• What is Arbitration?

What is arbitration?

Arbitration is a process (other than the judicial process) in which parties to a dispute present arguments and evidence to an arbitrator who makes a determination to resolve the dispute.

The Family Law Act 1975 now recognises two distinct types of arbitration:

    "Section 13E arbitration"
(which is arbitration carried out as a result of a Court order made by
consent in current proceedings);

    "Relevant property or financial arbitration"
(which is, in practical terms, private arbitration).

Section 13E arbitration can only be ordered where there are proceedings on foot and a Court is exercising jurisdiction under Part VIII of the Act, and is limited to issues arising under that part:  i.e. periodic and lump sum spousal maintenance, modification of spousal maintenance, declarations of property interests, adjustment of property interests, setting aside orders altering property interests, ante-nuptial and post-nuptial settlements and (to the extent that they arise Part VIII proceedings) bankruptcy issues.

Private arbitration can deal with all of the above matters and in addition issues arising under Part VIIIA (Financial Agreements), Part VIIIB (Superannuation) and s106A (Execution of instruments) regardless of whether proceedings are on foot or not.  

The advantages of arbitration include:

• Control of the process and the degree of formality. The arbitration can be designed to meet the needs of the individual parties and their issues.
• Flexibility. An arbitration does not require the same level of formality as a Court hearing.
• Convenience. The arbitration can be held at a time and place, and in accordance with a timetable, agreed between the parties and the arbitrator.
• Choice of decision maker. The parties are able to choose an arbitrator in whom they have confidence.
• Avoidance of delay. By setting their own timetable, the parties can avoid the delays inherent in the formal Court processes, obtain a prompt resolution of disputed issues, and have certainty that the hearing will take place on the agreed date.
• Promptness of decision. The arbitrator agrees to provide his or her award and reasons within a specified period (generally not later than 28 days from the hearing).
• Confidentiality. Arbitration takes place in a confidential setting. Arbitrators take an oath not to disclose 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 engendered by the formalities of the Court processes, parties can achieve significant costs savings.  Further, as a result of arbitration taking place at a time of their choosing, valuations remain current and the expense of updating material is avoided.

It may be a particularly valuable option for parties who have mixed children and financial matters and are having their parenting issues dealt with under Division 12A, who can proceed to have their financial issues arbitrated immediately after the children’s proceedings are completed without suffering further delay.

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