In the latest Weekly Wright Report:
Arbitration as a Way to Settle a Divorce
There are several ways to resolve disputes around a divorce and avoid the cost, time, and contentiousness of going to court. My colleague Mollie Caplis wrote about how Collaborative Law can be an effective alternative dispute resolution tool in an article that appeared in this space, and another colleague, Renée Ades, described the mediation process and the benefits it offers in another article. A lesser used alternative to resolve family law disputes out of court is arbitration. In some circumstances, it can be the perfect solution.
Arbitration is a dispute resolution process in which parties present their dispute to a third-party neutral who decides the dispute based on the evidence presented at an arbitration hearing. It is fundamentally a form of private litigation. The disputes that arise in the family law context generally involve marital property, alimony, attorney’s fees, child custody and child support. Except for custody and child support issues, the decision of an arbitrator hearing a family law case is binding on the parties and will almost always be accepted by the court. However, the court will review an arbitrator’s decision on issues that affect children to assure that those decisions are in the children’s best interest.
A typical arbitration process looks a lot like a case that is on a standard litigation track in court. It allows for the opportunity to engage in discovery, is overseen by the arbitrator who is appointed at the outset, and culminates with a hearing at which documents and witness testimony are presented. It is not uncommon for procedural rules, especially as they relate to the admissibility of evidence, to be relaxed in an arbitration setting. At the end of the hearing, an arbitrator will make rulings based on the evidence and the relevant law—an arbitrator is expected to apply the established law just as a judge would do. Those rulings are then submitted to a court to be incorporated in a divorce judgment that is signed by a judge. A judgment arising from an arbitration has full force and effect and is no different than one that results from conventional divorce litigation.
Parties may choose to arbitrate their disputes rather than initiate a court case because of certain advantages afforded by arbitration. First, arbitration is private, so the process takes place out of the eyes of the public and avoids public scrutiny of the parties and their disputes. It also provides an opportunity for parties to “have their day in court,” allowing them to speak their mind and tell their side of the story without actually going to court. Arbitration also tends to move more quickly than the standard track for a divorce case filed in court, and the schedule of events in an arbitration can be tailored to the needs and demands of the parties rather than being dictated by the rules of court. Arbitrators also have tools for enforcing rules of discovery and requiring full disclosure of the facts. One of the most important advantages of arbitration over litigation is the opportunity to select the arbitrator. This will ensure that the decision maker will be someone who has experience handling family law cases, either as a lawyer or as a judge. Additionally, since the arbitrator gets appointed at the outset of the arbitration process, they can become familiar with the personalities of the parties, the particular issues present in the case, and the unique facts of the case. By contrast, a case pending in court does not typically get assigned to a judge until the day before the trial, leaving little time for the judge to get up to speed before the trial begins.
At the same time, there are some drawbacks with arbitrating family law matters. First, and perhaps foremost, the decision of an arbitrator on issues affecting children is not binding on a court and must be reviewed by a judge who “cannot adopt an arbitration award that concerns the beneficial interests of children without first exercising independent judgment to determine whether the best interests of the children are met by that award.” Kovacs v. Kovacs, 98 Md. App. 289, 301-302 (1993). Additionally, the choice to arbitrate is one that both parties must make. A party cannot be compelled to arbitrate a family law matter. To proceed with arbitration, the parties will be required to enter into an agreement to arbitrate. That agreement will contain terms that set standards for the arbitration process, typically those that are set forth in the Uniform Arbitration Act, which Maryland has adopted. It is important to recognize that arbitration is an adversarial proceeding that requires the involvement of an experienced trial attorney, whose role will be similar to that of an attorney in a litigated case.
One of the most pronounced drawbacks of arbitration is its limited rights to appeal an arbitrator’s decision. Maryland law allows a court to confirm, modify, or correct an arbitrator’s ruling. Once a court issues an order that adopts an arbitration award, the court will enter a judgment that may be enforced as any other judgment. A court that reviews an arbitrator’s ruling will not recognize mere errors of law or simple factual mistakes as grounds to refuse enforcement of an arbitration award. The grounds to overturn an arbitration award are limited to an arbitrator’s misconduct, bias, prejudice, or lack of good faith.
If you are considering arbitration as means to resolve disputes in your divorce, you should engage the services of an attorney with arbitration experience and a thorough knowledge of family law. You are welcome to contact me at (410) 659-1348 or fkobb@wcslaw.com for more information or with questions.