RELATIONSHIP PROPERTY ARBITRATION
Robert Fisher*
TABLE OF CONTENTS
Introduction 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?
Overseas experience 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.
** Hon Robert Fisher QC, LLD, arbitrator and mediator. My thanks are due to Augustine Choi and Kate Tolmie Bowden for their assistance with this article. 1 For backlogs in the Family Court in general see Ministry of Justice publication “Reviewing the Family Court, A Summary” September 2011 p 1. Subsequent reforms are too recent to assess their effectiveness. 2
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).3 Under 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 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.
2 David Hodson “England Needs Binding Family Law Arbitration” (July 2002)
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?
These will be addressed in turn.
(1) Are relationship property arbitrations valid in New Zealand? There would be no point in investing time and trouble in a relationship property arbitration if there remained a risk of invalidity at the end of the process. Validity begins with some basic contractual principles:
Absent any specific reason to the contrary, two citizens are free to enter into a binding compromise of a dispute over their respective rights.
Before there can be a binding contract the parties must have defined their rights with sufficient certainty that a court will be able to ascertain and enforce them.10
The parties can achieve that certainty by delegating resolution of unresolved questions or disputes to a third party.11 So long as the process of delegation is irrevocable, and provides a formula or mechanism for determining rights in a way that is independent of the parties, it will be binding.
Wherever parties have the power to resolve their respective rights by agreement, they can use the same power to submit a dispute about those rights to arbitration or expert determination (this article will be confined to arbitration). Broadly speaking, anything parties can settle by way of agreement can be the subject of a submission to arbitration.12
9 Law Commission Arbitration NZLC R20, 1991 at [231]. 10 Willetts v Ryan [1968] NZLR 863 (CA). 11 Attorney General v Barker Bros Ltd [1976] 2 NZLR 495, 498-499. 12 Law Commission Arbitration NZLC R20, 1991 at [231]. 4
Those propositions mean that parties to a family law dispute must be able to submit it to arbitration unless there is a particular legal prohibition against their doing so. The answer will differ from one country to another. It will also differ according to the nature of the family law dispute.
It is therefore important to bear in mind that the present discussion is confined to relationship property disputes and to those which are arbitrated in New Zealand. The question is whether a special rule preventing submission of such disputes to arbitration lurks in the Arbitration Act, the PRA, the Family Courts Act 1980, or public policy. Each must be considered in turn.
The Arbitration Act The potential scope of arbitration is determined by s 10 of the Arbitration Act 1996 which provides:
10. Arbitrability of disputes—(1) Any dispute which the parties have agreed to submit to arbitration under an arbitration agreement may be determined by arbitration unless the arbitration agreement is contrary to public policy or, under any other law, such a dispute is not capable of determination by arbitration.
(2) The fact that an enactment confers jurisdiction in respect of any matter on the High Court or a District Court but does not refer to the determination of that matter by arbitration does not, of itself, indicate that a dispute about that matter is not capable of determination by arbitration.
The public policy requirement in s 10 is reinforced by making its contravention one of the grounds upon which an arbitration award could be challenged.13 The result is that any dispute may be validly arbitrated unless precluded by “public policy” or “other law”.
For potential obstacles in “other law” it will be necessary to examine two other Acts, the PRA and the Family Courts Act 1980. In examining those Acts it will be necessary to bear in mind s 9(1) of the Arbitration Act which provides that “[w]here a provision of this Act is inconsistent with a provision of any other enactment, that other enactment shall, to the extent of the inconsistency, prevail.” After considering those Acts, consideration will be given to the question whether further obstacles may come from “public policy”.
The Property (Relationships) Act For present purposes the critical provisions in the PRA are ss 21 and 21A. Section 21 materially provides:
21 Spouses or partners may contract out of this Act (1) Spouses, civil union partners, or de facto partners, or any 2 persons in contemplation of entering into a marriage, civil union, or de facto relationship, may, for the purpose of contracting out of the provisions of this Act, make any agreement they think fit with respect to the status, ownership, and division of their property (including future property). The purpose of s 21 is to permit contracting out of the PRA, whether in whole or in part. There seems no reason in principle why a couple should not include an arbitration clause in their contracting out agreement. The agreement must be “with respect to the status, ownership, and division of that property”. An agreement to arbitrate any dispute over their property must qualify as an agreement “with respect to” the status, ownership, and division of the property.
13 Arts 34(2)(b)(ii) and 36(1)(b)(ii)). 5
The alternative basis for an arbitration agreement is s 21A which materially provides:
21A Spouses or de facto partners may settle differences by agreement
(1) A husband and wife or de facto partners may, for the purpose of settling any differences that have arisen between them concerning property owned by either or both of them, make any agreement they think fit with respect to the status, ownership, and division of that property.
Section 21A is the relevant basis for an agreement if a relationship property dispute has already arisen before the parties decide to submit it for arbitration. Most agreements to settle property differences define the parties’ final property rights in the agreement itself but this need not be so. All that s 21A requires is that the agreement be “for the purpose” of settling the differences and that it be “with respect to the status, ownership, and division of that property”. An agreement to resolve property rights by arbitration has that purpose, even though final definition of the rights will come later.
Section 21D enumerates some of the topics which agreements under ss 21 or 21A may address but it expressly provides that the list “does not limit the generality of sections 21 to 21B”. Sections 21A and 21B, too, are entirely consistent with agreements to submit a relationship property dispute to arbitration.
As to enforcement of the submission agreement, s 21L provides:
21L Enforcement of agreement
(1) Remedies that, under any enactment or rule of law or of equity, are available for the enforcement of contracts may be used for the enforcement of agreements under section 21 or section 21A or section 21B.
