S v S (Arbitral Award: Approval) [Family Division]
| Jurisdiction | England & Wales |
| Judge | Sir James Munby,President of the Family Division |
| Judgment Date | 14 January 2014 |
| Neutral Citation | [2014] EWHC 7 (Fam) |
| Docket Number | Case No: GU12D00692 |
| Court | Family Division |
| Date | 14 January 2014 |
[2014] EWHC 7 (Fam)
IN THE HIGH COURT OF JUSTICE
FAMILY DIVISION
Royal Courts of Justice
Strand, London, WC2A 2LL
Sir James Munby
President of the Family Division
Case No: GU12D00692
Hendersons for the Petitioner
Family Law in Partnership for the Respondent
No hearing: application dealt with on paper
,
I have before me an application, transferred to me from the Guildford County Court at my direction, for the approval of a consent order which has been lodged with the court following, and intended to give effect to, an arbitral award made by Mr Gavin Smith in an arbitration conducted under the IFLA (Institute of Family Law Arbitrators) Scheme.
There is no doubt that in this case the court should approve the consent order, as I do. But it seemed to me appropriate to give some guidance about the proper approach of the court to such applications.
The IFLA Scheme
The IFLA Scheme is described by Sir Peter Singer in ' Arbitration in Family Financial Proceedings: the IFLA Scheme: Part 1', [2012] Fam Law 1353, and ' Part 2' [2012] Fam Law 1496. Up-to-date details about the Scheme and arbitrators accredited under it can be found on IFLA's website, ifla.org.uk.
For present purposes all I need say is that:
i) IFLA is a not for profit organisation, created by the Chartered Institute of Arbitrators (CIArb), the Family Law Bar Association, and the family lawyers' group Resolution, in association with the Centre for Child and Family Law Reform;
ii) IFLA arbitrations are conducted in accordance with the Arbitration Act 1996 and IFLA's Arbitration Rules (the Rules);
iii) IFLA arbitrators are all Members of the CIArb, that is, MCIArb;
iv) The IFLA Scheme covers financial and property disputes arising from relationship breakdown (Article 2 of the Rules);
v) The Rules contain a mandatory requirement (Articles 1.3(c) and 3) that the arbitrator will decide the substance of the dispute only in accordance with the law of England and Wales.
This last point is significant.
The facts
I can take the relevant facts very briefly. The parties were married in 1986 and separated in 2012. Their only child is now 19. A decree nisi on the wife's petition was granted early in 2013. In June 2013 the parties signed IFLA's Form ARB1, agreeing to arbitration in accordance with the Rules by Mr Smith in relation to their claims for ancillary relief and thereby binding themselves to accept his award. The arbitrator's Final Award is dated 7 November 2013. On 9 December 2013 the parties applied to the Guildford County Court seeking approval of the consent order. In addition to the draft consent order they lodged the Form ARB1, the Final Award, a Joint Statement of Information in Form D81 and, marked for dismissal purposes only, their Forms A.
The facts relevant to the subject matter of the arbitration are set out, clearly and comprehensively, in the Final Award. They concern only the parties, so I say nothingy more about them except to note that the Form D81 shows the matrimonial assets to be worth in excess of £1.5 but less than £2 million.
The legal context
The strong policy argument in favour of the court giving effect to an agreement that the parties have come to themselves for the resolution of their financial affairs following divorce has been recognised for a long time: see the discussion in X v X (Y and Z Intervening) [2002] 1 FLR 508 of the line of authorities of which Dean v Dean [1978] Fam 161, Edgar v Edgar [1980] 1 WLR 1410, Camm v Camm (1983) 4 FLR 577 and Xydhias v Xydhias [1999] 1 FLR 683 were the most prominent.
Thus by the turn of the Millennium it was well established that the court would not lightly permit parties who had made an agreement between themselves to depart from it. Indeed, as a matter of general policy what the parties had themselves agreed would be upheld by the courts unless contrary to public policy or subject to some vitiating feature such as undue pressure or the exploitation of a dominant position to secure an unreasonable advantage.
In X v X, para 103, I said that a formal agreement, properly and fairly arrived at with competent legal advice, should be upheld by the court unless there were "good and substantial grounds" for concluding that an "injustice" would be done by holding the parties to it. In propounding that formulation I adopted the language used by Ormrod LJ in Edgar v Edgar in preference to that of Thorpe J in Smith v McInerney [1994] 2 FLR 1077. I said that Thorpe J's references to "the most exceptional circumstances" and "overwhelmingly strong considerations" seemed to me, with respect, to put the matter perhaps a little too high. With the benefit of hindsight I was too questioning of what Thorpe J had said. Not for the first time he had seen, more clearly and presciently than others, the way in which the law was moving and, indeed, had to move.
