Relationship property arbitration

(2) How relationship property arbitrations operate

1. 
   Execution of arbitration agreement.
   
2. 
   Preliminary conference at which the procedural sequence is discussed and settled.
   
3. 
   Sequential filing and service of (i) asset and liability affidavits (ii) narrative affidavits and (iii) requests for particulars and documents from the other party (pleadings normally being unnecessary).
   
4. 
   Issues conference with two main purposes: (i) to consider whether the case can be resolved by agreement and any future process by which that might be promoted (“the settlement process”); and (ii) to identify issues and determine the way in which further information will be gathered and delivered (“the information-gathering process”).
   
5. 
   Implementation of those two processes.
   
6. 
   (If required) sequential filing and service of final affidavits.
   
7. 
   Hearing, with or without prior filing of submissions.
   
8. 
   Award.
   

Failing early settlement the most important step will be information-gathering. Any delay in the case overall will almost certainly be due to obstacles in that respect. All assets and liabilities of the parties must be established along with their values, their classification as relationship or separate property or personal or relationship debts, and other details affecting their division.

Information-gathering is an exercise in which arbitrators are particularly well-placed to help. Active assistance in identifying property details is best provided at one or more issues conferences. Ideally the first issues conference will be held after the initial exchange of affidavits and requests for discovery and particulars. Those attending normally include the parties, and often their accountants, as well as counsel. If the parties have already identified all relevant details in their affidavits, nothing more is required. More commonly, some further information-gathering process is called for.

Nothing useful can be proposed about information-gathering until some attempt has been made to identify the real issues in the particular case. There is no point in discovery in the abstract. When the real issues are ultimately traversed at trial, much conventional discovery turns out to have been either unnecessary or incomplete. Discovery must be focused upon those relationship property issues that really matter. So the parties and the arbitrator must start grappling with the merits of the case from the beginning. That is best done at a conference.

Once the issues have been defined, missing information can be sought through directions for targeted discovery, inspection of computer systems, interrogatories, oral questioning and/or reports by arbitrator-appointed experts such as independent accountants, valuers or experts in information technology.

Among those possibilities, the two warranting further mention are preliminary questioning and independent accountant reports. As to the first, an arbitrator can swear in the parties and their accountants as witnesses, and record their answers, at an issues conference. While final answers are unlikely at the first conference, the process will at least establish where and how the necessary further details can be ascertained. When the relevance of the required information is explained to the parties, it will usually result in a set of directions by consent. If necessary the same process can be followed at subsequent conferences or interim hearings.

The appointment of an independent accountant to investigate and report is another way of cutting through prolonged wrangling over the adequacy of discovery, particularly in cases of commercial complexity. The parties need to have full input into the choice of accountant and the issues on which the accountant is to report. In the writer’s experience the report that emerges frequently produces a settlement without more.

Normally those and similar procedures can be adopted by agreement in a cooperative atmosphere. Where necessary, however, there is an iron hand in the velvet glove. An arbitrator’s powers include the power to direct one or more hearings for any purpose conducive to resolution of the dispute,⁵⁴ to require a party to answer questions in an inquisitorial setting,⁵⁵ and to order any party to do all such things as may be reasonably needed.⁵⁶ Those who may be questioned include not only the parties but also accountants, company officers, employees and other witnesses. They can be brought before an arbitrator to give evidence, or to produce documents, at the instigation of either the arbitrator or one of the parties.⁵⁷ Given the power to direct that there be a series of hearings, that avenue can be used during the information-gathering phase or at the substantive hearing.

It is similarly open to an arbitrator to direct investigation and report by an independent accountant, and to require the parties to assist in that process, whether or not a party agrees.⁵⁸ It will often be necessary to combine this with the appointment of an IT expert to assist the accountant.

The next question is whether relationship property arbitrations are a good idea. Parties faced with relationship property litigation must decide whether to have it determined by a court or an arbitrator. Each route has its advantages and disadvantages.