(2) This section is subject to the provisions of this Part.
Once the parties have agreed to arbitrate, one party can initiate the process by arranging for the appointment of an arbitrator. If the other party fails to cooperate, the initiating party can have an arbitrator appointed by default under the Arbitration Act, sch 2, cl 1. Any attempt by the other party to commence court proceedings would be met by a stay of proceedings pursuant to the Arbitration Act 1996, sch 1, art 8. A stay in those circumstances would appear to be one of the “remedies … under any enactment” which a court would grant pursuant to s 21L of the PRA. The arbitration award itself is enforceable by the courts as a judgment under art 35 of sch 1 to the Arbitration Act.
That positive support for arbitration jurisdiction must then be compared with other features of the PRA which at first sight might seem inconsistent with arbitration. One is the fact that many of the discretions and powers in the Act are expressed as those of the “court”.14 “Court” is broadly defined in s 2 as the Family Court or other court having jurisdiction in the proceedings.
Use of the word “court” in the PRA would seem to be a classic case for the application of s 10(2) of the Arbitration Act. The effect of s 10(2) is that the fact that an Act confers jurisdiction on the High Court or a District Court, but does not refer to the determination of
14 For example ss 13, 14A, 15, 15A, 17 and 17A. 6 that matter by arbitration, does not, of itself, indicate that a dispute about that matter is not capable of determination by arbitration.
The other feature of the PRA requiring consideration is s 22. It provides:
22 Jurisdiction
(1) Every application under this Act must be heard and determined in a Family Court.
(2) This section is subject to any other provision of this Act that confers jurisdiction on any other court.
(3) Regardless of subsections (1) and (2), a Family Court Judge may order that proceedings be transferred to the High Court if the Judge is satisfied that the High Court is the more appropriate venue for dealing with the proceedings, because of their complexity or the complexity of a question in issue in them.
(4) The Family Court Judge may transfer proceedings on the application of a party to the proceedings or on his or her own initiative.
(5) Proceedings transferred to the High Court continue in that court as if they had been properly commenced there.
Although s 22(1) states that applications are to be heard and determined by the Family Court, it seems reasonably clear that this was not intended to exclude arbitration.
The sole object of the current s 22(1) appears to have been to reverse the primacy between the High and Family Courts. Before its replacement in 2001, s 22(1) provided that “The High Court and a Family Court shall each have jurisdiction in respect of proceedings under this Act: Provided that a Family Court shall have no jurisdiction … where proceedings … are pending in the High Court at the date at which the application is made”. The original s 22 therefore gave primacy to the High Court in certain circumstances where the proceedings overlapped.
The effect of the 2001 amendment was to reverse that primacy. All proceedings must now begin in the Family Court, albeit subject to the possibility of later transfer to the High Court. The original s 22 was expressed in an enabling form. It was consistent with the sharing of jurisdiction with other tribunals such as arbitrators. It seems highly unlikely that in reversing the primacy between the two courts in that way, Parliament intended to exclude arbitral jurisdiction by a side-wind.
This view gains strength from the fact that s 22(1) can operate only where there is an “application under this Act”. “Application” is relevantly defined as “a formal request to an authority”.15 In a legal context it is generally used to describe the commencement of court proceedings by lodging a request that a court exercise an existing jurisdiction to grant the applicant a particular form of relief. Courts do not need to wait for parties to confer jurisdiction upon them by agreement. They already have the jurisdiction to determine disputed rights. One party can, and normally does, make an application for relief.
15 The Oxford English Dictionary (2nd ed OUP Oxford 2005). 7
The term “application” is less easily applied to arbitration. A party does not begin an arbitral process by making a substantive “application” in any normal sense. Nor does a party come to a potential arbitrator asking him or her to exercise an existing jurisdiction. An arbitration is commenced by an agreement between two or more parties that they will ask an arbitrator to decide between competing points of view. Only a strained use of the word would allow this process to be described as an “application”. And if there is no “application”, there is nothing upon which s 22(1) can operate.
It seems reasonable to conclude that the purpose of s 22 of the PRA was to remove the potential for demarcation issues between the High and Family Courts. It does so by defining the allocation of jurisdiction between them. The provision says nothing useful on the subject of arbitration.
The result is that arbitration jurisdiction finds positive support in the power to contract under ss 21 and 21A. Related provisions in ss 21D and 21L are consistent with arbitration. The frequent use of the word “court” in the PRA is not inconsistent with arbitration. Commencement in the Family Court under s 22(1) is concerned solely with the relationship between the High and Family Courts.
Relationship property arbitration is therefore consistent with the PRA. The next question is whether it is also consistent with the Family Courts Act.
The Family Courts Act Section 11(1) of the Family Courts Act 1980 materially provides that “[a] Family Court shall hear and determine all such proceedings as are to be heard and determined by such a court under or by virtue of any of the provisions of … the Property (Relationships) Act 1976”.
There is a certain redundancy in these words. Their effect is that if one of a number of stated Acts, such as the PRA, requires proceedings to be heard by the Family Court, the Family Courts Act will endorse what the other Act has already said on that subject. It must equally follow that if no other Act requires that the proceedings be heard by the Family Court, the Family Courts Act will not make that requirement.
By this point we have established that whenever an application under the PRA is filed in court, s 22 of that Act requires that it be heard and determined in the Family Court rather than the High Court subject to a discretion to the contrary. But we have also established that s 22 does not extend to arbitration. As with s 22, s 11 of the Family Courts Act is confined to jurisdictional demarcation between the two courts.16 It says nothing as to jurisdiction where no court is involved. Section 10 of the Arbitration Act governs that situation.
