1) Arbitration under the Family Law Act allows parties to have property and financial disputes privately resolved by an arbitrator of their choosing rather than through traditional court litigation. 2) Arbitrators must be legal practitioners with family law experience and training. They have a duty to resolve disputes fairly and disclose any biases. 3) The main advantages of arbitration are reduced costs, privacy, and letting the parties control the process. However, arbitration is only suitable when facts are agreed upon and financial disclosure is full. Arbitral awards can be reviewed by courts on questions of law.

1. Arbitration of matrimonial
property disputes in Australia
Prepared by Corey Gauci
Solicitor – Family Law
TURNER FREEMAN LAWYERS

2. What is arbitration under the Family
Law Act?
• There are two kinds of arbitration under the Act:
• court-referred arbitration under s 13E in relation to disputes between married and de facto
couples; and
• party-initiated arbitration. This is arbitration agreed between the parties without court referral.
In the Act it is known by the rather bureaucratic term ‘relevant property or financial
arbitration matters’.
• Party-initiated arbitration has a broader scope than court-referred arbitration. It is not possible to
arbitrate arguments about binding financial agreements under s 13E, but it is using party-initiated
arbitration. The distinction, which has a historical rationale, has no practical utility today.

3. Who Is Eligible to be a Family Law
Arbitrator?
• According to the Family Law Regulations (reg 67B) the arbitrator must be a legal
practitioner who satisfies the minimum requirements (specialist accreditation or five
years in practice, including at least 25% in family law) and who has done an
arbitration course.
• In the Legal Profession Uniform Law, (s 6) ‘Australian legal practitioner’ means an
Australian lawyer who holds a current Australian practising certificate.
• The Australian Institute of Family Law Arbitrators and Mediators (AIFLAM)
maintains a list of trained arbitrators on behalf of the Law Council of Australia, and
that list can be searched by location.

4. The Arbitrator’s Role
Regulation 67I of the Family Law Regulations provides that:
(1) In an arbitration, an arbitrator must determine the issues in dispute between the parties to the
arbitration in accordance with the Act.
(2) An arbitrator must conduct an arbitration with procedural fairness (for example, giving each party to
the arbitration a reasonable opportunity to be heard and to respond to anything raised by another
party).
(3) An arbitrator must inform each party, in writing, if during the arbitration, the arbitrator becomes aware
of anything that could lead to direct or indirect bias in favour of or against any party.

5. The Advantages of Arbitration
• The Advantages of Arbitration
• Can greatly reduce the financial stress, emotion and legal costs of litigation.
• Parties can make their own decisions about who will decide their dispute and how they make that decision;
• Parties can set their own time frame in which to settle their dispute.
• Disputes are generally resolved faster.
• Parties are then able to move forward and make a new life for themselves.
• Private details are not aired in a public forum such as a courtroom. However, in some circumstances arbitrators are
compelled by law to report matters to the relevant authorities. It is therefore important to discuss the issue of
confidentiality prior to signing an arbitration agreement.

6. The Disadvantages of Arbitrations
• The Disadvantages of Arbitration
• The award (decision) is binding and only subject to appeal on a question of law.
• The process while not as expensive as litigation is more expensive than mediation because of the degree
of formality required by this process.
• This process will not suit everyone
• Arbitration is suitable for married and de facto couples who have separated. It may not suit circumstances
where there is significant disagreement about facts as asserted by each party. Nor will it be the preferred
process where there are issues about disclosure of financial information. You should therefore seek legal
advice about whether your matter is suitable for arbitration.

7. The new arbitration rules
The duty of disclosure
Each party has a duty to the arbitrator and each other party to give timely full and frank
disclosure of relevant information (reg 26B.01(1)). The requirements about what must be
disclosed (26B.01(2)) mirror r 13.04 with respect to court proceedings.
The use of Subpoenas
Regulation 67N gives to the arbitrator the power to compel witnesses or the production of
evidence. Furthermore, a party to an arbitration may apply to the court for the issue of a
subpoena in accordance with rules of court. Until now, there have been no such rules.

