Arbitration – Pros and Cons

Date: 12 Dec, 2019| Author: Fred Streiman

A helpful alternative to court may be mediation and/or arbitration.  We have canvassed mediation in another blog.  Arbitration requires the written agreement of the parties to have their matters decided by an independent third party chosen by the parties themselves.  Unlike judges in which one has no influence on their selection, the parties directly chose by mutual agreement who will decide their matter.  Also, arbitration can be faster, cheaper and if no appeal is ever launched, completely confidential.  Arbitrators in the family/estate litigation law field are generally highly experienced family/estate litigation law lawyers or retired judges, whom the parties’ lawyers have a great deal of faith in being able to grasp complex issues and deal with matters in a fair fashion. 

However, as in all choices in life, there are negatives that one must be aware of.  For arbitration to be binding, all the formalities under the Arbitration Act, including certificates of independent legal advice, must be fulfilled or arbitration cannot proceed. 

In arbitration, the arbitrators’ jurisdiction is completely limited within the four corners of the arbitration agreement.  The appeal process must be specifically laid out. 

A critical component of deciding a family/estate litigation law case is the necessity of complete financial disclosure.  Arbitrators do not have the ability to order third parties such as banks to release information unlike the authority granted to judges.  Another issue is the enforcement of an arbitration award.  The arbitrator has no ability to find a party in contempt and impose the penalties that such a finding makes available in the court system.  If there is an appeal, then all of the confidentially is lost. 

It is not uncommon to find separation agreements that simply indicate that in the event of a future dispute, such disputes must be resolved by way of arbitration.  These are actually not binding as for an arbitration to proceed, all the various formalities under the Arbitration Act must completed.  That includes the signing of a certificate of independent legal advice for each party.  As long as that is missing, the arbitration cannot proceed. 

It is an alternate solution, but one in which the pros and cons must be laid out before a decision to participate can be made.