Arbitration has historically been associated with the resolution of commercial disputes, particularly in the context of international commercial transactions, and has proved to be successful at resolving such disputes. Over the last decade, there has been encouragement to widen the adoption of arbitration as a method of resolving a broader range of disputes. The premise being there is nothing inherent in arbitration, as a form of dispute resolution, which makes it unsuitable for resolving non-commercial disputes, such as family disputes.

The advantages of arbitration over litigation often cited are its speed, flexibility and its confidential nature. The issue of the confidentially is particularly relevant at the moment following the President of the Family Division’s recent review on transparency in family proceedings – which sign posts a future of increased openness and transparency in family proceedings. While we await to see how the proposed increased transparency will be implemented, in certain cases this could result in an increased interest in arbitration as a closed and confidential forum in which family disputes can be resolved.

There is also, of course, the ever-present issue of delay in the family court system. The vast majority of, if not all, family law practitioners will have had direct experience of the significant delays that can occur when a family dispute is resolved through the court process. Recent pre-Covid statistics continue to demonstrate the significant strain under which the family justice system operates. For example, in 2019, the average length of proceedings to FDR was 55 weeks and the average length of proceedings to a final hearing was 84 weeks[1].

The question which is arises is, can the continued pressure on the family court system lead to arbitration gaining greater traction than is has done to date and become more than a niche alternative to litigation? If family arbitration, particularly arbitration involving financial disputes, is to significantly grow as an alternative to litigation, the issue of the compatibility between the statutory code governing arbitration in England & Wales, the Arbitration Act 1996 (“1996 Act”) and the principles governing family disputes will need to be resolved. The question this article seeks to explore is, to what extent are the key principles of arbitration under the 1996 Act compatible with the legal principles applicable to resolving financial disputes on divorce?

The Arbitration Act 1996

To understand the role of the 1996 Act in governing arbitrations, and the principles underpinning the Act, it is necessary to briefly examine the circumstances which led to its creation. Prior to the 1996 Act, there were three Acts governing arbitration in England & Wales. Those Acts were the Arbitration Acts of 1950, 1975 and 1979. There was also a substantial body of case law, which established the principles governing arbitration under those Acts. The disparate nature of the sources of arbitration procedural law was increasingly seen as being undesirable and in need of review.  The process of reviewing the then existing legislation began in 1989, when Lord Mustill, acting as chairman of the DTI’s Advisory Committee on Arbitration Law, first recommended the overhaul of the law of arbitration[2]. By 1996 a new Arbitration Bill had been drafted and laid before Parliament.

In simple terms, the goal of the Arbitration Bill was to consolidate the existing statutory provisions into a single Act, which would be more business friendly than the previous Acts, and which would also assist London in maintaining its position as a global centre for arbitration[3].

The primary focus and purpose of the Arbitration Bill was set out by Lord Fraser, Minister of State for the Department of Trade and Industry during the second reading of the Bill in the House of Lords on 18th January 1996, when Lord Fraser stated:

we are simply failing in our duty to the business community to assist companies to resolve their disputes with the minimum difficulty…….. Our objective has been to set out a comprehensive and coherent statement of the principles and practice of arbitration in England, Wales and Norther Ireland. The Bill combines a restatement of the current statue law with codification of the more important principles of arbitration law developed through case law. It means that business people will have set out for them in a single document the key aspects of arbitration law in England, Wales and Northern Ireland. Without this Bill the present unsatisfactory situation could also have had serious repercussions for the future of London as a world centre for the arbitration of international commercial disputes………..The principle of party autonomy is central to the Bill[4]

There can be little doubt that the express purpose of the 1996 Act was to serve the needs of the business community and to promote the resolution of commercial disputes. The two core principles that flow from the commercial emphasis of the 1996 Act are the principle of party autonomy and the emphasis in the Act on ensuring there is limited judicial intervention in the arbitral process (both of which are codified in section 1 of the 1996 Act).

