What does Haley v Haley mean for family arbitration?

Written by William Hogg - 13.11.20

Even prior to the outbreak of Covid-19, arbitration has been an increasingly popular form of dispute resolution in family matters. As one of few adversarial alternatives to court proceedings, arbitration is useful in dealing with delayed court dates and long waiting periods. 

A recent case where a husband believed his arbitral award was unfair has resulted in a significant ruling from the Court of Appeal. In essence, Haley v Haley [2020] ECA Civ 1369 has widened the scope to appeal arbitral awards, as the test, used to challenge the award, is much simpler. 

We discuss exactly how this outcome will affect the way family arbitration is used in the future below.

But first, what is arbitration?

Arbitration allows parties to receive a fixed outcome in the form of an arbitral award, without waiting for a court date. Parties can jointly choose their own arbitrator – one with the right expertise and experience – rather than rely on the ruling of a judge who they have no power to appoint. Parties will also have greater control over the date and location of the arbitration hearing, and often, this more streamlined process makes for lower overall legal costs. The award is then turned into a Consent Order by the Court.

Mainly for reasons of expediency and privacy, arbitration is especially helpful for high net-worth, high-profile clients. However, due to delays caused by lockdown, it is widely felt that the greater use of arbitration will include those parties with more modest assets. Lady Justice King expresses this sentiment in Haley v Haley [2020], paragraph 5:

“It is widely anticipated that parties in modest asset cases … will increasingly use the arbitration process in the aftermath of the Covid-19 crisis as the courts cope with the backlog of cases, which is the inevitable consequence of "lockdown.""

As does Sir Andrew McFarlane, President of the Family Division (Courts and Tribunals Judiciary):

“At a time when it is clear that the court will struggle to cope with the volume of cases in a restricted working environment, it is all the more important that parties, legal advisers and the judiciary should have express regard to all forms of non-court dispute resolution.”

So, what is the significance of the Haley v Haley outcome?

Previously, arbitral awards were incredibly difficult to appeal. Challenges to an award had to show that it was “obviously wrong” on a point of law, and the fairness of the outcome had “no place in a challenge to an arbitral award”. This, of course, meant lawyers would be hesitant to take many clients through arbitration, as the outcome would be set in stone – although this prospect could be attractive to certain parties.

In Haley, the Court of Appeal’s decision has widened the scope of appeals in arbitration. Instead of having to be “so wrong it leaps off the page”, an arbitrator’s decision simply has to be wrong, or unjust due to proceedings, and the fairness of the award is much more central.

William Hogg, Head of Dispute Resolution at Laurus, said this about the use of arbitration moving forward:

“I consider this ruling a real step forward. It means that the same rigorous scrutiny applied to court awards can also be applied to arbitration. This will give clients confidence when considering the arbitral route, and will add another layer of protection to an already attractive form of dispute resolution.”

What is the benefit to clients?

In Haley and even in cases where appeals were not successful, the benefits of having a very definite outcome are emphasised. Where parties can’t agree on an outcome, arbitration may be the most efficient way to reach a resolution and allow individuals to move on with their lives knowing the decision is final.

The recent case should not be a cause of concern for those clients seeking an authoritative outcome. This case will not undermine the finality of arbitration in future, as using the ‘wrong’ test does not guarantee a challenge will be successful.

Arbitration is still out of the public eye, offering much needed privacy – particularly to high-profile individuals – at a stressful time. The outcome of the Haley v Haley case should be a positive step in encouraging further uptake of arbitration at a time when it can confer significant benefit to clients. The ability to appeal will provide additional reassurance to clients who are attracted to the arbitration process for its other numerous advantages over standard court proceedings.

You can read more about how arbitration and other forms of dispute resolution work on our website.

To speak to a lawyer, call our Family Law Team on 020 3146 6300, or hello@lauruslaw.co.uk for friendly, professional and strictly confidential advice.