Arbitration is an increasingly popular means of sorting out the financial aspects of divorce swiftly, without undue acrimony and at relatively low cost. However, one important High Court case has made clear that those who put their disputes in the hands of an arbitrator must be prepared to live with the consequences.
When a husband and wife divorced after 14 years of marriage, they entrusted division of their money and assets to an arbitrator who awarded the husband £1,435,995 and the wife £1,178,855. The inequality between those awards was largely explained by the fact that the husband’s business was already well established before the marriage.
In refusing to submit to the arbitrator’s decision, the wife argued that he had greatly overvalued a Portuguese property, which was one of the assets which, by his award, passed to her. The arbitrator had valued the property at over £375,000, whereas she claimed that it was in fact worth not much more than £150,000.
In those circumstances, she applied to the High Court to redress the balance by awarding her an additional lump sum of £111,746. In rejecting that application, however, the Court closely equated family arbitrations, which were introduced in 2012, to commercial arbitrations, which have been available for over a century.
Save in very restricted circumstances, arbitration awards were treated as binding on the parties and arguments that they were unjust, or simply wrong, would almost never get off the ground. In upholding the arbitrator’s award, the Court found that the wife had failed to establish that its validity had been undermined by a mistake of fact or by unforeseeable supervening events.