8. Features of Arbitrations
• The new regulations are clear in their intent, although there are some inconsistencies which will presumably need
amendment as arbitration unfolds and with the passage of time. The Australian scheme has the following features:
• There can be no arbitration unless the parties consent;
• A Court can suggest that arbitration is appropriate, but cannot order the parties to arbitrate;
• The parties can only arbitrate under the Family Law Act on disputes between them about property and/or spousal
maintenance;
• Disputes about child support or child residence (custody) or contact (access) predictably cannot be arbitrated at all;
• Presumably, some disputants will choose to arbitrate on one aspect of a conflict (e.g.. valuation of a business) and
then use the decision of the Arbitrator as the basis for settling by negotiation all other elements of the property
dispute such as percentage, timing of distribution and apportionment of debts etc. Alternatively of course, they can
use the arbitration process to settle the whole of their property and financial matters in dispute;

9. Features of Arbitration (Cont.)
• Disputes over property with third parties (e.g.. creditors or relatives claiming a share of the matrimonial property)
cannot be arbitrated under the Family Law Act. This is because:
• the Arbitrator has no procedural power to join third parties; and
• the Arbitrator has limited substantive power under the Family Law Act to make orders which affect the property
rights of third parties.
• Disputes over the property rights of a third party can be arbitrated if the third party consents, enters into a written
Arbitration Agreement and that “third party” part of the order is registered under a state Commercial Arbitration Act;
• Only certain “Arbitrators” can arbitrate and register his/her award under the Family Law Act.

10. How to apply to the Court for referral
to arbitration?
Regulation 67D of the Family Law Regulations provides the following:
(1) An application for an order under section 13E of the Act in relation to a Part VIII proceeding, a part of
a Part VIII proceeding, or a matter arising in a Part VIII proceeding, must be:
(a) in accordance with Form 6 (see last slide); and
(b) made jointly by all parties to the proceeding; and
(c) accompanied by a financial statement in accordance with the applicable Rules of Court.

11. When can an arbitral award be
challenged?
• One of the issues which has undoubtedly led to resistance to the use of arbitration is that there are limited rights of
review. However, there may well be more avenues for review than practitioners realise.
• First, it is important to note that an arbitral award only takes effect once registered. That registration is on the
application of a party. There could be circumstances where neither party is entirely happy with the outcome, and
they come to some agreement of their own instead.
• Second, there is a right to review the arbitral decision on a question of law (s 13J). It is important to note the exact
wording of the section because it does not say, in terms, that the award can only be overturned for an error of law.
Section 13J provides that a party ‘may apply for review of the award, on questions of law’ by a judge. On a review
of an award, the judge may:
• determine all questions of law arising in relation to the arbitration; and
• make such decrees as the judge or Federal Circuit Court of Australia thinks appropriate, including a decree
affirming, reversing or varying the award.

12. When can an arbitral award be
challenged?
• Read literally, if a review of an arbitral award is sought on a ‘question’ of law, then the judge may determine that legal
question and has a broad discretion, having done so, to make a decree ‘affirming, reversing or varying the award’. This
might mean that even if the judge concludes that there is no error of law, the award could still be varied in some way.
• For example, applying House v the King (1936) 55 CLR 499, the judge might conclude that on the facts the award ‘is
unreasonable or plainly unjust’, and consequently it may be inferred that in some way there has been a failure properly to
exercise the discretion which the law reposes in the arbitrator. That might lead the judge to vary the award even if he or
she decides that the arbitrator correctly determined the specific ‘question of law’ about which a review was sought.
• Third, there are other grounds for setting aside the award. Section 13K provides that the court may make a decree
affirming, reversing or varying the award or agreement if satisfied that it was obtained by fraud (including nondisclosure
of a material matter); or void, voidable or unenforceable; or if it is impracticable for some or all of it to be carried out; or
the arbitration was affected by bias, or a lack of procedural fairness.

13. CGT and stamp duty relief
Finally, it is necessary to consider CGT and stamp duty. The exemptions from stamp duty and capital gains tax in
relation to interspousal transfers do not apply to arbitration. Section 68 of the Duties Act 1997 (NSW), for
example, exempts transfers pursuant to binding financial agreements, court orders and other agreements between
the parties following relationship breakdown. It is difficult to see how arbitration fits into the existing exemptions.
This can be dealt with either in the arbitration agreement, or the arbitral award, or both. The agreement or award
could specify that in the event that issues of stamp duty or CGT relief arise, the parties will agree to enter into
Consent Orders to give effect to the arbitral award, and if a person fails to do so, he or she would be liable to pay
the relevant duty or tax payable. The award could be in similar terms.

14. Helpful links
• Family Law Act 1975 (Cth)
http://www.austlii.edu.au/au/legis/cth/consol_act/fla1975114/
• Family Law Rules 2004 (Cth)
http://www.austlii.edu.au/au/legis/cth/consol_reg/flr2004163/
• Family Law Regulations 1984 (Cth)
http://www.austlii.edu.au/au/legis/cth/consol_reg/flr1984223/
• Form 6 - Application for Arbitration
WORD Version available here.