United States: The New Jersey Supreme Court Enacts Rule 5:1-5, Codifying Arbitration Procedures For Divorce Matters.

Resolving issues pertaining to a divorce matter are not only costly and challenging, but if parties' choose to litigate their issues before a sitting Family Part Judge, their dirty laundry becomes public record.

In order to resolve divorce litigation in a more private setting, parties have the choice of attending mediation and/or arbitration as alternative dispute resolution options. In addition to maintaining privacy, these alternative options usually bring matters to a resolution more quickly than the backlogged Court system is able to, and are more cost-effective. Further, given the more informal setting, there is usually a reduced level of conflict between the parties and attorneys.

When a Complaint for Divorce is filed, pursuant to New Jersey Court Rule 5:4-2(h), the first pleading of each party must include an affidavit or certification "that the litigant has been informed of the availability of complementary dispute resolution ('CDR') alternatives to conventional litigation, including but not limited to mediation or arbitration, and that the litigant has received descriptive literature regarding such CDR alternatives." A copy of the Court-approved descriptive literature describing alternative dispute resolutions can be found here: http://www.judiciary.state.nj.us/notices/2006/n061204.pdf

With regard to arbitration, on September 1, 2015, the New Jersey Supreme Court adopted Rule 5:1-5, which applies to all Agreements to Arbitrate and Consent Orders to Arbitrate between and among parties to any proceeding heard in the family part, except: (A) the entry of the final judgment of annulment or dissolution of relationship; (B) actions involving the Division of Child Protection and Permanency; (C) domestic violence actions; (D) juvenile delinquency actions; (E) family crisis actions; and (F) adoption actions, which may not be arbitrated.

Fawzy v. Fawzy

The adoption of Rule 5:1-5 is essentially a codification of the 2009 New Jersey Supreme Court decision Fawzy v. Fawzy, 199 N.J. 456 (2009). In Fawzy, the parties agreed to resolve all matters pertaining to their divorce proceeding through binding arbitration. While the arbitration was in progress, the husband attempted to stop the proceeding and restrain the arbitrator from issuing custody or parenting time award. The Court denied the husband's efforts to both stop the arbitration or restrain the arbitrator from ruling on custody and parenting time, and the arbitrator subsequently issued a custody and parenting time award.

The husband then sought to vacate the arbitration award and disqualify the arbitrator from ruling on the remaining issues of the matter, arguing that "parties cannot submit custody issues to binding arbitration because doing so deprives the court of its parens patriae obligation to assure the best interests of the child."Fawzy v. Fawzy, 199 N.J. 456, 466 (2009). The trial judge denied the husband's application, and the Husband appealed. The Appellate Division subsequently reversed, holding that "matrimonial litigants cannot submit custody issues to final, binding, non-appealable arbitration." Id. at 466. The wife then filed a petition for certification to the Supreme Court on this issue.

New Jersey Supreme Court Justice Virginia Long issued an opinion holding that "within the constitutionally protected sphere of parental autonomy is the right of parents to choose the forum in which their disputes over child custody and rearing will be resolved, including arbitration". Id. 461-462.

However, since the Arbitration Act does not require the recording of testimony or a statement of findings and conclusions by the arbitrator, in order to protect a parties right to challenge an arbitration award with respect to custody and parenting time, Justice Long additionally mandated that "a record of all documentary evidence adduced during the arbitration proceedings be kept; that testimony be recorded; and that the arbitrator issue findings of fact and conclusions of law in respect of the award of custody and parenting time. Without that, courts will be in no position to evaluate a challenge to the award." Id.

Arbitration Procedure

As previously mentioned, all family law matters may be arbitrated unless they fall into one of the express exceptions under R. 5:5-1(a), which are listed above.

Once parties decide to resolve their matter through arbitration, R. 5:5-1(b) requires that several prerequisites be met. These are: (1) execution of the Arbitration Questionnaire; (2) execution of a Consent Order to Arbitrate or Arbitration Agreement; and (3) placement on the court scheduling Arbitration Track.

Specifically, with regard to the Agreement or Consent Order:

  1. Insofar as an Agreement or Consent Order relates to a pending family proceeding, the Agreement or Consent Order shall state:

    1. the parties understand their entitlement to a judicial adjudication of their dispute and are willing to waive that right;
    2. the parties are aware of the limited circumstances under which a challenge to the award may be advanced and agree to those limitations;
    3. the parties have had sufficient time to consider the implications of their decision to arbitrate; and
    4. the parties have entered into the Agreement or Consent Order freely and voluntarily, after due consideration of the consequences of doing so.
  2. In addition, in all family proceedings involving child-custody and parenting-time issues, the Agreement or Consent Order shall provide that:

    1. a record of all documentary evidence shall be kept;
    2. all testimony shall be recorded verbatim; and
    3. the award shall state, in writing, findings of fact and conclusions of law with a focus on the best-interests of the child standard.
  3. Further, in all family proceedings involving child support issues, the Agreement or Consent Order shall provide that the award shall state, in writing, findings of fact and conclusions of law with a focus on the best-interests standard, and consistent with R. 5:6A and Rules Appendix IX.

As you can see, the subparagraphs of this rule have codified the requirements mandated by Justice Long in the Fawzy opinion, which protect a parties' right to challenge custody and parenting time arbitration awards with a clear and concise record.

Take Away

It should be remembered that the new arbitration rule represents the minimum that is required by law to be in an Arbitration Agreement, and attorneys should be mindful of this when drafting Consent Orders or Agreements to Arbitrate. Clients should be fully aware of all of the issues that will or will not be litigated by the arbitrator, pursuant to the agreement, and the narrow scope of review that accompanies an arbitration award. The more clear and concise the Arbitration Agreement is, the less likely it will be challenged by a disgruntled litigant who is unhappy with the award received.

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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