The Family Courts Act is not an obstacle to arbitration. What remains for consideration is the common law concept of public policy.
16 For the same view see AAP Willy Arbitration in New Zealand (Butterworths, Wellington, 1997) at [1.5]. 8
Public policy The PRA is primarily concerned with the property consequences of contribution to marriage or a de facto relationship. These consequences are closely defined in the central provisions for division of property (ss 8 to 18C). In general these provisions are concerned with matters other than family support (broadly the obligation to maintain a child or former spouse due to a past or present family relationship).
For the most part, family support obligations have been left to the Family Proceedings Act 1980, the Child Support Act 1991 and/or the Family Protection Act 1955. However in certain ring-fenced areas, support can also arise in proceedings under the PRA. The areas are economic disparity,17 discretions affecting children,18 occupation of the family home,19 vesting of tenancies20 and the form in which the property division should be implemented.21 In exercising those discretions, a court must also have regard to any existing orders or agreements for support and may itself make orders in that regard.22 In short, support issues can arise on the periphery of dividing property under the PRA.
Traditionally, the courts refused to enforce agreements that purported to oust the jurisdiction of the courts. Agreements affected in that way included those in which a wife or child purported to contract out of the right to seek maintenance and support through the courts. The rationale was that if husbands and parents failed to discharge their support obligations, the community as a whole would need to shoulder the burden. For that reason it was thought that family support obligations ought to be subject to oversight by the courts. The view was that husbands and parents should not be free to contract out from them. Agreements treated as void in that way included those in which wives agreed to accept defined sums by way of maintenance and not to seek more,23 those which purported to surrender rights under the Family Protection Act24 and those which denied a father’s obligation to maintain a child.25 There is little doubt that in an earlier age, relationship property arbitrations would have run foul of the courts’ public policy requirements in relation to family support.
All that has changed. There have been three developments.
First, the courts no longer have exclusive control over entitlement to support. Parliament has given spouses the power to enter into binding agreements governing spouse and child support.26 There is a growing view that spouses and parents should be encouraged to resolve their own differences by agreement.27 17 PRA ss 15 and 15A. 18 s 26. 19 s 27. 20 s 28. 21 ss 26, 29, 30, 31 and 33. 22 s 32. 23 A v A [1967] NZLR 357. 24 Re Julso [1975] 2 NZLR 536. 25 Deans v Supplementary Benefits Commission [1972] NZLR 536. 26 Currently the Child Support Act 1991 s 58. 27 Ministry of Justice “Family justice reform: Questions and answers” (23 May 2014) http://www.justice.govt.nz/policy/justice-system-improvements/family-court-reform/family-justice-reform- questions-and-answers. 9
Secondly, recent decades have seen a strong public policy impetus in support of arbitration as a method of resolving disputes. The trend has been evident in both the common law28 and the Arbitration Act. The first purpose of the Arbitration Act is “to encourage the use of arbitration as an agreed method of resolving commercial and other disputes…”.29 Relationship property disputes are “other disputes”. The effect of that Act is that arbitration of such disputes is to be encouraged.
Thirdly, and most importantly, spouses have been given the power to enter into binding relationship property compromises. Parliament did not make these compromises conditional on court approval. Nor did it see the necessity for any independent mechanism for protecting the interests of children or a spouse’s right to support. The power to settle differences by contract has been entrusted to the parties. It would be odd if the parties were free to agree on rights themselves but not the mechanism by which those rights were to be determined. There is nothing in the relevant statutes or the common law to suggest that a distinction of that kind was intended.
It seems reasonable to conclude that the mere fact that a relationship property dispute has been resolved by arbitration rather than a court would not of itself be regarded as contrary to the public policy of New Zealand. At least where the relationship property regime which formed the basis of the award was the one which would have been applied by New Zealand courts in any event, the award would be enforced. That makes it unnecessary to consider the potential role of validation under the Illegal Contracts Act 1970.
There is the potential for a different outcome if the award is based on a radically different relationship property regime with features which a New Zealand Court considered to be contrary to public policy.30 Whether an award of that kind might be unacceptable to a New Zealand court is an intriguing issue, but one which is beyond the scope of this article.31
Challenges to the agreement The validity of an arbitration award is to be distinguished from challenges to the agreement from which it stemmed. Jurisdiction to arbitrate a relationship property dispute can be derived from an arbitration clause in a contracting out agreement entered into before there is any dispute32 or a submission agreement after a dispute has arisen.33 In either case an agreement to submit a dispute to arbitration can be set aside on the ground that adequate formalities had
28 Attorney General v Mobil Oil NZ Ltd [1989] 2 NZLR 649 (HC) (importance of upholding arbitration agreements given greater weight than competing policy objectives of the Commerce Act 1986); CBI NZ v Badger Chiyoda [1989] 2 NZLR 669 (CA) (agreement contracting out of right to seek High Court review of award valid). 29 s 5(a). 30 For a helpful discussion of potential problems for Islamic Arbitration of relationship property disputes, albeit considered from an undue influence perspective, see Laura Ashworth “Islamic Arbitration of Family Law Disputes in New Zealand” (unpublished dissertation for LL.B (Hons) University of Otago 2010) at pp 36 to 38. 31 Ashworth, above, tackles that issue. 32 PRA, s 21. 33 PRA, s 21A. The writer has seen both forms of arbitration in New Zealand. 10 not been observed,34 that giving effect to the agreement would cause serious injustice,35 or that something different is required in the interests of children.36
As to the first of those, formalities will have been observed if the agreement was in writing and the signature of each party had been witnessed by a lawyer who certified that the party in question had received independent legal advice as to its effect and implications. Failure to observe those formalities will render the agreement void37 unless the Court is satisfied that no material prejudice has resulted.38
As to the second, serious injustice does not seem a serious possibility if the dispute is to be decided according to conventional PRA principles. Whatever view one might take as to the relative merits of arbitration and court proceedings, it is difficult to see how the mere adoption of one forum rather than the other could be regarded as a source of serious injustice. There may be more room for argument where the parties’ agreement adopts a radically different relationship property regime. It is conceivable that some regimes could depart so far from values adhered to in New Zealand that the courts would regard their application as a source of serious injustice.39
As to the third ground for setting aside, the possibility that an agreement might be challenged as contrary to the interests of the children seems theoretical only. If the substantive principles invoked by the agreement are drawn from the PRA, the choice between arbitrating and litigating in court seems immaterial for present purposes. An agreement could adopt a relationship property regime that treated children in a way that differed markedly from the New Zealand model. But orders in favour of children are made so rarely under the PRA itself40 that it is difficult to think of any circumstances in which children would be prejudiced by adopting a different relationship property regime.
