DR Corner: Arbitration, Litigation and Biscuits

Introduction

A member of my chambers once described the private FDR as, ‘like a court FDR, but with biscuits’. I agree. But arbitration and litigation are different in a different way, and those differences are important. At the same time, arbitration is not just another form of consensual non-court dispute resolution (NCDR). Ask a commercial lawyer whether the primary ambition of arbitration is to lower the temperature and they will look at you strangely. They want the privacy that we sometimes take for granted, but more than that, what they really want is fairness, expertise and speed.

I would hazard that lumping arbitration in with NCDR has made the choice to enter it feel like a question about pre-existing goodwill. After all, where that is lacking, mediation and collaborative problem-solving can be pointless. And so much has had to be said to nervous clients (and perhaps the equally nervous family lawyers) about the perception that arbitration is somehow an inherently more ‘friendly’ process than litigation. It is not.

For a time, there was much handwringing over the quality of decision-making by advocates cosplaying as decision-makers and take-up was slow. Decisions like Haley v Haley [2020] EWCA Civ 1369 and A v A [2021] EWHC 1889 (Fam) have helped, and the confidence that comes with the greater possibility of judicial oversight has helped with the uptake of arbitration. So has the Ministry of Justice’s resistance in using its own court facilities to the full. But it is wrong to infer that this has somehow shifted arbitration into being much the same as litigation, but just in nicer surroundings. Arbitration is in a unique position. It is neither litigation nor consensual resolution. It can draw on the best of what it is not, to improve what it is.

Procedure and evidence

Arbitration Act 1996 (AA 1996), s 34 is clear:

‘It shall be for the tribunal to decide all procedural and evidential matters, subject to the right of the parties to agree any matter.’

And so, the Family Procedure Rules 2010 (SI 2010/2955) (FPR) simply do not apply to arbitration claims in any way. The forms and processes are comfortingly well understood and sensibly used most of the time. But there is no requirement for a Form E, let alone Questionnaires. How often do cases genuinely turn on Replies?[[1]] Remember that the usually pointless ‘Schedule of Deficiencies’ does not exist in the FPR in the first place. Arbitration has no mandated rules as to whether, and to what extent, there needs to be disclosure, written evidence, oral evidence or any rules about that evidence (e.g. admissibility, opinion evidence and so on). There is no need for a formal application for expert/opinion evidence, and no test of necessity as under FPR Part 25. Note that once parties sign up to any given set of rules (e.g. the Institute of Family Law Arbitrators (IFLA) rules) they are stuck with them unless they agree otherwise, but they can choose to amend those rules before they commit to them, the most obvious example being in relation to whether they have the ‘modern’ presumptions of no order for costs or the ‘old’ Calderbank rules with tactical without prejudice proposals.

Importantly, AA 1996, s 34(2)(g) goes on to say that the arbitrator’s remit includes:

‘Whether and to what extent the tribunal should itself take the initiative in ascertaining the facts and the law.’

And so there is space for an arbitrator to be much more directive in what steps they consider will help them to get to a position where they can deliver a fair outcome. This power is rarely used, in part because many arbitrators are still in default ‘litigation-mode’, but also it seems that some lack the confidence to be assertive about what they need from the participants who, as they are painfully aware from the Forms H (that are not necessary), are footing the bill and may not want (for example) a full-blown Royal Institution of Chartered Surveyors valuation even if the arbitrator thinks it warranted.

The standard IFLA rules at Article 9 reinforce this procedural clean sheet:

‘9.1 The parties are free to agree as to the form of procedure (if necessary, with the concurrence of the arbitrator and, in particular, to adopt a documents-only procedure or some other simplified or expedited procedure.

9.2 If there is no such agreement, the arbitrator will have the widest possible discretion to adopt procedures suitable to the circumstances of the particular case in accordance with section 33 (general duty of the tribunal).’

Unsurprisingly, that ‘general duty’ requires an arbitrator to ‘act fairly and impartially’. But if the only criterion for the ground-rules are that they be fair and impartial, there is huge scope to tailor the rules to the issues in the case. Why be so prissy about re-examination or re-calling witnesses? Why not let a shareholder spouse speak directly with the single joint expert about working capital requirements? Consider also for a moment the knotty problem of summary judgment. Plenty of issues in plenty of cases have no real prospect of success. It is one thing for a judge to tell you that, but it is quite another to be told that by an arbitrator you are paying for the very purpose of hearing you out fully. This problem had troubled some of our civil law cousins for many years until, on 1 August 2025, a new s 39A was added into AA 1996 which expressly gave arbitrators the power to make summary judgments/awards. But we know from the judgment of Lord Wilson in Wyatt v Vince [2015] UKSC 14 at [27] that summary disposal is conceptually difficult in financial remedy proceedings:

‘The meticulous duty cast upon family courts by section 25(2) is inconsistent with any summary power to determine either that an ex-wife has no real prospect of successfully prosecuting her claim or that an ex-husband has no real prospect of successfully defending it. Indeed, were the latter conclusion to be appropriate, how should the court proceed to quantify the ex-wife’s claim? For in applications for financial orders there is no such separation as exists in civil proceedings between issues or liability and those of quantum.’

