(1) Are relationship property arbitrations valid in New Zealand? 3
The Arbitration Act 4
The Property (Relationships) Act 4
The Family Courts Act 7
Public policy 8
Challenges to the agreement 9
Challenges to the award 10
Validity conclusions 12
(2) How relationship property arbitrations operate 12
(3) The potential advantages of court proceedings 14
(i)Coordination with other claims 15
(ii) Lower court fees 16
(iii) Reduced opportunity for procedural game-playing 16
(iv) Greater respect for the tribunal and its processes 17
(v) Precedent-setting for the wider public good 17
(4)The potential advantages of arbitration 17
(i)Procedural flexibility 18
(ii) Information-gathering powers 19
(iii) Speed 20
(iv) Finality 20
(v) Confidentiality 21
(vi) Choice of decision-maker 22
(vii) Ease of access 22
(viii) Continuity 22
(ix) Party autonomy 22
(x) The possibility of “med-arbs” 23
Delay is the bane of those involved in a relationship property dispute. A year can easily go by between separation and property settlement, often longer. In the meantime the parties struggle with stress, inability to plan, financial hardship, mounting legal costs, the unwelcome sharing of each other’s financial fortunes, and increasing difficulty in tracing relationship property.
To a degree the passage of time is unavoidable. Relationship property disputes require the gathering of complex and historic information from those rarely noted for meticulous record-keeping. But in most countries it is the system that must take most of the responsibility. Over-burdened judges cannot be expected to offer micro-management of cases, early fixtures, or prompt decisions.1
Is mediation the answer? Yes in many cases. But successful mediation frequently grows out of litigation. Adequate disclosure may require strong case management. Some parties need an impending trial before they will grasp the nettle. And there will always be a few parties who need someone else to decide for them. Where to turn?
At least overseas, parties have turned to arbitration. The treatment of family law arbitration differs from one jurisdiction to another but broadly three levels of sophistication are possible.
At the most modest level, family law arbitrations have been conducted as ad hoc proceedings conducted (rather infrequently it has to be said) against a generalised background of arbitration law. New Zealand and Ireland are jurisdictions where that form of family arbitration continues to be the only possibility.
At a more ambitious level lies institutional family law arbitration. Notable examples are England and Scotland. Family law arbitrations in these jurisdictions are still conducted against a background of unspecialised arbitration law but they are reinforced by voluntarily adopted family law rules and institutions.
In England a 2002 call to strengthen family law arbitration by giving it its own legislation went unheeded.2 Tired of waiting, some family law organisations and the Chartered Institute of Arbitrators combined in 2012 to produce their own solution. They adopted a set of rules (the IFLA Scheme) and an institution to administer them (the Institute of Family Law Arbitrators).3Under the IFLA Scheme, property and financial disputes are submitted to an accredited family law arbitrator for resolution in accordance with conventional substantive law. A similar scheme was set up in Scotland where the Family Law Arbitration Group Scotland (FLAGS) administers the arbitration of child and financial disputes in an institutional setting.4 Although these schemes are in their infancy, they appear to have been greeted with enthusiasm.5
Some jurisdictions have elevated family law arbitration to a third and ultimate level which gives family law arbitration its own statutory basis. In Australia the Family Law Act 1975 (Cth), as amended in 1991, authorises and regulates arbitration for property settlement, maintenance and financial agreements, both Court-ordered and by agreement. Similar legislation supports family law arbitration in Ontario,6 British Columbia, North Carolina, Colorado, Connecticut, Indiana, Michigan, New Hampshire and New Mexico.7 Specific legislation of this kind permits arbitration of issues such as custody and child or spousal support, as well as financial and property issues, in circumstances where there might otherwise have been room for debate over jurisdiction. It also enables the courts to later modify or correct those awards which deal with matters requiring continuing oversight.
New Zealand is still at level one. There is a modern and supportive statutory basis for arbitration in general but nothing specifically addressed to family law disputes. Nor is there presently any institutional setting in which family law arbitration can be conducted. Overseas experience suggests that family law arbitration has vast potential. In this country its use appears to have been confined to a few relationship property disputes submitted to individual arbitrators in ad hoc agreements.8
Although the arbitration of various kinds of family dispute may well be feasible and desirable under existing New Zealand legislation, this article will be confined to relationship property. Of all the fields of family law, relationship property is the most obvious candidate for arbitration because the Property (Relationships) Act 1976 (“PRA”) expressly provides for resolution of disputes by contract. Generally speaking whenever parties can settle an issue by contract they can submit it to arbitration.9 A relationship property contract is not subject to court approval and (unlike parenting and financial support disputes) the result does not require on-going monitoring to ensure that it remains appropriate.
For those reasons relationship property disputes seem to be peculiarly suitable for arbitration. However it would be unwise to advocate more use of arbitration for that purpose without answering four questions:
(1) Are relationship property arbitrations valid in New Zealand?
(2) How do relationship property arbitrations operate?
(3) What are the potential advantages of court proceedings?
(4) What are the potential advantages of arbitration?