Challenges to the award Those are all grounds upon which an arbitration agreement could be challenged before an award is given. More important, however, are the grounds upon which an award might be set aside once the arbitration is over. By that stage one party or the other is likely to be aggrieved by the arbitrator’s decision. What steps could he or she take to escape the decision?
The Arbitration Act creates an exhaustive code for challenging awards. Appeals are possible only if the parties had been unwise enough to voluntarily create that opportunity for further litigation, and even then any appeal must be strictly confined to questions of law.41 Awards
34 PRA, s 21F. 35 PRA, s 21J(1). 36 PRA, s 26(3). 37 PRA, s 21F. 38 PRA, s 21H. 39 See further Ashworth, above, n 30. 40 See cases assembled in Fisher on Matrimonial and Relationship Property (loose leaf ed, LexisNexis) at paras 18.83 and 18.84. 41 Arbitration Act sch 2, cl 5; Ewan and Brookside Farm Trust Ltd v Gallaway Cook Allan [2014] NZSC 75 at [14] and [89]. 11 can be set aside on review, or found to be unenforceable, only if one of the few stated grounds is established.42
Of the possible grounds for setting aside or declining to enforce under the Arbitration Act, only two could be regarded as having particular application to relationship property awards. One ground is that the arbitration agreement was not valid.43 That would permit the argument that the parties had failed to observe the formalities for a valid agreement required by s 21F of the PRA. The other relevant ground is that the award or its enforcement would conflict with public policy of New Zealand.44 That could permit the argument that the relationship property regime adopted under the agreement was not one that is acceptable in New Zealand.45 Neither ground could arise if the parties had attended to normal signing formalities when they signed their arbitration agreement and had invoked either the PRA relationship property regime itself or some other regime regarded as broadly acceptable in a New Zealand society.
There does not appear to be room for a third potential ground for setting aside based on s 21J (serious injustice) or s 26 (interests of the children) of the PRA. Under the Arbitration Act the only relevant ground for setting aside an award is that the “agreement is not valid under the law to which the parties have subjected it, or, failing any indication on that question, under the law of New Zealand”.46 So the Arbitration Act ground is all about contractual validity. The jurisdiction conferred by s 21J of the PRA, on the other hand, permits a court to set aside a valid agreement on the ground that “giving effect to the agreement would cause serious injustice.” In exercising that discretion the Court must take into account a range of considerations including “the length of time since the agreement was made” and “whether the agreement has become unfair or unreasonable in the light of any changes in circumstances since it was made”.47 This is clearly the act of judicially modifying existing contractual rights rather than declaring that the agreement was invalid from the beginning in the normal contractual sense. The Act expressly preserves existing rules of law and equity for determining validity.48 Since the relevant ground for setting aside an award under the Arbitration Act is confined to contractual validity, it is not an invitation to revisit the justice of the agreement under s 21J of the PRA. The same considerations must apply to the jurisdiction to intervene on behalf of children under s 26 of the PRA.
Nor does the jurisdiction to intervene under ss 21J or 26 of the PRA extend to the award itself. The jurisdiction to set aside is confined to “agreements”. Certainly the PRA is a code to which other statutes are subject49 and any other statute prevails over the Arbitration Act if there is inconsistency between the two.50 But there is no conflict between the PRA and the
42 For review see sch 1, art 34 and for refusal to enforce see sch 1, art 36. 43 Arts 34(2)(a) and 36(1)(a)(i) 44 Arts 34(2)(b)(ii) and 36(1)(b)(ii) 45 See text to n 42. 46 1st sch, arts 34(2)(a) and for refusal to enforce see art 36(1)(a)(i). 47 PRA, s 21F(4)(b) and (d). 48 PRA, ss 21G and 21J(3). 49 PRA, ss 4 and 4A 50 Arbitration Act, s 9(1). 12
Arbitration Act in this respect. The PRA governs challenges to an “agreement”; the Arbitration Act governs challenges to an “award”.
An agreement and an award are distinct legal concepts. An agreement is the basis for a cause of action in contract. The cause of action is converted into an order susceptible to direct enforcement by the State when a court or arbitrator takes the further step of promulgating a decision defining the parties’ substantive rights.
