Canada: Family Law Arbitration Has Advantages, But It's No Guarantee You'll Stay Out Of Court

The National Post recently reported on the case of a dispute between separated parents that centred on whether their children should be vaccinated or not.

Instead of going to court, the couple had opted to resolve their differences through another mechanism: family law arbitration.

While arbitration decisions are not made public unless they are appealed, in this case the arbitrator reportedly sided with the mother, determining that she was not obligated to vaccinate her children.

The case shone a light on a process that is becoming increasingly popular, as many see arbitration as a faster, more efficient way to resolve disputes than going through the courts.

Arbitrations also come with the benefit of privacy: in court proceedings, the separating couple is identified publicly by name, and their financial affairs are public to anyone who cares to look at a court file. Family arbitrations are private, with the award (the arbitrator’s “judgment”) being available only to the parties and their lawyers, unless an appeal is launched.

Unlike mediation, which involves a third-party facilitator but requires the agreement of the parties to reach a resolution, an arbitrator is given the jurisdiction by an agreement signed by the parties to resolve the issues in dispute and impose a binding decision.

Family arbitrations effectively allow litigants to choose their own “judge,” as the arbitrator has to be named in the arbitration agreement, and most family arbitrators have had long careers as family lawyers, making them well-suited to deciding complex family issues. By contrast, judges have varied backgrounds, and few have a lifetime of experience in family law.

Despite the benefits of a family arbitration, caution is needed before agreeing to participate.

An arbitrator’s jurisdiction over family law issues is limited by the terms of the arbitration agreement entered into by the separated spouses. An arbitrator, unlike a judge, has no inherent jurisdiction to decide an issue unless the parties have signed a valid arbitration agreement specifically setting out what the arbitrator has jurisdiction to deal with.

If the arbitration agreement does not clearly set out the issues to be dealt with, the arbitrator cannot make a decision on the issue; the matters not covered in the arbitration agreement will have to be dealt with by a court, meaning that the couple could end up litigating before two decision-makers.

One of the several safeguards introduced by the McGuinty government in 2006 required that certain formalities be complied with before an arbitration agreement was valid. One of these requirements included that independent legal advice be given to the parties signing an arbitration agreement; that a certificate of independent legal advice must be signed by each lawyer providing the advice; and that the rights of appeal be set out in the agreement.

The courts have taken these requirements seriously. In the 2011 case of Davies v Davies, where a lawyer failed to sign a certificate of independent legal advice, even though both spouses signed the agreement, the court held that the agreement was invalid and required that the spouses resolve their issues in the courts.

Similarly, where a couple simply signed a settlement agreement in which they agreed that they will arbitrate future disputes between them, they were not allowed to resort to arbitration as they had not signed a specific arbitration agreement setting out the details related to the arbitration. In 2017, Horowitz v. Nightingale confirmed that simply agreeing to arbitrate future disputes did not satisfy the necessary formalities required by the Family Law Act, and again, the parties were required to proceed in court.

Still other limitations exist for those contemplating a family arbitration.

Getting the required financial disclosure from a separated spouse in order to determine financial issues is often a problem, and court orders for disclosure are commonplace.

If the parties are in an arbitration, and disclosure is required from third parties — such as from the trustees of a trust of which one of the spouses is a beneficiary, or from a corporation which a non-disclosing spouse does not control — the arbitrator has no right to make an award against a third party to produce the disclosure unless that third party has also signed the arbitration agreement and is bound by its terms.

Other problems can arise when trying to enforce an arbitration award.

If a spouse fails to comply, the arbitrator can be limited in the relief available.

Justice Robert Charney, in the 2015 case of Woronowicz v Conti, confirmed that the arbitrator has no jurisdiction to find a spouse in contempt — only a court can do so.

Finally, it is important for any separating spouses to remember that arbitrations are not always private.

If an arbitration award is appealed, all of the information that was part of the arbitration hearing itself, including the financial disclosure that was produced, will be publicly available in the court file.

Parties contemplating a family arbitration should weigh the advantages and disadvantages carefully, and understand that the arbitration process can never guarantee that the parties stay out of court.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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