There have of course been many significant developments in this area of the law since it was first set on its course by Ormrod LJ. Many have helpfully been identified by Baker J in AI v MT [2013] EWHC 100 (Fam), paras 20–21, 30–31. For present purposes three developments demand particular notice.
First, there was the identification and subsequent elaboration by Thorpe LJ of the concept of the 'magnetic factor' – the feature(s) or factor(s) which in the particular case are of "magnetic importance" in influencing or even determining the outcome: see, for example, White v White [1999] Fam 304, 314 (affirmed, [2001] 1 AC 596) and Crossley v Crossley [2007] EWCA Civ 1491, [2008] 1 FLR 1467, para 15. We see this approach, though not the label, carried forward in the fundamentally important statement of principle by the Supreme Court in Radmacher (formerly Granatino) v Granatino [2010] UKSC 42, [2011] 1 AC 534, para 75:
"The court should give effect to a nuptial agreement that is freely entered into by each party with a full appreciation of its implications unless in the circumstances prevailing it would not be fair to hold the parties to their agreement."
Secondly, mediation and subsequently other forms of alternative dispute resolution have become well established as a means of resolving financial disputes on divorce. As Thorpe LJ observed in Al Khatib v Masry [2004] EWCA Civ 1353 [2005] 1 FLR 381, para 17, "there is no case, however conflicted, which is not potentially open to successful mediation". By 2008 use of the collaborative law approach was being encouraged by the court: see the observations of Coleridge J in S v P (Settlement by Collaborative Law Process) [2008] 2 FLR 2040. The same year, writing extra-judicially in ' Statutory Arbitration and Ancillary Relief', [2008] Fam Law 26, Thorpe LJ ventured the view that "to extend the Arbitration Acts to reach all financial issues created by the breakdown on relationships is surely safe territory." Indeed, there is nothing in the Arbitration Act 1996 which on the face of it would preclude arbitration as a permissible process for the resolution of disputes rooted in family life or relationship breakdown. The Family Procedure Rules 2010 now encourage resort to alternative dispute resolution procedures in this as in other areas of family law: see FPR rule 1.4(e) and FPR Part 3. It was against this background that the IFLA Scheme was introduced in February 2012.
Thirdly, the court has adapted and abbreviated its processes to facilitate the appropriately simple and speedy judicial approval of such agreements. Where the parties are agreed on the terms of the consent order the court has available to it the process adopted by the parties in the present case. But in the context of collaborative law, Coleridge J, with the support of Sir Mark Potter P, was willing to adopt an even more streamlined process in S v P (Settlement by Collaborative Law Process) [2008] 2 FLR 2040.
Where, in contrast, one of the parties seeks to resile, the court has long sanctioned use of the abbreviated 'notice to show cause' procedure utilised in Dean v Dean [1978] Fam 161, Xydhias v Xydhias [1999] 1 FLR 683, X and X (Y and Z Intervening) [2002] 1 FLR 508 and S v S (Ancillary Relief) [2008] EWHC 2038 (Fam), [2009] 1 FLR 254. The approach here was well captured by Thorpe LJ in Xydhias v Xydhias [1999] 1 FLR 683, 692:
"If there is a dispute as to whether the negotiations led to an accord that the process should be abbreviated, the court has a discretion in determining whether an accord was reached. In exercising that discretion the court should be astute to discern the antics of a litigant who, having consistently pressed for abbreviation, is seeking to resile and to justify his shift by reliance on some point of detail that was open for determination by the court at its abbreviated hearing."
Moreover, in such a case the court, if need be of its own motion, can always, by the appropriately robust use of its case management powers, limit the ambit of the issues to be considered at the hearing; for example, as was done in both Crossley v Crossley [2007] EWCA Civ 1491, [2008] 1 FLR 1467, and S v S (Ancillary Relief) [2008] EWHC 2038 (Fam), [2009] 1 FLR 254, by focusing the hearing exclusively on those issues relevant to the magnetic factor(s).
Back of all this there is the increasing emphasis on autonomy exemplified by cases such as MacLeod v MacLeod [2008] UKPC 64, [2010] 1 AC 298, and Radmacher (formerly Granatino) v Granatino [2010] UKSC 42, [2011] 1 AC 534. As Lord Phillips PSC said in Radmacher, para 78:
"The reason why the court should give weight to a nuptial agreement is that there should be respect for individual autonomy. The court should accord respect to the decision of a married couple as to the manner in which their financial affairs should be regulated. It would be...
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