For so long as the agreement remains the basis for the parties’ rights, it continues to be subject to challenge under ss 21J and 26 of the PRA. The position changes once an award is issued. The award has its own statutory foundation and is independently enforceable.51 Once the award is issued it becomes the source of the parties’ rights unless and until the award is set aside. It can be set aside only if the case is brought within one of the statutory grounds specific to arbitration awards. As noted earlier, one of the grounds is invalidity of the antecedent arbitration agreement. But it is important to note that invalidity of the agreement does not of itself invalidate the award. Not even a specific judicial finding that the agreement was invalid is enough on its own. It is only if the Court both finds that the agreement had been invalid, and goes on to exercise a remedial discretion against the award, that the award will be set aside.52
The statutory code for setting aside arbitration awards is an exhaustive one. It leaves no room for a collateral challenge based on the PRA. It follows that arbitration awards are beyond the reach of ss 21J and 26 of the PRA.53
Validity conclusions It is reasonable to conclude that New Zealand relationship property awards are fundamentally valid and final. They are challengeable on the ground that appropriate signing formalities had not been observed when the arbitration agreement was signed or that the parties had opted out of the conventional relationship property regime into something so radical that it is unacceptable in this country. But with those minor qualifications, a relationship property award is no more open to challenge than an award based on any other field of law.
(2) How relationship property arbitrations operate In relationship property cases of complexity and substance, the arbitration sequence will usually be along the following lines:
(a) Execution of arbitration agreement.
(b) Preliminary conference at which the procedural sequence is discussed and settled.
(c) 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). 51 Arbitration Act, sch 1, art 35. 52 Carr v Gallaway, above, n 41 at [3], [73] to [86] and [95]. 53 For a contrary view see Ashworth, above, n 30 at 33 and 38. 13
(d) 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”).
(e) Implementation of those two processes.
(f) (If required) sequential filing and service of final affidavits.
(g) Hearing, with or without prior filing of submissions.
(h) Award.
In that sequence settlement is clearly the first objective.
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 14
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.
(3) The potential advantages of court proceedings It will be convenient to begin with the advantages of court proceedings. Potential advantages to consider are (i) the opportunity to combine the relationship property dispute with other claims, (ii) lower tribunal fees, (iii) reduced opportunity for procedural game-playing, (iv) greater respect for the tribunal, and (v) the precedent-setting function of court judgments. Each will be considered in turn.
(i) Coordination with other claims A significant advantage of court proceedings is that claims based on different statutes and common law causes of action can be resolved in one proceeding or hearing. Statutory claims
54 See generally Arbitration Act 1996, sch 1, art 19. 55 Schedule 2, cl 3(1)(a). 56 Clause 3(1)(j) 57 Art 27(2)(a) sch 1. 58 Art 26 sch 1; PRA s 38. 15 that can be usefully combined with proceedings under the PRA in this way include those derived from the Family Proceedings Act (particularly s 182), the Trustee Act 1956, the Family Protection Act 1955 and the Law Reform (Testamentary Promises) Act 1949. Related causes of action at common law include claims in contract or tort and claims against trustees based on constructive trusts and on breach of trust.
The extent to which such claims and causes of action can be combined with a relationship property arbitration is beyond the scope of this article. At least some could be combined with relationship property in one arbitration if all interested parties have full capacity and agree. Claims in contract or tort, and claims against trustees based on constructive trusts or breach of trust, are obvious examples.
In many other cases, however, it will be beyond the competence of the parties to submit their dispute to arbitration. The complication is likely to be the involvement of children, unascertained beneficiaries, inalienable family support rights after death or questions of family status. One point of view is that even in those cases it is worth conducting an arbitration on the basis that each party makes a contractual commitment to support a consent court order reflecting the terms of the award.59 However a more conservative approach is to assume that if it would take a consent court order to make any settlement of the dispute legally binding, it may be quicker and safer to submit the whole dispute to the court in the first place.
It follows that when considering an arbitration over rights under the PRA, an adviser should consider the following questions:
Is the dispute confined to the PRA or does it spill over into other statutes or causes of action?
If additional claims are involved, will it be efficient to determine them in isolation from the relationship property dispute or should they all be heard together?
If they should all be heard together, is it clear that the additional claims can be validly submitted to arbitration?
If it is clear that the further claims can be validly submitted to arbitration, do all interested parties have full capacity and agree to that course?
If it would be more efficient to hear all claims together, and a court order would be needed to legitimise all or part of any overall settlement of the dispute, it will usually be safer to bring all the claims – including the relationship property dispute - in the courts.
(ii) Lower court fees Forum fees will normally be higher for arbitrations than court proceedings.
59 See the IFLA scheme discussed earlier in the text accompanying n 3. 16
Fees payable for relationship property proceedings in the Family Court involve an initial filing fee of $700 and a hearing fee of $906 for each half-day or part half-day.60 Thus a case involving interlocutory hearings of two days, and a substantive hearing of four days, requires court fees in the order of $11,500. For the same proceedings in the High Court the initial filing fee is $135061 and there is a hearing fee of $1600 per half-day62 resulting in equivalent fees in the order of $20,550. Fees payable for an arbitrator, stenographer and venue are likely to exceed that figure.
However to stop at that point would be misleading. Only a very small proportion of relationship property disputes proceed to judgment or award. Most settle as soon as the parties have enough information to carry out a reliable property analysis.
Information is the key. This is where an arbitrator should be in a position to help. An efficient and prompt information-gathering process should make a full property analysis and settlement possible at an early stage. There is an obvious corollary in cost-saving. And for the few relationship property disputes that do go to a full hearing, the relative finality of an award compared with an appealable court judgment is likely to reduce costs further. Taken overall, therefore, it seems doubtful whether court proceedings will prove to be more economical than arbitration.
