Binding Arbitration in Divorce Cases

New Jersey Court Rule 5:1-4(a)(5) provides that the parties may agree to execute a consent order or agreement placing the issues before the court, at any point in a proceeding, on the “arbitration track.” Rule 5:1-5 sets forth, in detail, the scope of the arbitration, forms to be completed and the general rules to be followed in family law arbitration proceedings. Rule 5:3-8 governs the review and enforcement of arbitration awards.

This article highlights what this author believes to be the major “pros and cons” of submitting divorce issues to binding arbitration.

The Pros

Efficiency

Litigating a divorce from its inception through a trial until a judgment of divorce is entered is rarely an efficient process. By agreeing to binding arbitration to resolve all (or mutually selected) issues in a divorce matter, the attorneys and the parties can decide when and where the arbitration will take place. Typically, the arbitrator will set aside an entire day or block of days for the arbitration to be held, and the arbitrator has the ability to devote that entire day to the arbitration process, without the distraction of having to address a number of other matters, as a Family Part judge inevitably must do on any given day. The parties and the attorneys can agree to “relax” the rules of evidence and can agree on how the arbitration is to proceed (i.e., with or without a transcribed record) in order to meet the needs of the clients and attorneys. Accordingly, an arbitrator is likely to be better equipped than a trial judge to efficiently conduct the arbitration, hear testimony of the parties and witnesses, review the evidence and make a decision quickly.

Privacy

Many litigants are hesitant to have a divorce trial in a courtroom, knowing that there could be strangers, people they know or even reporters there observing the testimony and other evidence touching upon the most sensitive and personal of issues. Issues relating to their incomes, assets, children and social activities are likely to be “aired” in a public court room. Selecting binding arbitration basically eliminates this concern. The parties know that anything said or presented to the arbitrator will be said or presented only in the presence of the arbitrator, the litigants and the attorneys.

Knowledge/Expertise Of the Arbitrator

While the judges sitting in the Family Part are obviously equipped to handle divorce trials, there may be certain areas of the law in which a selected arbitrator may have special expertise. Many of the arbitrators are former Family Part judges and/or attorneys who have exclusively practiced family law their entire careers. Not only can the parties and their attorneys consider the unique knowledge or expertise of a certain arbitrator, they can also consider the arbitrator's demeanor and hourly rate. Selecting the “right” arbitrator for a divorce matter gives the parties and the attorneys a sense of control over the case and confidence that the issues will be presented, addressed and resolved in the best manner possible.

Rules/Issue Selection

Unlike trying a case in court, the Rules of Evidence in a binding arbitration hearing may be relaxed. The parties can decide whether or not to have a verbatim record of the arbitration kept (except if arbitrating custody and parenting time cases, in which event a record must be kept). The parties and counsel can also choose what issues will be arbitrated. Such flexibility makes the parties feel as if they are part of the process and, like selecting the arbitrator, may give the parties a sense of control and confidence in the way their case is being handled.

Finality

When the parties in a divorce matter submit their case to binding arbitration, they receive a binding decision. Although the parties can also agree on the scope of appeal, typically, the parties entering into binding arbitration want finality and agree that the arbitrator's decision will not be appealable except under limited circumstances, such as a gross error committed by the arbitrator. Divorce litigants ' especially those who are trying to expedite their divorce by entering into binding arbitration ' want finality and want their divorce to be over as quickly as possible. Rule 5:3-8 sets forth the manner in which the arbitrator's decision can be converted to a judgment or order.

Cost

Cost is listed as both a “pro” and a “con” in this article. While it is true that the parties have to pay the arbitrator's costs, it is highly likely that the cost of a trial in the Family Part will be greater than the costs of arbitration. As aforementioned, due to the court's heavy caseload, it is nearly impossible for a Family Part judge to spend a full, uninterrupted day trying a divorce case. Not only can this be frustrating for both litigants and attorneys, but it becomes very costly for the litigants to pay their attorneys for a full day of work when only half or less of the day is actually spent trying their case. Although each attorney will still need to prepare his or her client's case for the arbitration hearing in a similar manner to the way it would be prepared for a trial, given the ability to relax the Rules of Evidence, agree upon individualized rules and procedures and to streamline the arbitration process, some of the attorneys' preparation time may be able to be decreased by submitting the issues to binding arbitration.

