Why Paul Hollywood was wise to settle his financial proceedings in arbitration
Bake Off judge Paul Hollywood has resolved the financial arrangements in his £10m divorce from ex-wife Alexandra in arbitration, according to reports in the press last month. Arbitration is not confined just to celebrities. It has several advantages compared to going to court, including speed, confidentiality, lower legal costs and the trauma of having to attend court. This can be frightening for some people, anxious and stressful about what to expect in court and the potential hostility of coming face to face with their husband or wife.
The parties must pay the arbitrator's costs, but the time saved and the flexibility of the process usually means that costs are significantly lower than if the dispute goes to court.
The press likes nothing better than a celebrity break-up, and the respective divorces of Paul Hollywood and Ant McPartlin have given them plenty to write about over the past few months.
Recent stories have focused on the fact that Hollywood has successfully settled financial matters with his ex-wife in arbitration and in doing so kept the terms of their settlement confidential.
In contrast, Lisa Armstrong is said to have rejected an offer made by ex-husband Ant McPartlin of more than half his £62m fortune, on the basis that she "wants her day in court". By doing so, Armstrong has highlighted one of the significant benefits of arbitration that McPartlin was keen to avail himself of, namely, confidentiality. Armstrong is believed to want the financial proceedings (and details of the breakdown of her marriage, McPartlin's addiction problems and the parties' financial position) to be heard in court, even if it means there is a risk of receiving a lower settlement.
What is arbitration?
In 2012, the Institute of Family Law Arbitrators (IFLA) launched a scheme that allows financial disputes in family matters to be resolved by arbitration. Instead of going to court, the couple jointly appoints someone, (usually a family law barrister, solicitor or former judge), to arbitrate their dispute. The parties agree that the arbitrator's decision will be final and binding and subsequently put into a financial remedy order for the court to seal.
Arbitration has several distinct advantages compared to going to court, including:1.Confidentiality
Unlike most court proceedings, arbitration hearings are held in private. In some cases, judges will order that financial proceedings are held in private and place reporting proceedings on the media, but this is the exception and most cases are heard in open court.
Arbitration guarantees that a divorcing couple's financial affairs remain private and confidential.2.Speed
Going to arbitration almost invariably means the dispute is settled more quickly. The court lists are congested, and it is not unusual for the financial hearing to be delayed for several months, even years. An arbitration can take place more or less anywhere, and at any time convenient for the parties. They control the timetable, not the courts. In most cases, arbitration hearings are completed within a day, or two days at the most. In one recent case, BC v BG, the parties chose to go to arbitration due to frustration with court delays in hearing their case. The husband applied for financial relief in November 2016, and the hearing was initially listed for February 2018. This hearing was adjourned until July 2018 due to the court being unable to accommodate the case and then adjourned again in July 2018 due to the judge being ill. The parties chose to go to arbitration instead, and the hearing took place in July 2018 with the award being made a few weeks later. Stories like this are not unusual
3.Choice of arbitration
The parties cannot choose the judge who hears their case, but they can choose the arbitrator. Every judge is different and the same judge may not hear adjourned or further hearings. Choosing an arbitrator ensures continuity throughout the proceedings.
The parties, together with the arbitrator, have control over how the process takes place. They can be flexible about where appointments take place and aren't restricted by court hours. They can also be flexible about when and how evidence is exchanged between them.
The parties must pay the arbitrator's costs, but the time saved and the flexibility of the process usually means that costs are significantly lower than if the dispute goes to court,
6.Reducing the stress of attending a court hearing
Attending court can be very stressful. The courts can be crowded and noisy with little room to discuss matters privately unless you are one of the fortunate few who manages to secure a conference room. Tensions run high, as do emotions. Arbitration takes place in a quiet and calm environment.
Arbitration is encouraged by the courts
The case of BC v BG referred to above involved an application by the wife that the court refused to give effect to the arbitral award. This is possible where there are "supervening circumstances", ie new evidence that gives rise to a materially different dispute, or fundamental new circumstances and/or an error of law by the arbitrator.
None of these applied in this case, and Ms Clare Ambrose, sitting as a Deputy High Court Judge, refused the wife's application and upheld the award made in arbitration. She said in her judgment: "A primary purpose of the [IFLA] scheme is for the parties to achieve finality in their dispute… Finality is an agreed priority for parties using the ILFA Financial Scheme and this agreement will be respected."
Unless Lisa Armstrong has a change of heart, the financial proceedings with Ant McPartlin are likely to take place next year. McPartlin might seek reporting restrictions, but he may fail given that he has spoken so openly in the press about the breakdown of his marriage and his battle with addiction. If he does, no doubt the tabloids will have a field day revealing sensitive details of the couple's financial affairs, something Paul Hollywood will be glad he avoided.
If you would like to discuss an issue relating to divorce, please contact Mark Goldstein at [email protected] or on 020 7616 5322.