Financial Remedy Proceedings on Divorce – Private FDR Hearings and Arbitration
Alternatives to the Court process.
Where parties cannot reach an agreement in relation to their finances on divorce outside of Court, they will need to navigate through the Court process. However, family lawyers specialising in financial remedy proceedings on divorce and their clients have long been aware of the significant delays in the Court process, which have been worsened by the Covid-19 pandemic.
There is a 3 hearing process to Court proceedings. The first hearing is known as a financial directions appointment, or FDA, at which the Judge will confirm that the parties have each filed the requisite financial disclosure, known as a Form E, and will set out an agenda for the case to move forward, such as for expert reports to be obtained. The next stage is a financial dispute resolution hearing, or FDR, at which the parties will each set out their respective positions on a without prejudice basis and a Judge will give an indication to the parties of what he or she believes to be the right outcome on the facts of the case as presented, with a view to assisting the parties in resolving the case by agreement. If the parties are unable to reach an agreement at the FDR hearing or at any other stage during the proceedings, then the case will be listed for a final hearing at which the parties will give evidence and a Judge will impose a decision upon them.
With delays in the Court, however, it will often take many months, potentially even years, for this 3 stage process to be completed. There were significant delays in the system prior to Covid-19 and these have only increased. We are frequently seeing at least a 6 month wait from the FDA hearing to the FDR hearing and possibly, sometimes, even longer.
Consequently, clients are increasingly seeking ways to shortcut the Court process in the hope of achieving settlement in a shorter timeframe and thereby reduce costs.
There are several options available but the main two, which we can assist with and advise on, are private FDRs and arbitration.
A private FDR, as with a Court FDR, seeks to achieve an agreement between the parties, but with the assistance of a financial remedy expert acting in place of an FDR Judge. The expert will review the case, summarise the issues and provide a view of the strengths and weaknesses of each party’s case. This can assist the parties to reach an accord, as they can see how their case might be decided if it went to a final hearing. The parties can negotiate throughout the process and present without prejudice offers.
One of the main advantages to a private FDR is that the expert can be chosen by the parties based on their experience and any specialist expertise required. Private FDR Judges are normally a family solicitor, barrister or retired Judge. The parties can also choose the date and time of the private FDR and will have an expert who will be focused on that private FDR case, as opposed to a Court Judge with a multitude of Court cases in their list. This means the expert will have more time and will be prepared to give more guidance than a Court Judge to help the parties understand the issues in dispute and their positions more clearly. The expert can also guide the parties on issues that need to be prepared or resolved prior to the hearing.
Further, a private FDR can be heard in a more relaxed setting, such as a barrister’s chambers or solicitor’s offices, which is considerably less formal than Court. Each party’s legal team will be there to support, advise and present on their client’s behalf.
Although the parties will need to pay for the expert’s time, the chances of settlement are high at a private FDR, which thereby reduces the prospect of having to proceed to a final hearing and incurring significant costs.
If a private FDR or other negotiations are not successful in reaching a settlement, then the parties can opt for arbitration instead of a final hearing in Court proceedings.
Arbitration is similar to the final hearing stage of the Court based financial remedy proceedings. Any decision of the arbitrator is final, binding and enforceable. Arbitration is a formal process protected in law and the final decision will be reflected by way of a contract, protected and enforced under contract law.
Unlike a Court final hearing, however, where parties cannot choose the Judge, they can choose their preferred expert to arbitrate. The expert will be experienced and focused on the parties’ case and so there is no competition for the expert’s time, unlike with a Court Judge.
The parties can also agree the procedure to be followed at arbitration and the decision of the arbitrator will be confidential. Thanks to more recent case law, a decision of an arbitrator can also be appealed in much the same way as a decision of a Judge at a final hearing in the Court system, providing there are sufficient grounds for an appeal.
As with a private FDR, the choice of expert, timing and location of the process is set down by the parties, which can be less stressful and can save time and money.
Arbitration may well be suitable for parties who have been in negotiations but are unable to settle and are therefore looking at waiting many months for a final hearing in the Court which will be costly, stressful and lengthy. The option to go to arbitration, rather than waiting many months for a final hearing may therefore be a very sensible option in the right case.
If you would like further information on private FDRs or arbitration in relation to the financial aspects of your divorce, then please contact the Divorce, Family & Civil Partnerships team.