(iii) Reduced opportunity for procedural game-playing For those parties (or their lawyers) who are intent on obstruction and time-wasting, arbitration can offer certain opportunities for which there is no court equivalent. A party can object to the suitability of an arbitrator,63 challenge the scope of the arbitrator’s jurisdiction64 or attempt to have the arbitrator removed.65 In relationship property there is also the opportunity to challenge the relevant arbitration clause or submission agreement prior to the award on the ground that giving effect to it would cause serious injustice for the purpose of s 21J of the PRA.66
Those opportunities must be compared with others that are uniquely available in court proceedings. In particular the right to appeal against, or judicially review, interlocutory or substantive decisions in court proceedings is much wider.
However unmeritorious challenges might be, an obstructive litigant can make any form of proceedings lengthy and expensive. It seems doubtful whether, taken overall, the opportunities for procedural game-playing are significantly lessened by litigating in court.
(iv) Greater respect for the tribunal and its processes A few litigants find it hard to respect the process. Procedural timetables are flouted. Hearings are disrupted. Unnecessary friction and delay results.
60 Family Courts Fees Regulations 2009, reg 5B and sch 3. 61 High Court Fees Regulations 2013 reg 5 sch item 4. 62 Item 20. 63 Arbitration Act 1996, sch 1, art 11. 64 Same place art 16. 65 Same place art 12(2). 66 See discussion of s 21J in connection with finality of awards below. 17
It might be argued that for some, the image and trappings of a court will have a useful psychological impact that the relative informality of an arbitration lacks. One can only speculate. But arbitration is possible only where both parties have voluntarily elected to use that procedure. Parties seem more likely to respect the process that they themselves have chosen than one in which one of the parties is a reluctant participant. Much more important will be the way in which the individual judge or arbitrator chooses to run his or her proceedings.
Overall, it seems unlikely that respect for the tribunal will be a useful consideration when choosing between the two.
(v) Precedent-setting for the wider public good It is often pointed out that only court judgments contribute to the development of the law. Arbitration awards are confidential. It is unquestionably in the interests of the public at large that a court be chosen as the forum. Only then will judgments be published for the edification of all.
It is possible that in time systems will be developed which enable dispute resolution organisations to publish case summaries in a way that does not endanger the confidentiality of the parties. For example memoranda could be published summarising the principles applied in a case and only such facts, if any, as could under no circumstances be traceable to individuals. As this would require much editorial input it could be undertaken only by special interest groups such as a family law arbitration service. But unless and until family law arbitration in New Zealand reaches that level of sophistication, it must be assumed that the price of arbitration will be loss of valuable precedents for the wider public.
None of this is of interest to the actual litigant. It is unrealistic to expect that in deciding which forum to choose, litigants will be influenced by a desire to contribute to family law jurisprudence. They prefer confidentiality, minimal cost, and a speedy end to uncertainty, so long as this can be achieved without risk to a just outcome. Advisers would seem bound to respect their clients’ wishes in that respect.
(4) The potential advantages of arbitration The benefits of court proceedings must be compared with the potential advantages of arbitration. Handled in the right way, arbitration should offer superior procedural flexibility, information-gathering powers, speed, finality, confidentiality, choice of decision-maker, ease of access, continuity, party autonomy and the possibility of a “med-arb”. These will be discussed in turn.
(i) Procedural flexibility The core requirements of relationship property proceedings are to identify the relevant assets and liabilities, place values on each, identify the issues, assist each party to obtain any further information required in relation to those issues, provide each party with the opportunity to adduce evidence and submissions, and arrive at a decision. Those requirements must be met whether the dispute is submitted to the courts or to arbitration. 18
Both forums are capable of offering, if appropriate, formal pleadings, further particulars, discovery, interrogatories, non-party discovery, orders for security, interim injunctions, preservation and inspection orders (referred to as “interim measures” in arbitration), witness summonses, and directions as to mode of evidence.67
Up to that point there will be little practical difference between court and arbitration. Where the real difference lies is flexibility. The procedural constraints upon arbitrators are few and rudimentary: they must treat the parties equally,68 comply with natural justice,69 observe any procedural requirements in the arbitration agreement, and allow each party to present his or her case.70 But this leaves arbitrators largely free to conduct the arbitration “in such manner as the arbitral tribunal considers appropriate”.71 In practical terms the arbitration can be run in the way that best suits the parties.
Given that level of flexibility, arbitration should not be thought of as a uniform procedure. Each dispute calls for its own process. In deciding what procedure a dispute calls for, the two questions to ask are (i) how much can sensibly be spent in resolving this dispute (“the Rolls Royce continuum”) and (ii) what techniques best suit this particular case (“let the punishment fit the crime”).
The Rolls Royce continuum
At virtually every point in an arbitration a procedural choice lies between the elaborate and the rudimentary.
At the elaborate end of the scale, there may be a panel of three arbitrators, formal pleadings, full Peruvian Guano discovery, personal attendance at conferences and interlocutory hearings, service of full briefs of evidence and a formal oral hearing at which a full daily transcript is distributed. That can be followed by rights of review and appeal to the High Court, the Court of Appeal and the Supreme Court.
At the other end of the scale there may be a sole decision-maker sitting as expert rather than an arbitrator, an exchange of letters to identify the issues, no discovery, and a decision made on the papers without hearing or right of appeal or review.
Most relationship property arbitrations fall somewhere near the middle of that procedural continuum. But where a case is placed on the continuum should be a conscious decision to be exercised individually. The procedure warranted for an argument over the division of a commercial empire is unlikely to suit an argument over a house or car. Courts are less attuned to the need for proportionality in time and cost.
