May 25, 2016

Arbitration in Family Law Matters: Has Its Time Come?

Linda J. Ravdin

Alternative dispute resolution embraces a variety of processes designed to resolve legal disputes outside of a formal court proceeding.  One such option is binding arbitration.  In binding arbitration a neutral decision-maker, who could be a retired judge or a lawyer with expertise in the subject matter of the dispute, is appointed make a decision to resolve a legal dispute.  Arbitration has been used for many years to resolve commercial, construction, labor, and many other types of legal disputes.  It is rare in the family law arena, but that could change.

The Uniform Law Commission (ULC) is currently working on a Uniform Family Law Arbitration Act (the UFLAA).  It will be presented to the Commission at its annual meeting in the summer of 2016.  If the ULC adopts it, it can be considered for enactment by state legislatures.  Ideally, it would be enacted by all states and the District of Columbia so that there would be a uniform approach to arbitration of family law disputes across the United States.

There are a variety of family law matters that may be appropriate for arbitration:

• A dispute between a divorcing couple about allocation of property rights or a claim for spousal support;
• A dispute about how to divide up shared property under a premarital or postmarital agreement;
• Determination of the amount and duration of spousal support under a premarital or postmarital agreement that leaves this issue for resolution in the event of divorce;
• Resolution of a disagreement about the meaning of a premarital agreement, a postmarital agreement, or a marital separation agreement, or about how to carry out its terms;
• Determination of a claim for modification of contractual spousal support, e.g., a dispute about whether a support payor has become disabled under a provision for reduction upon disability;
• Resolution of a claim that a party breached an agreement.

Binding arbitration has not generally been considered suitable to resolve disputes about custody or support for a minor child.  Courts in Maryland, Virginia and D.C. have permitted parties to arbitrate such disputes, but the court retains ultimate authority over these matters.  As a result, for most such disputes, it will make more sense for parties who are unable to settle through negotiations or mediation to take their dispute directly to court, without going through arbitration first, only to have the dissatisfied party seek to start over in court.  The draft UFLAA provides a set of ground rules that would permit arbitration of child issues.

Some marital agreements provide for binding arbitration of a dispute that may arise in the future.  However, parties who do not have a contract with a binding arbitration clause can agree to go to arbitration after a dispute arises.  In either case, binding arbitration is voluntary, meaning that a party cannot be forced to arbitrate a dispute unless he or she has agreed in writing to do so.

There are pros and cons to binding arbitration.  Some of the benefits include:

• The proceedings are private. The hearings typically take place in a conference room and are not open to the public as are courtrooms.  Written materials submitted to the arbitrator are not public records as are such materials filed with a court.
• It typically takes less time from initiation to conclusion than a proceeding in a court, where a large volume of cases and overcrowded dockets can mean long delays.
• The lawyers for the parties can jointly select the arbitrator. They could choose a retired judge or a practitioner with experience in the subject matter of the dispute.
• The right to appeal is quite limited. This can mean that the dispute is resolved (for good or ill) once the arbitrator rules, and the court confirms the arbitration award, without the sometimes lengthy appeals that can cause a court case to take years to resolve.
• Parties have flexibility to agree on rules and procedures for the proceeding that meet the specific needs of the case.

There are disadvantages as well:

• The limited right to appeal means a party who is aggrieved by the arbitrator’s decision may have no recourse.
• Parties must pay for the arbitrator’s time (although the savings in legal fees resulting from not having to pay two lawyers to sit around the courthouse could offset this expense).
• Until courts have grappled with how much involvement they should have in custody cases that have first gone to arbitration, there will be a period of uncertainty about whether arbitration can effectively resolve these cases with reasonable finality.
• Even though arbitrators are to apply the same law as judges, parties have little recourse if they do not do so.
• The arbitrator does not have the power to enforce the decision. Therefore, a party may still need to go to court to force the other party to comply.

The draft UFLAA draws on earlier uniform arbitration acts created for business disputes, but seeks to provide a framework that is appropriate for the resolution of family disputes, especially in its treatment of child-related issues and domestic violence.  Some of the key provisions are:

• Parties can agree to submit any existing or future family law dispute to binding arbitration, including property and spousal support, custody and child support.  An arbitrator cannot grant a divorce or an adoption, terminate parental rights, grant a guardianship or adjudicate a claim of child neglect.  A party who entered into an agreement to resolve a future child-related dispute by arbitration is not bound by that agreement unless he or she affirms the agreement to arbitrate after the dispute arises or a court orders it.
• The parties can agree that the arbitration will be confidential.  Because arbitration is a voluntary process, a party need not agree to arbitrate unless the other party agrees to make it confidential.
• Applicable law. The arbitrator must apply the same law that a judge of the state would apply.  However, as discussed above, an arbitrator’s error of law is an insufficient basis on which to vacate his or her decision.
• Protection from abuse. An arbitrator’s qualifications must include training in identifying domestic violence and child abuse.  If the arbitrator determines there is a reasonable basis to believe a party’s safety is at risk, the arbitrator may not proceed until steps are taken to address the concern.  Moreover, the arbitrator must report suspected child abuse to the proper authorities and suspend proceedings.  An arbitrator may also make a temporary award to protect a party or a child from “harm, harassment or intimidation” and may impose procedures to protect a party or child from the risk of such conduct.
• Powers of the arbitrator. The arbitrator generally has the same powers as a judge, including the power to interview a child, appoint an expert, issue subpoenas, appoint an attorney for a child, compel parties to make discovery and issue an order prohibiting them from disseminating information obtained through discovery, sanction a party for misconduct during the arbitration, and make an award of legal fees and costs.  In addition, the arbitrator may make temporary orders to the same extent as a judge of the state.  For example, in Maryland, Virginia, and the District of Columbia, where judges can make awards of temporary child access, temporary spousal support, temporary child support, and advance legal fees, the arbitrator would have the same powers.
• Judicial review. The trial judge can review a child-related decision, but only on the record made at the arbitration hearing, to determine if it complies with state law and is in the child’s best interests.  Court review of other decisions, e.g., a decision about division of property, spousal support, or a claim of breach, is strictly limited, generally to a claim the award was procured by fraud or corruption or other misconduct of the arbitrator.  A mere mistake of fact or law on the part of the arbitrator is insufficient.
• Except for child-related disputes, for which the arbitrator must make a verbatim record, the parties can opt to dispense with a court reporter and transcripts.  This is consistent with the limited judicial review of an arbitrator’s decision; there is little need for a transcript if there is to be no appeal.

If enacted, the UFLAA will give parties and their lawyers another tool in the dispute resolution toolbox.  Because it would allow for arbitration of the full range of issues that are presented at divorce, including child issues, it may make arbitration more feasible for some parties who would otherwise be forced into court.  Moreover, parties who have a strong desire to maintain privacy, and who prefer a speedier resolution than they are likely to get from a court, albeit at the expense of a full right to appeal if they are unhappy with the result, may find arbitration a good alternative to going to court.