The Good, The Bad and The Ungley

New Year: New Lockdown… and this one looks like it could be here for a good while. For many of us, January is normally a fairly challenging month: cold, wet and dark; a looming tax bill; crumbling resolve to stick to New Year’s resolutions; and the sheer, treacherous malevolence of the bathroom scales in pointing out all the excesses of Christmas. Add a global pandemic, some sketchy “home learning” and a general moratorium on stepping outside one’s front door into the mix, and it all makes for a pretty gloomy picture.

For family arbitrators [and practitioners who have seen the light, namely arbitraters], at least, there is a scrap of positivity from which to take comfort: there is no doubt that the covid pandemic situation has channelled many more cases into the arbitral ‘system’, whether from practitioners already au fait with workings of the IFLA schemes, or from those previously less confident in the merits of arbitration and perhaps needing a bit of a nudge. To that extent, the situation has been something of a “shot in the arm” for arbitration. The challenge for arbitrators and committed arbitraters alike will be in working out how we can successfully kick on and improve the use and take up of the IFLA arbitration schemes.

The Good

Hopefully, the experiences of those referring cases into family arbitration for the very first time over the last few months will have been positive. There is a degree of professional satisfaction (and, depending on the client, sheer relief) in getting any case over the line and concluded. The utilisation of the IFLA schemes will have delivered on that front for numerous families that would otherwise have been left stagnating amongst the backlog of cases adjourned out of the court lists. But the IFLA schemes represent a way of delivering so much more than just an outcome: the process itself, if marshalled effectively by the arbitrator, can be a much more positive experience for the litigants and their representatives. In particular, the dual benefits of remote hearings and rapid [remote] access to the arbitral tribunal ought to prove to be a major selling point for the IFLA schemes, and a means of instilling confidence in and propagating enthusiasm for the arbitral route.

The best means of increasing the take up of family arbitration will be for those who have tried, used, applied and experienced the IFLA schemes to be able to speak positively and confidently about it, both to their own clients and to those opponents who may be hesitant to reach for the Forms ARB1. It is, if you like, a question of winning hearts and minds: those yet to be persuaded of the benefits of  arbitration need to be won over not just in terms of the theoretical arguments, but also to have genuine faith and confidence that the process works in practice for their clients. Here’s where we meet “The Good”: the arbitrators, practitioners and judges who can and do positively advocate the benefits of the IFLA schemes from actual practical experience, spreading the word and, in turn, helping to take some pressure off the court system.

The Bad

There will be those, both litigants and practitioners, for whom arbitration will never be an acceptable route. Their objections have nothing to do with the factual matrices of their own cases but rest instead on an outright, blanket opposition.  For the purposes of the title of this blog, they can be labelled “The Bad”. There is a cohort of family lawyers who view arbitration with suspicion and unease and are insistent on battling things out in front of a ‘proper’ judge in a ‘proper’ courtroom. Being realistic, there is probably no amount of evangelism, encouragement or cajoling that will persuade these Lee Van Cleef style litigators to change tack.

Equally, even where the professional lawyer is not resistant to arbitration, many lay clients will want to avoid any hint of acceleration in the resolution of their dispute, especially where they perceive some tactical advantage in elongating the ‘status quo’ and putting off the day of reckoning for as long as possible. Deliberate, tactical foot-dragging is completely at odds with the very first principle enunciated in the Arbitration Act 1996, namely (at s.1(a)) that “…the objective of arbitration is to obtain the fair resolution of disputes by an impartial tribunal without unnecessary delay or expense” (emphasis added). Persuading a litigant to surrender what they perceive, rightly or wrong, to be a tactically advantageous citadel of delay to the forces of brisk arbitration is likely to be a very hard task.

The Ungley

So what are the options for practitioners where their own client’s enthusiasm for using arbitration is being frustrated by unreasonable and unfounded opposition from the other party? Whatever response is adopted, the critical objective is manoeuvre the other side into articulating, and seeking to justify, their refusal to engage with the arbitral process.      

For the majority family lawyers, the Ungley order first came onto the radar in the decision of Mostyn, J in Mann v Mann [2014] EWHC 537 (Fam), where it was warmly endorsed (and deployed) as a means of trying to steer a case towards non-court dispute resolution. This mechanism, devised initially by Master Ungley in clinical negligence cases, is to make a direction that: 

The parties shall by consider whether the case is capable of resolution by ADR. If any party considers that the case is unsuitable for resolution by ADR, that party shall be prepared to justify that decision at the conclusion of the trial, should the judge consider that such means of resolution were appropriate, when he is considering the appropriate costs order to make.

The party considering the case unsuitable for ADR shall, not less than 28 days before the commencement of the trial, file with the court a witness statement without prejudice save as to costs, giving reasons upon which they rely for saying that the case was unsuitable.

Of course, arbitration is and remains a fundamentally voluntary process: no party can be compelled to arbitrate. But in circumstances where an already overburdened court system has jealously to safeguard judicial time and resources, there is plenty of scope for the judge (to borrow a phrase from another context) to provide “judicious encouragement” to the parties to adopt and use the arbitration route.

The “teeth” of the Ungley order is in compelling the recalcitrant party to justify, through a witness statement, their reasons for refusing to utilise non-court dispute resolution routes. Where those reasons are found to be not good enough, that party will be exposed to adverse costs sanctions at the end of the case. However, the downside of the Ungley mechanism is perhaps that it does not bare its teeth soon enough. The time for the ‘Bad’ party to go into print and sign off on a witness statement is only a month away from the actual trial date. Arguably this is far too late. A better course would be to require a written justification of the reasons for refusing to engage with non-court dispute resolution at the very outset of the case.