These principles continue to be of central importance to arbitration in England & Wales, as recently recognised by Lord Hodge in the Supreme Court decision of Halliburton Company v Chubb Bermuda Insurance Ltd (formerly as Ace Bermuda Insurance Ltd) [2020] UKSC 48 where, at paragraph 47, Lord Hodge observed that, ‘The 1996 Act is based on the principle of party autonomy and aims to limit the role of the courts to the protection of the public interest.

Party Autonomy

Of the two central principles governing arbitration, party autonomy is arguably the single most important one. In recognition of this, the 1996 Act provides a framework with a significant degree of flexibility, consisting as it does of mandatory and non-mandatory provisions. This approach affords the parties a significant degree of flexibility as to how their arbitration is to operate. For example, the parties have the freedom to choose which arbitration rules they wish to apply to their arbitration or alternatively to tailor rules to meet the needs of their particular arbitration. The rules under which an arbitration is to be conducted can have significant consequences, for example by further limiting the already limited circumstances in which the court can intervene in the arbitral process (including limiting appeals[5]).

The flexibility provided to the parties under the 1996 Act, rooted as it is in the concept of party autonomy, has a significant drawback. The freedom given to the parties is at the expense of there being any significant role for the court in resolving the dispute, including in resolving any errors in the award. The 1996 Act sets out a number of hurdles to be overcome before an appeal from an award can be brought. Practically, this means there is very limited scope for appeals under the 1996 Act and successful appeals are rare. For example, in the Commercial Court in 2018-2019 (the statics for the year 2019-2020 are arguably not representative due to Covid) there were no successful appeals under section 69 of the 1996 Act (on a point of law) and there were very few successful appeals under section 68 (serious irregularity). The difficulty in successfully appealing an arbitration award was emphasised by Mr. Justice Teare during the Commercial Group users meeting for that year, when he stated he hoped that parties were hearing the message that the hurdle for these applications is ‘high[6].

Family Arbitrations

What does all of this all mean for financial remedy arbitrations? Firstly, the flexibility in the 1996 Act allows financial remedy and other family arbitrations to have their own bespoke set of rules, familiar to the family law practitioner.

The procedural rules used in family arbitrations are those under the Family Law Arbitration Schemes (“Scheme”). These rules were created by the Institute of Family law Arbitrators. There are two schemes. Firstly, the scheme applying to financial disputes and, secondly, the scheme applying to disputes involving children. Both schemes expressly recognise that they operate under the 1996 Act. In common with commercial arbitrations, each Scheme is founded in the law of contract by requiring there to be an agreement between the parties to arbitrate. The basic elements underpinning family arbitration are very similar to those underpinning commercial arbitrations. They are: the need for a contractual agreement to arbitrate; the arbitration process being governed by the 1996 Act; and the need for there to be a set of rules under which the arbitration is to operates under. While superficially it may appear that there is a substantial degree of commonality between commercial and family arbitration under the 1996 Act, closer analysis reveals a far less harmonious relationship.

Firstly, family arbitration is still very much governed by family law principles, many aspects of which, arguably, do not sit comfortably with the principles upon which the 1996 Act is founded. In particular, the key concept of party autonomy, which runs throughout the 1996 Act, has far less prominence and importance in all areas of family law.

Party autonomy has historically played an un-ambiguously subservient role to judicial oversight in family law. Perhaps the ultimate expression of this subservience in the context of financial remedy disputes is embodied in the principle prohibiting the parties from restricting each other’s right to apply for financial relief from the court[7]. The tension between this principle and the court’s desire to simultaneously enable and encourage the parties to settle financial disputes without recourse to the courts has been considered in a number of cases over the years. Most notably in the cases involving nuptial agreements. The courts increasing willingness to uphold nuptial agreements is, perhaps, a sign of the judiciary’s increasing recognition that the principle of party autonomy can, in certain circumstances, be determinative in the context of family disputes. In the Supreme Court decision of Radmacher v Grantino [2010] UKSC 42, Lord Philips PSC summarised the position, at paragraph 78, as: “The reason why the court should give weight to a nuptial agreement is that there should be respect for individual autonomy”.

However, the role of party autonomy has its limits in both family and commercial spheres. That limit is usually expressed in the form of judicial intervention. In the context of arbitration, the tension between party autonomy and judicial intervention is perhaps most acutely revealed when one party to an arbitration is dissatisfied with the award and seeks to challenge it.

