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Spotlight: DB v DLJ [2016] EWHC 324 (Fam)

by Karen Dovaston
Posted: 7 March 2016

On 24 February 2016, a judgment was handed down by Mr Justice Mostyn in the matter of RE: DB v DLJ [2016] EWHC 324 (Fam) (24 February 2016).

1. What’s happened?

This case was essentially about an arbitration award being turned into a court order. The facts were, briefly, that the husband and wife had agreed to arbitrate. They appointed Gavin Smith (of ‘At a Glance’ fame), whose award was referred to by Mr Justice Mostyn in the following glowing terms: ‘The award was a thorough, conscientious and clear piece of work. Its quality is a testament to the merit of opting for arbitration.’

The matter came before the court when the husband issued a Notice to Show Cause why the arbitration award should not be made into an order. The wife’s position was that the award was vitiated by a mistake about the true value of the property in Portugal allocated to her. Alternatively, that events had occurred since the award which invalidated the finding made by the arbitrator as to the value of that property.

After a clear run through of the scope of challenge to an arbitration award, the interplay between the civil jurisdiction for interference with an arbitration award (very slim) and the family jurisdiction for interference with an arbitration award (a little less than very slim but still slim), we swing by S v S (Arbitral Award: Approval) (Practice Note) [2014] 1 WLR 2299, romp through Barder events, foreseeability and mistake, then, last but not least, application to this case of the principles propounded, with an endorsement of the arbitration award on the home stretch.

Along the way, there is a comment that the ARB1 might need amending and a further note on two practice points about where to issue a Notice to Show Cause (if you find yourself in the husband’s predicament in this case). Answer: Royal Courts of Justice for Mr Justice Mostyn to allocate to a High Court judge as soon as possible. Secondly, if you have a Barder-type application, you can apply to the court that made the order in the first place; you don’t need to appeal.

2. Why is it important?

It is important as it is a further case supporting the limited interference with arbitration awards. In the words of Mr Justice Mostyn at paragraph 16: ‘It can therefore be seen that when parties sign up to arbitration under the 1996 Act they “buy” very limited rights of challenge. These rights do not extend to a challenge based on a mistake in the production of evidence or as a result of a supervening event.’

Further, in the family context: ‘It can therefore be seen that the parties have agreed in writing that challenges to an arbitral award would not be confined only to those available under the 1996 Act. In addition they specifically agreed that the court would retain an overriding discretion, and inferentially the parties agreed that they would each be enabled to argue that the court should not exercise its discretion to incorporate the award for reasons outwith those stated in the 1996 Act. In so doing they were agreeing, pursuant to section 58(1), an exception to the award being final and binding. In making such an agreement the parties were of course, doing no more than recognising what the general law already provided.’

However: ‘I would not go that far, as this would appear to rule out a challenge on the ground of a vitiating mistake or a supervening event. If a challenge were to be made out on one or other such ground it would in my judgment be a plainly wrong exercise of discretion for the court to incorporate an award nonetheless … However I do agree with Mr Pointer QC that when exercising its discretion following an arbitral award the court should adopt an approach of great stringency, even more so than it would in an agreement case. In opting for arbitration the parties have agreed a specific form of alternative dispute resolution and it is important that they understand that in the overwhelming majority of cases the dispute will end with the arbitral award. It would be the worst of all worlds if parties thought that the arbitral process was to be no more than a dry run and that a rehearing in court was readily available.’

It also gives further practical guidance about where to send papers in applications of the type in this case.

3. How does this fit into existing law and practice?

This judgement is a neat ‘refresher’ of arbitration, Barder or supervening events, and mistake. It is a classic Mr Justice Mostyn judgment, analysing the law and then boiling it down to a nice easy-to-remember checklist.

It is also supportive of the arbitration scheme, so if you do not know what that is about, it’s time you did a bit more reading, no?

4. In what ways does this affect practitioners?

The fourth edition of the Family Law Protocol says we should all be advising our clients of all methods to resolve their issues, and that includes talking about arbitration. This is the second case of this type within the last 24 months effectively endorsing the arbitration scheme. If you do not know what family arbitration is about, you need to find out. You may like that it is confidential, flexible in terms of method and scope - you can ring-fence agreed areas - and is generally quicker and cheaper than going to court. You can also choose your arbitrator. IFLA keeps a database of arbitrators and has a search function to help you find an arbitrator based on specialism, region etc.

5. What, if anything, should I be doing differently as a result?

You need to be thinking about arbitration as another method to help your clients and make sure you understand how the scheme works.

You could also take some lessons from this case from the analysis of mistake and assumptions being made. In this case, the wife assumed that her planning permission would be going through, despite warnings from her architect. She didn’t bother to check or even consider the alternative of it not being passed, consequently, when it did not pass, she had to resist an order being made and was very much on the back foot.

About the author - Karen Dovaston

Karen Dovaston is a member of the Family Section Advisory Group. She is deputy head of family law department and a family law arbitrator at Jeffries Solicitors.

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