegation of procedural irregularity (as set out in PD 30A para 3.2(b) of the FPR).
In addition, the following should be filed with the D11:
- A skeleton argument (not exceeding 20 pages)
- The arbitral award; and
- A draft of the initial gatekeeper’s order (of which there is a pro forma within the standard orders compendium).
Upon issuing the D11, the gatekeeper should immediately issue an order disapplying the requirement to file a Form E or attend a first appointment, but providing that the respondent to the application may file a short skeleton argument in response, together with their suggested draft order.
The papers should then be placed before a circuit judge authorised to hear financial remedy appeals, not sooner than 21 days after issue. That judge will decide whether the permission to appeal test has been passed. If it has not, then an order will be made in the terms sought by the respondent, with a likely costs’ penalty for the applicant. If the permission to appeal test has been passed, then directions will be given for the application to be heard inter partes.
If either party considers that the application should be allocated to a High Court judge, then a written request should be made at the outset, to be considered by the gatekeeper.
Following the inter partes hearing, if satisfied that the arbitral award is "wrong", then the circuit (or High Court) judge will make different provision to that within the award. The general rule of no order as to costs does not apply (see BC v BG (Financial Remedies) [20191 EWFC 7, [20191 2 FLR 337), and so costs will usually follow the event in these applications.

How to challenge a children determination

Following on from the guidance in relation to financial arbitration, Peel J took the opportunity when giving judgment in the case of G v G [20221 EWFC 151 to provide guidance on the procedure to be adopted when challenging an arbitral determination in children proceedings. In the main, the procedure follows the same structure as that in relation to financial cases, but with obvious differences regarding the forms to be used.

If a Form C100 has not yet been filed, then one must be filed. As with financial cases, the requirement to attend a MIAM will not apply, and s 3(d) of the Form 100 (exemption from MIAMs because of attendance at non-court resolution) should be ticked.
A Form C2 must then be filed within 21 days of the arbitral determination in its final form, annexing the grounds of challenge. Again, this should be done in the same way as grounds of appeal, and each ground should specify whether it raises a challenge against a point of law, a finding of fact, or an allegation of procedural irregularity.
With the C2, the applicant should file:
- A skeleton argument, not exceeding 20 pages in length;
- The arbitral determination; and
- A draft gatekeeping order (a suggested draft of which is appended to Peel J’s judgment in G v G).
The gatekeeper will then issue an order which disapplies the usual procedure under FPR, Part 12, and instead provides that the respondent may file a short skeleton argument in response and their proposed draft order, within 14 days.
The papers will then be placed before a circuit judge not sooner than 21 days after issue, who will conduct a triage / paper exercise and will decide whether the permission to appeal test has been passed. If either party considers that the application should be allocated to a High Court judge, then a written request should be made at the outset, to be considered by the gatekeeper.
If the application does pass the triage stage, then directions will be given for the application to be heard inter partes.

With these two pieces of guidance in place, there is now a clear route to challenging an arbitral award or determination, both in terms of the test that the court will apply, and the procedure that must be followed. Clients can therefore be confident in arbitration as a means of resolving their disputes, thereby avoiding the long delays and costs implications of court proceedings. This can only be good news for the over-burdened court system.

Please note this content was originally published in the Family Law Journal September 2023 edition, best practice section.

This publication is a general summary of the law. It should not replace legal advice tailored to your specific circumstances.