The Cons

Cost

The cost of arbitration can be viewed by litigants as a significant factor in their decision whether or not to arbitrate their case. Since many of the well-qualified arbitrators are former Family Part judges and/or attorneys who have exclusively practiced family law for their entire careers, their hourly rates will be significant. Litigants who are hesitant to agree to binding arbitration due to the cost factor may think to themselves that they are just “hiring a third lawyer” with an hourly rate similar to or even greater than that of his/her attorney. If the issues presented to the arbitrator are time consuming and complex, and the arbitration lasts multiple days or weeks, the cost of arbitration will likely become significant.

Limited Ability to Appeal

Just as finality is a “pro” of binding arbitration, the limited ability of the parties to appeal could be viewed as a “con” to binding arbitration. A litigant who does not agree with the arbitrator's decision, although no gross error was committed by the arbitrator, may be left without a process of appeal. While many such appeals may not have been successful anyway, it is certainly possible that an arbitrator can make a bad or unfair decision, which might have been overturned or remanded on appeal if an appeal was an option.

Confirmation/Enforcement Issues

Rule 5:3-8 governs the review and enforcement of arbitration awards. The very fact that an arbitrator's award needs to be confirmed by the court in a judgment or order can turn out to be another “con” in binding arbitration. Of course, even once the arbitrator's decision is “confirmed” in a court judgment or order, enforcement of that judgment/order presents its own set of potential problems. Any litigant or attorney who has struggled enforcing court orders knows that the process can be time consuming and aggravating.

Rule 5:3-8(a) sets forth the procedure by which a final or interim economic award of the arbitrator is to be confirmed in a court judgment or order. Rule 5:3-8(b) governs the confirmation of final or interim custody and parenting time awards. Rule 5:3-8(c) governs a confirmation of final and interim child support awards. All three subsections of Rule 5:3-8 state that the court “shall” confirm and enter a judgment in conformity with the final award of the arbitrator, or confirm and enter a pendente lite order in conformity with an interim award of the arbitrator. That is, unless the court determines to correct, modify or vacate the final or interim arbitration award pursuant to the procedures and standards set forth in the Uniform Arbitration Act, N.J.S.A. 2A:23B-23 or 24 (unless the parties have expanded the scope of review under N.J.S.A. 2A:23B-4(c)); the New Jersey Alternative Procedure for Dispute Resolution Act, N.J.S.A. 2A:23A-23 or 14; and any other applicable statute; or in accordance with any other agreed-upon framework.

In addition, subsection (b) sets forth more specific criteria which must be met to “confirm” custody/parenting awards, and subsection (c) includes a provision which states that the court shall confirm a child support award unless the court finds that there is evidential support establishing a prima facie case of harm to a child.

While Rule 5:3-8 may seem like it provides an “easy” way to have the court confirm the arbitrator's decision, the clauses contained in the aforementioned rule start with the word “unless,” thus opening the door for the party against whom the judgment/order is sought to object to the entry of such judgment/order on the grounds set forth above. Even if the grounds for objection are ultimately found not to be valid, the time and effort involved in converting the arbitrator's award to a court judgment or order can inevitably lead to additional attorney fees and frustration.

Conclusion

It is this author's opinion that binding arbitration serves as an excellent ADR venue in which to address and resolve divorce (and post-divorce) issues. While the “cons” of arbitrating divorce matters, including the cost, the limited ability to appeal and potential problems confirming the arbitrator's award in a judgment or order are legitimate concerns, the “pros” of arbitration outweigh the “cons.” Given the current backlog in the Family Part and the inherent inefficiency of the system, binding arbitration in divorce cases will inevitably and justifiably become an even more common ADR option.

Christopher R. Cavalli is a partner with Callagy Law in Paramus, NJ. He is a Certified Matrimonial Law Attorney and leads the firm's Family Law Department. This article also appeared in the New Jersey Law Journal, an ALM sister publication of this newsletter.