Let the punishment fit the crime
67 Arb Act sch 1 arts 17A to 17J, 19(2) 23, 24, 27 and sch 2 cl 3; see also the power to issue interim awards: s 2(1) and art 35. 68 Arbitration Act 1996, sch 1 art 18. 69 Arts 34 and 36. 70 Art 18. 71 Art 19. 19
The second question is which techniques will best resolve the particular dispute. All relationship property proceedings have the assembly of past and present property details at their core. But some may be dealt with in a round table discussion, some on the papers without a hearing and some at an oral hearing with cross-examination on the affidavits.
Due to their training and background, lawyers instinctively lean towards procedures that mimic the approach that would have been taken in court. Court-like procedures also have the security of the familiar. Lawyers are less likely to feel at home in a kitchen with everyone talking at once and the arbitrator conducting a test to see which spouse the disputed cat prefers. But arbitration is an opportunity for flexibility and imagination. What matters is the outcome for the parties, not legal convention.
The object is to be constantly on the alert for shortcuts which save time and money without prejudicing the outcome. There is more room for this in arbitration than in court proceedings.
(ii) Information-gathering powers Reference has previously been made to the extensive information-gathering powers of an arbitrator.72
Some of those powers are shared with courts. Discovery, interrogatories, and further particulars are obvious examples. The same is broadly true of the power to direct the appointment of an independent accountant to investigate and report. The courts can direct an investigation.73 The High Court (although not the Family Court) can also appoint an independent expert74 and/or order inspection of property and computer systems.75
However there is an important difference between arbitration and the courts when it comes to the examination of parties and witnesses in an inquisitorial setting.
The closest the High Court comes to a general power of oral inquiry lies in certain powers following insufficient answers to interrogatories76 or refusal to swear affidavits.77 But the process of issuing interrogatories, and establishing insufficiency of answers, is time- consuming and cumbersome. Cross-examination is rarely ordered and, if granted, remains an adversarial exercise limited to obtaining a proper answer to the interrogatory.78 The courts have also shown a marked reluctance to direct oral examination following refusal to make an affidavit, preferring to direct witnesses to make an affidavit with examination as a mere sanction to secure compliance.79 Such an order will be declined altogether if the witness is prepared to swear an affidavit, albeit not the one sought by a party.80
72 Above, see text accompanying n 53 and following. 73 PRA s 38; Family Court Rules 2002, rr 399(2)(b) and 400(2)(b). 74 High Court Rules, r 9.36. 75 HCR r 9.34; Transpacific All Brite Ltd v MPC Traders Ltd & Ors HC Napier CIV-2011-441-169, 24 November 2011. 76 HCR 8.42(b). 77 HCR r 9.75. 78 Litchfield v Jones (1884) 54 LJ Ch 207 (Ch). 79 Archives & Records Assoc of NZ Inc v Blakeley 18 February 1998, Heron J, HC Wellington CP 226/97. 80 Stewart v Judicial Committee of the Auckland Racing Club Inc 10 June 1991, Temm J, HC Auckland M102/90. 20
In the Family Court there is an important power to examine a party on oath where he or she fails to file any, or a sufficient, affidavit of assets and liabilities.81 Even there, however, there are severe limitations. The Court’s hands are tied until one party chooses to file a formal application alleging default. There will inevitably be argument about the sufficiency of any affidavit of assets and liabilities already filed. The examination is confined to the defaulting party, as distinct from his or her accountant and other witnesses. Most importantly, the examination does not extend to events and transactions during the relationship.82 Such evidence is usually critical.
Valuable though those court powers may be, they are no substitute for an arbitrator’s power to call the parties and their accountants to a conference, swear everyone present as witnesses, and lead a round table discussion designed to get to the bottom of a factual issue.
(iii) Speed New Zealand has not escaped the world-wide pressure on family courts.83 It seems too early to say what effect the 2014 Family Court reforms will have on waiting times. What one can say with confidence is that in virtually all jurisdictions overseas, family courts struggle to cope with the number of cases requiring decision.
Judges have little control over their workloads. Arbitrators do not have that excuse. If they accept only those arbitrations that they can handle expeditiously, they should be able to resolve cases more quickly than judges.
(iv) Finality Arbitrations offer greater finality than court proceedings. Once an award is issued, there is less opportunity to prolong matters by appeal or review than would be the case with an equivalent Family Court judgment.
The grounds for reviewing an arbitration award are circumscribed by statute. There is no opportunity to rehear the merits. For all practical purposes review under arts 34 and 36 is confined to excess of jurisdiction and denial of natural justice.84 An appeal from an arbitration award may or may not be possible depending on the wishes of the parties when drafting their arbitration agreement. If the right to appeal is desired, it must be limited to questions of law. Even then the appeal will be possible only with the Court’s leave unless the parties taking the unusual course of opting for appeals as of right.85 But if the parties really want a right of appeal to the courts, with its attendant costs, delays and publicity, it is hard to see why they would choose arbitration in the first place. In short, the opportunities for challenging an arbitration award are closely circumscribed.
That may be contrasted with successive opportunities for challenging decisions originating in the Family Court. Appeals may be taken to the High Court as of right. The appeals extend to
81 Family Court Rules, r 400(2)(a). 82 see rr 400(2)(b), 398(2) and form P(R)1. 83 Ministry of Justice publication “Reviewing the Family Court, A Summary” September 2011 p 1. 84 Arbitration Act 1996, sch 1, arts 34 and 36. 85 sch 2, cl 5. 21 the facts as well as the law. If the parties are the unfortunate beneficiaries of leave to bring more than one appeal, it is possible to have as many as six hearings (Family Court substantive hearing.
