What is Arbitration and is it Right for Your Matter?

Arbitration is a process in which parties to a dispute (usually with the assistance of lawyers) present arguments and evidence to an arbitrator who makes a binding determination which resolves the dispute.

Under the Regulations an arbitrator has to:

• Be a Legal Practitioner who is either accredited as a Family Law Specialist, or who has practiced as a Legal Practitioner for at least 5 years with at least 25% of work done in that time in relation to Family Law; and
• Have completed specialist arbitration training conducted by a tertiary institution or professional association of Arbitrators; and
• Be included in a Law Council of Australia list of Practitioners approved by the Council.

In practice, arbitrators are usually experienced barristers or former judges. Arbitrators issue arbitration decisions – essentially acting as a kind of privately engaged judge – where the decision is enforceable once registered in court (section 13H of the Family Law Act 1975 (Cth) [‘the Act’]).

How is arbitration different from mediation?

Mediation is a more common, less formal process in which parties seek to resolve their matter on the basis of agreement with the assistance of a neutral mediator. The mediator assists the parties in narrowing their dispute and focusing on the relevant issues. Matters discussed in mediation are confidential and are inadmissible if the dispute ends up in court, except in very rare circumstances.

Arbitration involves the parties advocating directly to an arbitrator, usually with the assistance of legal representation. The arbitrator, after considering all the matters, makes a binding decision of the parties.

In this sense, arbitration is more similar to the process of litigation than it is to mediation.

When does arbitration occur?

Arbitration must occur with the consent of all parties. Arbitration usually occurs when:

• Exercised under an arbitration clause in a binding financial agreement when separating; or
• Undertaken voluntarily by parties as an alternative to litigation; or
• Referred to arbitration by a Court (again, with the parties’ express consent).

What are the benefits of arbitration?

• Flexibility – An arbitration does not require the same level of formality as a Court hearing and can be designed to meet the needs of the individual parties and their issues.
• Convenience – An arbitration can be conducted at a time and place agreed between the parties and the arbitrator. This is distinct from litigation, where the date and venue of a hearing are set by the Court.
• Avoidance of delay – The parties are able to prepare and agree on their own timetable for the procurement of evidence and the filing of documents. By setting their own timetable, parties can avoid delays inherent in the formal Court processes and ensure the timetable works best for them. Furthermore, the parties will not be at risk their matter is not reached, as the arbitrator will have no other arbitration to hear that day, unlike the Courts, which are often over listed.
• Choice of decision maker – The parties are able to choose their arbitrator.
• Confidentiality – Arbitration takes place in a confidential setting. Arbitrators are bound not to disclose or disseminate any communication or information received in their capacity as arbitrator.
• Binding result – An arbitral award is a conclusive determination of the dispute, subject to rights of review provided in the Act, and is binding and enforceable.
• Cost – By designing an arbitration process which meets their individual needs and avoiding the costs of the Court process, parties can achieve significant savings.

Rights of Appeal

Decisions of an arbitrator may be reviewed by the court pursuant to section 13J of the Act, but this is also the case with any decision made by a judge. A review of an arbitration award is done by way of application to the court on the basis of questions of law or fact. That means parties cannot simply seek to review an award because they’re unhappy with it. An applicant would have to demonstrate there was an error of law or fact in order to be successful in any appeal. A judge would then assess the application and may affirm, reverse, or vary the award.

One such example of an arbitrators decision being successfully reviewed was the recent case in Vida & Vida [2023] FedCFamC1A 175, which among other things, involved questions of procedural fairness.