Two Types of Arbitrations – The Difference is Important

Family law financial arbitrations are gathering momentum in Queensland. Whilst relatively simple, there are some subtle nuances to be aware of when designing your arbitration process.

From the very start, it is important to know there are two types of arbitration, a s13E arbitration or a private arbitration (section 10L(2)(b)).

Section 10L(2) 

Arbitration may be either:

(a)  section 13E arbitration --which is arbitration of Part VIII proceedings, or Part VIIIAB proceedings (other than proceedings relating to a Part VIIIAB financial agreement), carried out as a result of an order made under section 13E; or

(b)  relevant property or financial arbitration --which is arbitration (other than section 13E arbitration) of:

i.      Part VIII proceedings, Part VIIIA proceedings, Part VIIIAB proceedings, Part VIIIB proceedings or section 106A proceedings; or

ii.     any part of such proceedings; or

iii.   any matter arising in such proceedings; or

iv.    a dispute about a matter with respect to which such proceedings could be instituted.

Section 13E arbitrations can only deal with Part VIII proceedings or Part VIIIAB (but not in relation to a Part VIIIAB financial agreements) proceedings.  Private arbitrations have a broader area of disputes that can be determined. Below is a comparative table of the type of disputes that can be arbitrated differentiating between the disputes s13E arbitrations are restricted to.

                                   Type of dispute

Column A

Section 13E

Column B

Private Arbitration

 Part VIII (sections 71 to 90)

·      s74 Spousal maintenance

·      s78 Declaration of interests

·      s79 Alteration of interests

·      s79A Setting aside an order

·      s80 Powers of court – including making orders by consent

·      s83 Modify an existing spousal maintenance order

·       

 

 

 

Yes

 

 

 

Yes

 Part VIIIAA (sections 90AA to 90AK)

·      Orders and injunctions binding third parties

 

No

 

No

 Part VIIIA – Financial Agreements (sections 90A to 90Q)

·      s90G declaration of validity (whether the agreement is binding)

·      s90K setting aside a financial agreement

 

No

 

Yes

 Part VIIIAB – Financial Matters Relating to De Facto Relationships

Division 1 to 2 (sections 90RA to 90ST)

·      s90RD Declaration of a de facto relationship

·      s90RH Setting aside a declaration of a de facto relationship

·      s90E De facto spousal maintenance

·      s90SM Alteration of interests

·      s90SN Setting aside an order

·      s90SS Powers of court – grant injunctions

 

 

 

Yes

 

 

Yes

 Part VIIIAB – Financial Matters Relating to De Facto Relationships

 Division 3 (section 90TA)

 

?

 

?

 Part VIIIAB – Financial Matters Relating to De Facto Relationships

 Division 4 (section 90UA to 90WA)

·      s90UJ declaration of validity (whether the agreement is binding)

·      s90UM setting aside a financial agreement

 

 

 

No

 

 

Yes

 Part VIIIB – Superannuation interests (sections 90MA to 90MZH)

·      s90MT splitting order

·      s90MU flagging order

·      s90MV termination of a payment split

 

No

Yes

 Section 106A

·      Execution of a document by an officer of the court

No

Yes

Section 117 – Costs

?

?

It is notable that PartVIIIB Superannuation Interests cannot be the subject of an arbitration pursuant to a court ordered sect 13E but CAN be arbitrated privately.

Part VIIIAA – orders binding third parties – cannot be the subject of arbitration (either privately or pursuant to section 13E).

Whether s90TA (orders binding upon third parties in de facto proceedings) is excluded or not is not entirely clear. It is safer to assume they cannot be arbitrated BUT see below recommendations.

Section 117 (costs) commences with the words “in proceedings under this Act”. Thus, “costs” are an ancillary part or extension of the proceedings and therefore likely matters that can be subject to an award. To avoid doubt, the arbitration agreement should clearly specify whether or not such costs orders can be made.

What if you are already in court – what are the options where you need column B outcomes?

Option 1 - The simple answer is to discontinue the existing court proceedings.

That may, on the surface be untenable, however a discontinuance with a notation to the effect that the parties are pursuing private arbitration AND without prejudice to either party’s right to reinstitute proceedings in the event of the arbitration not proceeding would provide a sufficient safety net.

Option 2 - Alternatively, adjourn the proceedings with no other order (as opposed to a s13E order) with a Notation that the parties are pursuing private arbitration with the proceedings to be discontinued by consent if the arbitration proceeds.

What about third party proceedings ?

It seems increasingly common for third parties to intervene in financial proceedings and this is usually in the context of either (or both) grandparents “lending” money to the parties and seeking repayment as a liability upon separation. In most cases if the money is not determined to be a debt, it is usually a relevant contribution to be considered.

Some suggested options [and hence minimising costs through an additional set of lawyers’ fees] are as follows;

Option 1 – The third party discontinues their claim in the Court proceedings subject to the parties proceeding to and concluding an arbitration.  In this circumstance, it would be prudent (if acting for the third party’s interests) to require a Notation to the effect that such discontinuance is without prejudice to and on the basis, that one of the issues being determined by the arbitration is the fact of the liability (or not).  Whether the third party provides evidence then on behalf of a party is a matter for the design of the arbitration.

Option 2 – The parties agree to arbitrate the entirety of the dispute save the third-party claim. This could be most appropriate where a spouse or the third party is seeking a constructive trust interest in a certain property or properties.