There are various alternatives to resolving disputes by way of the adversarial system within the court system. These options are typically referred to as Alternative Dispute Resolution (ADR). Some of the forms of ADR that relate to family law include mediation, collaborative divorce, and arbitration. Although mediation is utilized most often, when an independent third-party facilitator cannot help the parties reach an agreement and the parties realize that someone must make a call, but they don’t want to be enmeshed in the court system, arbitration provides an excellent option.
Arbitration is a process by which parties enter into a contract or agreement to have the issues in their dispute determined by a third party called an arbitrator. Due to ever-increasing court dockets, cost of litigation, lack of privacy, and a myriad of other reasons, there has been a growing trend to resolve family law disputes through some form of ADR. For example, in New Jersey, divorcing parties or people with virtually any family law matter (with some limited exceptions) now have new and improved Rules of Court and forms to assist them and their lawyers in resolving their disputes outside the courtroom. The new rules allow cases to be placed on an “Arbitration Track.” The genesis of this process in New Jersey began with the scholarly decision penned by Justice Virginia Long about six years ago in the landmark New Jersey Supreme Court case of Fawzy v. Fawzy, 199 N.J. 456, 482 (2009). As a result of Justice Long’s direction, the NJ Supreme Court created the Ad Hoc Committee on the Arbitration of Family Matters. The report of this committee was ultimately accepted by the NJ Supreme Court in 2015 and resulted in substantial changes to the NJ Rules of Court regarding the arbitration of family law matters.
Although selecting arbitration has a handful of drawbacks, such as having to pay the arbitrator and the limited appeal options, it is typically viewed as a better approach due to its many benefits. In this writer’s opinion, those benefits far outweigh the limited drawbacks. The following is a brief overview of those benefits.
Although it varies from state to state, for the most part, everything that happens in court is a public record. Arbitration allows parties to resolve their disputes in a private setting in a fashion that they determine to be fair and efficient.
Although this is typically one of the limited drawbacks of arbitration, it can actually be a benefit in some cases. Sometimes, the arbitration process is quicker and less expensive than proceeding to trial in the court system. This is true even though the parties usually must compensate the arbitrator and perhaps may even have to pay for a record to be maintained for all or a portion of the arbitration proceedings. When in the court system, litigants are subject to the vagaries of the court’s docket and the many other litigants and case types (e.g., child abuse, children in court, domestic violence, etc.) that are before a judge at any particular point in time. It is not unusual for parties to be given a trial date that they must prepare for and then, when they appear, not be heard by the court for various reasons. This can happen multiple times, costing thousands of dollars of lost preparation and travel time. This is unlikely to ever occur in the arbitration process.
Arbitration is a method to resolve disputes outside of the court system by way of an impartial third party. That impartial third party may be a retired judge, an attorney, or any other individual that the parties believe is appropriate to resolve their dispute. The ability to select your arbitrator has many advantages that usually outweigh the fact that that arbitrator is being paid. For instance, as a paid professional, the arbitrator is dedicated to your case. When you’re scheduled to appear before the arbitrator, he or she will typically be prepared and paying attention to your matter only for the agreed-upon timeframe. Also, you can tailor the arbitrator to the issues. This is never possible in court. For example, if you are arbitrating the value of a business, parties have the ability to select a valuation expert rather than a lawyer or retired judge. Or, if they prefer, they may select multiple arbitrators; perhaps a valuation expert and a lawyer. The parties can tailor the arbitration process in a way that suits their finances and the issues to be addressed.
Parties may arbitrate certain limited issues without arbitrating every issue in the case. This may help resolve a case that is stalled due the parties’ inability to get past certain issues. The parties are usually assured of keeping their agreed-upon decision maker throughout the process. In litigation, you may have multiple judges assigned to your case as a matter proceeds in court. Also, in arbitration, you can select your hearing dates without having to compete for court time with other litigants. It is far easier to arrange schedules around children’s events, work, vacations, health problems, and a myriad of other issues that may interfere with a litigant’s or attorney’s appearance in court. Although the arbitration process may simulate the presentation of evidence in a trial within the court system, it can be modified where the parties mutually agree to make it less formal and more conducive to an expeditious and financially cost-efficient process. For instance, will the Rules of Evidence apply strictly, in a relaxed way or not at all. This also applies to whether a record must be kept. Of course, as in New Jersey, there are certain limits on some of this flexibility when dealing with child-related issues, but it does not substantially impact the benefit of arbitration in this writer’s opinion.
In arbitration, you can receive a final decision. In litigation, all final decisions are subject to appeal. At the end of the process, the arbitrator issues an “award” that addresses all of the issues that have been presented to the arbitrator to be resolved. After the award is issued, it is then submitted to the court to confirm the award by way of an order or judgment that is as effective as any order or judgment after a full trial within the court system. Unless the parties agree otherwise, there are limited grounds to object to the confirmation of an award. (In NJ, this differs depending upon the statute that the parties agree will apply to their arbitration process.) The parties may agree in advance that the award will be binding and not subject to appeal in any way. They may agree to be limited to the grounds to vacate or modify an award under the applicable statute. They may also agree (with limited exceptions) to expand the parameters of review to which the arbitration award may be subject. This helps provide the level of finality tailored to the parties’ particular sensitivities. This ability does not exist within the court system.
Therefore, although arbitration may not be right for everyone and has a few drawbacks, it is clear that in most instances, arbitration provides many advantages over traditional litigation in the court, including enhanced privacy and confidentiality, cost savings in some situations, the ability to select a fair and qualified decision maker, the ability to tailor the process in a way that suits the parties, flexibility, convenience, and finality.
Certified Divorce Financial Analyst
Business Valuators / CPAs