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Arbitration and mediation are often promoted as being quicker, less costly methods to resolve disputes than litigation, but they should be used with care, as a recent case shows.
It involved a couple who divorced. Both had children by earlier marriages and they agreed when they split up to settle the financial arrangements between them by arbitration.
The arbitrator considered the evidence provided and made his award in 2015. The decision provided for a roughly equal division of their assets and a 60:40 division of the sale proceeds of the husband’s business.
Until the business was sold, the arbitrator ruled that the wife should receive periodical payments.
The wife refused to accept the ruling and its conversion into a ‘financial remedy order’ by the court, because a house that was to be retained by her when the assets were divided was valued on the basis that she would be able to obtain retrospective planning permission for building works that had been carried out on it. This had subsequently been refused.
The net effect of this, she argued, was that the value of the property was some £220,000 less than the value put on it for the purposes of the arbitration and, accordingly, she should receive another £110,000.
Arbitration proceedings are difficult to overturn unless there has been a clear error, fraud on the part of one party or a ‘supervening event’ that was not predictable when the arbitration was carried out.
When considering her claim, the court asked whether any of these had occurred. It was clear that there was no fraud and that the refusal of planning permission, whilst not expected, was at least possible. The arbitrator had made no mistake on the facts presented to him.
The claim was therefore refused.
Says Alan Kiddle, in this instance, the couple might well have been better advised to take their time before reaching a settlement, so that the residual uncertainty of the planning permission issue could be eliminated.”
For advice on how best to negotiate a fair financial settlement on the break-up of any relationship, contact us.