Is an arbitration award final?
Is an arbitration award final?
If you are involved in divorce proceedings you may be considering using arbitration to sort out the financial settlement. Arbitration involves both parties instructing an arbitrator to decide the case for them, rather than have the matter go to court. Arbitration has a number of advantages, in particular being much quicker than contested court proceedings.
But is an award made by an arbitrator final, in the same way that an order of the court is final? It is an issue that concerns many who are considering arbitration – after all, what is the point of going through arbitration if the award is not final?
An instructive case
The question of the finality of an arbitration award was raised in a recent, and highly instructive, High Court case.
In the case the husband was not satisfied with the arbitration award, and sought to have it set aside by the court, so that the court could decide the case instead.
The factual background was that the parties were married in 2005 and had one child, now aged 11. The marriage broke down and the wife commenced divorce proceedings in 2018. She also issued a financial remedies application, but this was delayed, because of the unavailability of a judge. The husband and wife therefore agreed to have the financial remedies claim dealt with in arbitration.
The main assets were the proceeds of sale of the former matrimonial home, amounting to £319,000, and the parties’ pensions, with the husband’s pensions being of much greater value.
The arbitrator awarded £298,000 from the proceeds of the former matrimonial home to the wife, taking into account the fact that the husband had a much higher mortgage capacity. As to pensions, the arbitrator awarded some 35% of one of the husband’s pensions to the wife, with the aim of leaving each party with an equal pension income.
The husband applied to have the arbitrator’s award set aside. His application was heard by the High Court.
The first question for the High Court to decide was: should the husband be given permission to appeal against the award, in the same way that he could have appealed against an order made by the court? The High Court held that he should not. When people choose to go to arbitration they don’t just agree to have the case heard by an arbitrator rather than a court. They contract into a different regime, which has different rules, including the rules relating to appeals. Under those rules permission to appeal was only available if the decision was one which no reasonable arbitrator could reach, when applying the law properly. Here, the arbitrator had applied the law properly, and his award was in the range of that which a reasonable arbitrator could make.
The husband also argued that the award should be set aside for ‘serious irregularity’, as allowed by the arbitration rules. However, the High Court found that there had been no such irregularity.
Award final and binding
The last question to be determined by the High Court was: should the award be made an order of the court? (Arbitration awards are normally made into court orders, to ensure that they are final and enforceable.)
The High Court said that it would be rare for an arbitration award that had not been successfully challenged not to be made into an order, as such an award is final and binding. Here, the award reflected a fair allocation of assets, taking account of the relevant considerations, and was firmly within the range of right outcomes. The High Court was therefore satisfied that it should approve the order.
Accordingly, the husband’s application to set aside the order was dismissed, and the award was made into an order of the court.
In conclusion, the answer to the question posed at the beginning of this post is that yes, arbitration awards are usually final, just as court orders are final. There is a right to appeal against an arbitration award if there has been a legal error or serious irregularity, but that is certainly no more than the right to appeal against an order of the court.
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Ian Walker offers an arbitration service, for both financial remedy claims and disputes over arrangements for children. For further information see here, and for information about arbitration in financial cases, see here.