In a commercial arbitration, the position is clear. The concept of party autonomy invariably triumphs over judicial intervention. The view being the parties have agreed to arbitrate, therefore, absent any public policy reasons requiring intervention from the court, the parties are held to their agreement and the award that results from this agreement is final and will not be interfered with. In the family context, the position has been less clear. Since the introduction of the financial Scheme in 2012, judicial pronouncements on how the Family Court should approach a dissatisfied party’s attempt to challenge an arbitral award has not been consistent. In S v S [2014] EWHC 7 (Fam) Sir James Munby P adopted an approach intellectually consistent with existing arbitration principles. He recognised the central importance of the contractual underpinning of an arbitration and held, at paragraph 19, that: “In the absence of some very compelling countervailing factor(s), the arbitral award should be determinative of the order the court makes..

This more conventional approach was also followed by Mostyn J in DB v DLJ  [2016] EWHC 324 (Fam), and by Clare Ambrose (sitting as a Deputy Judge of the High Court) in R v K [2020] EWHC 841 (Fam), where both judges upheld the concept of party autonomy in financial remedy arbitrations and recognised the applicability of the legal framework imposed by the 1996 Act. Both cases emphasised that in the overwhelming majority of cases the arbitral award would be final. This approach is consistent with the principle highlighted by Lord Fraser during the second reading of the Arbitration Bill that: “We started from the principle that if the parties have chosen arbitration rather than the court to resolve their dispute, this decision must be respected.

However, more recently the Court of Appeal in Haley v Haley [2020] EWCA Civ 1369, has departed from these earlier authorities. In Haley the Court of Appeal concluded that the 1996 Act did not apply in its entirety to financial remedy arbitrations.

The basis for the Court’s differing view from earlier authorities stems from the distinction it draws between the authority upon which financial remedy arbitration awards may be enforced as opposed to the authority upon which commercial awards are enforced. Family arbitrations are said to be different because the enforcement of an award following a commercial arbitration derives its authority from the arbitration agreement itself, whereas the enforcement of an award following a financial remedy arbitration award will derive its authority from the court and not from the arbitration agreement, i.e. it is non-contractual in nature[8].

The Court of Appeals’ conclusion on the non-contractual basis of an order following a financial remedy arbitration provides the gateway through which the central question of how the tension between party autonomy under the 1996 Act and the court’s statutory duty under the Matrimonial Causes Act 1973 (“1973 Act”) is indirectly resolved.  The Court of Appeal resolves this tension firmly in favour of an interventionist approach by the court. The Court of Appeal does this principally by drawing an analogy between a negotiated consent order and an arbitral award made following arbitration. Lady Justice King summarised the position, at paragraph 69, as follows:

A court can decline to make an order in the terms of an agreement negotiated by, or on their behalf, in circumstances where (to borrow the words of Lord Phillips of Worth Matravers in Radmacher) there are ‘good and substantial grounds for concluding that an injustice will be done by holding the parties to the terms of their agreement’ ; or where ‘it would not be fair to hold them to their agreement’. It must, in my view, equally follow that where the agreement, albeit contractual, is for a third party to decide the terms that are in dispute, the court can decline to make the order where there are good and substantial grounds for concluding that an injustice will be done in an order is made in the terms of the arbitral award”.

The Court of Appeal’s conclusion on the non-contractual nature of an order made by a court following an arbitration leads the Court of Appeal to further conclude that challenges to arbitral awards should not be subject to the restrictions imposed by the 1996 Act (as previously determined by earlier authorities), but should instead be considered in the same way as any other challenge to a first instance decision under the Family Procedure Rules 2010 (“FPR 2010”). By reaching this conclusion, the Court of Appeal necessarily dis-applies the application of ss.67, 68 and 69 of the 1996 Act to financial remedy arbitrations[9].

The practical effect of the Court’s conclusions in Hayley was set out by Mostyn J’s in A v A (arbitration: guidance) [2021] EWHC 1889 (Fam), where Mostyn J concludes that following Haley a challenges to financial remedy arbitral awards under ss.68 or 69 of the 1996 Act are ‘entirely redundant[10]. Mostyn J explains that it is important that the Court approaches a challenge to an arbitral award ‘as hearing an appeal from a judgment of a district judge or circuit judge.[11].