(v) Confidentiality For all practical purposes relationship property hearings are private, whether in arbitration86 or court.87
The position is very different when it comes to publication of the decision. As a general principle, arbitration awards cannot be published. The same applies to any other information gleaned from arbitration proceedings.88 The discretion to override the presumption of confidentiality89 is easily side-stepped by contracting out of that power.90 Even if the parties have overlooked doing so in their arbitration agreement, it is hard to see any circumstances in which an arbitrator or judge would authorise disclosure of the award in the absence of an appeal or review.91
There is less certainty if one party chooses to take the arbitration award to the High Court on appeal, where the submission agreement so permits, or on review. Even there, however, one might reasonably expect a judge to take into account the fact that by submitting a private family matter to arbitration the parties had evidenced a wish for confidentiality. This would seem a powerful reason for continuing the confidentiality that the parties had enjoyed in the arbitration proceedings themselves.92
That may be contrasted with the position where the proceedings originate in the courts. With narrow exceptions, all decisions are published. The names of the parties will usually be anonymised on application and there are special protections for children, those under some form of special care, and domestic violence applicants.93 But with those qualifications the courts cannot prevent publication of a relationship property decision.94
Few are happy to have intimate details of their personal history published to all and sundry. That is likely to be seen by many as a significant reason for opting for arbitration.
(vi) Choice of decision-maker Generalisations about the skill and experience of judges compared with arbitrators are pointless. The variation between individuals within those groups is much greater than any variation between the groups themselves. The real difference between judges and arbitrators, however, is the opportunity to choose. Only in arbitration do the parties choose their decision-maker.
86 Arbitration Act s 14A 87 Family Courts Act 1980, s 11A. 88 Arb Act s 14B. 89 ss 14D and 14E. 90 s 14. 91 ss 14D and 14E. 92 s 14F(2). 93 PRA s 35A; Family Courts Act 1980 s 11B(3) and (4). 94 Family Courts Act 1980, s 11B(1). 22
Choosing the decision-maker may not matter in the general run of cases. However it can be important in cases where the issues are less about traditional family law concepts than about complex commercial and equitable relationships. Analysing a complex web of companies, trusts, partnerships, and inter-entity finances can be time-consuming and exacting. In such cases the parties may prefer to select a decision-maker whose skill-set and time availability are thought to fit the particular task in hand.
(vii) Ease of access Arbitrators are usually accessible at short notice through direct emails (with the important proviso that they are copied to the other party) and telephone conferences with both counsel. Most interlocutory matters can be disposed of with a minimum of time and formality.
Court processes are necessarily more measured. The volume of cases filed in court is high. Standardised procedures are the only way of processing multiple cases and judges. Some classes of litigation (parenting, domestic violence etc) are particularly inflammatory. Family Court Judges must be protected from abuse. A system which permitted direct approaches to judicial officers would not be feasible, even where the communications were joint ones.
(viii) Continuity Knowing that he or she will ultimately have to decide a case, an arbitrator will have a personal stake in its management from the outset. Arbitrators have the luxury of familiarising themselves with the file, running all interlocutory matters with the benefit of that knowledge, and structuring the hearing in a way that will suit their particular methods. It is no criticism of judges that rostering requirements usually make that level of continuity impracticable.
(ix) Party autonomy In their agreement to arbitrate existing or future property disputes the parties choose the relationship property regime that will be applied, the procedure that will be followed, and the person who will make the decision. Parties are more likely to be satisfied with the result of a process that they themselves devised.95
It also accords with the 2013 Family Court Proceedings Reforms which were designed to place greater emphasis upon resolving family disputes by private agreement.96 It is a short step from agreement on the substantive outcome to agreement on the way in which the outcome should be achieved.
(x) The possibility of “med-arbs” So long as an arbitrator does not caucus with the parties, or give the impression that the case has been predetermined, it is possible to combine an arbitration with a mediation.97 Similar benefits can be obtained during an expert determination. In the Family Court it is not appropriate to combine distinct forms of dispute resolution before the same judge.
95 Ashworth, above, n 30 at p 31; Marion Boyd Dispute Resolution in Family Law: Protecting Choice, Promoting Inclusion (prepared for Ministry of Attorney General, Ontario, Canada 2004) at 74. 96 Ministry of Justice release at http://www.justice.govt.nz/policy/justice-system-improvements/family-court- reform. 97 For the hazards to avoid see Acorn Farms v Schnuriger [2003] 3 NZLR 121. 23
Conclusions So long as appropriate signing formalities are observed, and the adopted relationship property regime is an acceptable one, agreements to submit relationship property disputes to arbitration will be binding and the awards they produce enforceable.
Whether arbitration will serve the parties better than court proceedings depends on the nature of the particular dispute. There will be an overwhelming preference for court proceedings wherever it is foreseeable that resolution of a relationship property dispute will need to be combined with claims under other statutes such as the Trustee Act 1956 or the Family Protection Act 1955. The same will be true whenever the dispute is likely to involve third parties who are unable or unwilling to commit to arbitration. It seems doubtful whether court proceedings offer additional advantages of any significance.
For the remainder of cases, arbitration appears to offer significant advantages. These include speed, finality, procedural flexibility, confidentiality, choice of decision-maker, ease of access to the tribunal, continuity and the opportunity to combine the arbitration with mediation. Of particular importance is the efficiency of an arbitrator’s information-gathering powers. Information-gathering is normally the key to resolving relationship property disputes.
At present the use of arbitration to resolve New Zealand relationship property disputes is surprisingly limited. If overseas experience is anything to go by, that is about to change.