Forcing the recalcitrant party to go on record and to nail their colours to the mast early on maximises the potential costs leverage. From a tactical point of view, it also means that at every interim stage of the court proceedings, there is witness statement material to use against the ‘Bad’ party. It will be much easier to cause the judicial hairdryer treatment to be dished out to the other side if it can be shown that their reasons for insisting on staying in the court arena are patently inadequate. In the discretionary field of family law, the consequences of establishing unreasonable litigation conduct in the other party often goes beyond the pure question of costs.   

Significantly, it is not necessary to wait for the court to get involved or to make a formal Ungley order before this pressure can be applied. Where appropriate, the thumbscrews can be tightened at a much earlier stage. The groundwork for any costs leverage begins in properly framed correspondence which sets out and proposes various non-court dispute resolution options and requires the opposing party to provide a substantive response. “The Surrey Initiative” is an exciting scheme, spearheaded by Karen Barham at Moore Barlow LLP, designed to entrench and enforce proper compliance with the terms and spirit of Part 3 of the Family Procedure Rules 2010, and to provide a framework for meaningful costs leverage. Readers of this blog are strongly encouraged to familiarise themselves with the details of the scheme (https://www.moorebarlow.com/the-surrey-initiative/) and to consider, and where appropriate adopt, the excellent suggestions made therein.

It may well be tactically helpful to think carefully about the window dressing and commentary in such letters. The correspondence needs to be framed with two different readers in mind: firstly, the other party. They need to understand why arbitration (or whichever non-court dispute resolution option) is being proposed in preference to the court system. Is this to avoid delay? Provide a framework? Save expense? Maximise the prospects of early settlement? They also need to understand precisely what is being proposed. Here, the writer will need to strike a balance between setting out a clear path (“We propose arbitration and would like to appoint either X, Y or Z as arbitrator…”) and, on the other hand, building in some flexibility and inherent reasonableness (“We are happy to discuss and consider the identities of alternative arbitrators…”).

Secondly, the letter must also be written with the future judicial reader in mind. Factor in that the letter is likely to be something you want to waive under the judge’s nose, either at an (every??) interim court hearing or at the costs stage of the trial. The letter needs therefore to be short, to the point and easily digestible.  

Quick on the draw

The tactic of flushing out an opponent in correspondence and forcing them to either commit to non-court resolution, or at least to justify why their client is unwilling to do so, is not necessarily limited to the “main event”. Even where the other side refuse to agree to non-court dispute resolution for determination of the substantive claim, and even where they advance not-entirely-fanciful reasons for that refusal, there is still plenty scope to promote the use of dispute resolution models that avoid the court. This is especially true for arbitration, where speed and agility of the arbitral process comes into its own as an efficient means of dealing with any satellite or interim points.

Firstly, practitioners should consider whether or not they can extract an early commitment from the other side to resolve any disputed interim issues by way of arbitration. Just because a party is reluctant to arbitrate the main substantive dispute, they should still and separately be required to justify why they are unwilling to adopt arbitration as means of, for example, sorting out maintenance pending suit, interim child arrangements or the appointment of an expert. These are generally discrete issues where speed of determination can be critical. Getting a commitment from the other side to utilise (or, conversely, recording their written refusal to utilise) arbitration to deal with such points may have powerful costs consequences. This is especially so in financial cases, where costs rules for most interim applications and maintenance pending suit are outside the ‘starting point of no order’ regime (FPR 2010, r. 28.3(4)(b)).

Secondly, it will be very hard for a party who is refusing to engage with non-court dispute resolution sensibly to maintain that refusal where the court option is suddenly removed from the equation. Many references to arbitration occur simply because a case has been adjourned out of the court lists at the last moment due to lack of available judges (see for example Haley [2020] EWCA Civ 1369 itself). The costs consequences of a hearing being aborted after the deeming of counsels’ brief fees can be disastrous. This is a risk which is foreseeable. Steps can be taken to mitigate the consequences by having agreed IFLA arbitration as a ‘plan B’ well in advance.  

Given the current state of the court lists, the continuing pressure on overloaded and overworked judges and, of course, the small matter of a worldwide pandemic, it is wise to anticipate cases being ‘bumped’ at the last minute and to take pre-emptive action. It is no good waiting until the worst has happened and a final hearing has actually been adjourned: arbitration should be lined up, at least in principle, as a “back up” option well in advance. This does not mean that the parties necessarily have to identify and agree upon an arbitrator at this stage (indeed, it is easy to see how this would become problematic, as the arbitrator will not want to ringfence time in their dairy for an arbitration that may never happen), but parties should be encouraged to agree in principle and in advance that if their case is adjourned out of the court list at the last moment, they will in that instance proceed straight to arbitration and will thereby preserve the existing hearing date. (This scenario poses some nice questions about the status of such an agreement, and whether it would of itself amount to a binding arbitration agreement, but those are for another post!) Given the impressive numbers of arbitrators now qualified under the IFLA financial and children schemes, there is little doubt that a suitably qualified and experienced arbitral tribunal will be available at short notice.    The critical point here is perhaps not that the ‘Bad’ party contingently agrees to arbitration (and let’s face it: if they are fully paid up members of the awkward squad, they probably won’t) but that they will have been required to justify in advance why they refuse to do so. That ought to provide some very significant costs leverage for the ‘Good’ party when the adjourned case comes back before the judge for trial, many weeks or months later.