While the Court of Appeal’s approach in Haley is in many respects an attractive one. After all, a Financial Remedies Court is concerned with the ensuring there is ‘fairness’ following the breakdown of a relationship, rather than being concerned with determining a commercial dispute between companies or individuals. However, there are wider implications for financial remedy arbitrations in dis-applying the appeals framework under the 1996 Act and replacing it entirely with the procedure and approach under the FPR 2010.

The fundamental problem is one cannot separate the restricted appeals process under the 1996 Act from the concepts of party autonomy and limited judicial intervention that form the basis of all arbitrations under the 1996 Act. Therefore, by concluding that it is permissible for financial remedy arbitrations to operate outside the scope of the 1996 Act in this manner, the Court of Appeal has by necessity also effectively excluded the core principles of arbitration from financial remedy arbitrations.


In Hayley the Court of Appeal appears to have taken a pragmatic approach to the conceptual problem of how you reconcile the court’s statutory duty to intervene, if necessary, in financial remedy disputes with the key arbitration principles of party autonomy and limited judicial intervention in the resolution of disputes.

From a practical perspective, there is an undeniable attraction in harmonising the appeals procedures between financial remedy arbitrations and those disputes determined conventionally through the courts. Whether you litigate or arbitrate you end up at the same point and follow the same path post first instance decision. However, by taking a more pragmatic approach, financial remedy arbitration has arguably been deprived of the key factors that has made commercial arbitration successful; namely, certainty and finality. Parties often choose arbitration because they have confidence that the award will be final, subject to the limited permissible appeals.

The potential difficulties in allowing financial remedy arbitrations to operate outside the scope of the 1996 Act were identified by Clare Ambrose in R v K   (heard approximately 6 months before Hayley) where at paragraph 29 f) she held ‘I doubt it would be attractive to IFLA users (or their lawyers) if a separate or “mix and match” approach was adopted in family cases drawing from both the 1996 regime and that applying to appeals under FPR Part 30. Even if it might reassure some it would create substantial uncertainty’[12].

An agreement to arbitrate now only appears to bind the parties up to the conclusion of the award, following which the parties are freed from the restrictions under the 1996 Act and can bring an appeal on the same basis as if they had not agreed to arbitrate at all. This is a unique position and is in stark contrast to commercial arbitrations. Further, it is difficult to reconcile the unique position afforded to family law arbitration with Lord Sumption’s observation in Prest v Petrodel Resources Ltd and others [2013] UKSC 34[2013] 2 AC 415, at paragraph 37, that “Courts exercising family jurisdiction do not occupy a desert island in which general legal concepts are suspended or mean something different.”

The ‘mix and match’ approach now applicable to financial remedy arbitration is a result of the Court of Appeal seeking to reconcile the principles underpinning financial remedy disputes with those underpinning the 1996 Act. What is apparent is that these principles cannot be reconciled with each other, at least not without one fundamentally undermining the other. The obvious solution would be for family arbitration to have its own statutory code reflecting its underlying principles and ensuring conceptual consistency. In the absence of a new family arbitration specific statutory framework, it is difficult to envisage how family law arbitration will be able to gain the necessary consistency and predictability to allow it to become a main stream and more widely used method of dispute resolution.

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[1] Figures exclude data for London – see report of the Farquhar Committee on the Financial Remedies Court September 2021– Part 1 at paragraph 2.6


[3] Ibid

[4] Ibid 

[5] Rule 26.8 of the London Court of International Arbitration Rules.


[7] Section 34 of the Matrimonial Causes Act 1973

[8] Haley v Haley [2020] EWCA Civ 1369, at paragraph 68.

[9] Ibid at paragraphs 70 to 73

[10] A v A (arbitration: guidance) [2021] EWHC 1889 (Fam), at paragraph 16

[11] ibid, at paragraph 17

[12] R v K [2020] EWHC 841 (Fam), at paragraph 29 f)