Leaving aside the recent thrust of cases such as Tsvetkov v Khayrova [2023] EWFC 130 where claims of conduct of doubtful or limited impact are now routinely (dare one say, ‘summarily’?) prevented from going forward unless they reach some (as yet, undefined) high bar, does this apply to arbitration? And in particular, could an arbitrator deal on a summary basis with part of a case, separating out the wheat from the chaff of a case at a much earlier stage than a court could? Clearly, a financial remedy application does not have formal ‘heads of claim’ some of which can be isolated from the others because there is a need to have an overall ‘holistic’ review of where everyone is left at the end by making sure that everything is carefully balanced off against everything else in the round.

But is that true in practice? Imagine that X asserts they are liable to repay a loan of £1m to a parent. Y points out that: (a) the total assets are £1.2m; and (b) the only evidence of a loan is a WhatsApp sent 5 years later (and 2 weeks after Form A) which simply says, ‘pay it back if and when you can’. X says that they ‘must’ repay it out of deep-seated moral obligation, but that would leave Y unable to rehouse. That is not amenable to a strike-out. It might be dealt with on a TL v ML [2005] EWHC 2860 (Fam) preliminary hearing basis with all of the evidence and pleadings and bells and whistles. Is it reasonable to have to wait and incur the costs when it is legally recognisable as a claim but in practice completely ridiculous? So why not a summary judgment on a discrete aspect of a claim?

Representation

Once very specific difference between litigation and arbitration relates to representation. AA 1996, s 36 is clear:

‘Unless otherwise agreed by the parties, a party to arbitral proceedings may be represented in the proceedings by a lawyer or other person chosen by him.’

The IFLA rules repeat this, but add at Article 4.7:

‘If at any time the arbitrator forms the view that the participation of a non-lawyer representative or the assistance given by a McKenzie Friend unreasonably impedes or is likely to impede the conduct of the arbitral proceedings or the administration of justice, he may direct that the relevant party should not continue to be so represented or assisted, as the case may be, and will state his reasons in writing.’

When it comes to representation, Legal Services Act 2007, s 12 tells us that ‘the exercise of a right of audience’ and ‘the conduct of litigation’ are each a ‘reserved legal activity’ which can only be undertaken by qualified lawyers. Schedule 2 gives further definitions and makes clear at paras 3 and 4, respectively, that:

‘A “right of audience” means the right to appear before and address a court, including the right to call and examine witnesses. …

The “conduct of litigation” means –

(a) Issuing of proceedings before any court in England and Wales.

(b) The commencement, prosecution and defence of such proceedings, and

(c) The performance of any ancillary functions in relation to such proceedings (such as entering appearances to actions).’

Arbitration per se does not involve appearing before a court. Neither does it involve issuing proceedings before a court, commencing them or doing anything ancillary to them. Of course, the court can be involved before and during arbitration, and at the end of a financial remedy arbitration there will be contact with the court as the order is sent in for approval. But within the four walls of the arbitration itself, a party has a presumptive right to be represented by whomever they choose, lawyer or not. And that can mean that a party can ask for the cross-examination of their ex-spouse to be conducted by whomever they choose, so long as this does not impede the arbitration process.

Therefore, just as the procedural rules of FPR Part 9 do not apply, neither do the protective provisions of FPR Parts 3A, 3AA or 3AB, nor the restrictions on the cross-examination of victims of offences or those protected by injunctions under Matrimonial and Family Proceedings Act 1984, ss 31Q–31Z. Where this arises, the answer is to include these restrictions expressly at the point that the arbitration agreement is being negotiated. That is, these rules can be imported, but this is something that must expressly be agreed or, if it becomes an issue, the arbitrator can impose the restrictions or protections that they consider warranted in that particular case and, by analogy with Article 4.7 of the IFLA rules, should explain why they have done so in writing.

The arbitrator’s substantive powers

An arbitrator might have much wider powers over process and procedure, but they have far narrower substantive powers.

There is some tension between the AA 1996 and the IFLA rules here. On the one hand, AA 1996, s 38(1) says this:

‘The parties are free to agree on the powers exercisable by the arbitral tribunal for the purposes of and in relation to the proceedings.’

However, Article 7.2 of the IFLA rules says this:

‘In relation to substantive relief of an interim of final character, the arbitrator will have the power to make orders or awards to the same extent and in the same or similar form as would a Judge exercising the jurisdiction of the High Court. (For the avoidance of doubt, the arbitrator’s powers does not extend to interim injunctions; committal; or jurisdiction over non-parties without their agreement).’

That is not to say that once arbitration has started there can be no protective or injunctive orders. AA 1996, s 44 is clear that the court can make freezing orders and search orders, ‘in support of arbitral proceedings’ and can grant interim injunctions (including those which might impact on third parties).

The issues in relation to third parties are important because, despite its rigour, entering into an arbitral forum (whether as a ‘primary’ party or as a ‘secondary’ party) is a choice which must be made freely. Article 7.5 of the IFLA rules says this:

‘The parties may agree that a third party or parties be joined to the arbitration provided that the third party or parties agree in writing: (a) to be so joined; (b) to abide by the Financial Scheme Rules; and (c) to be bound by any award made by the arbitrator. In such a case, the arbitrator may join the third party or parties to the arbitration on such terms as may be agreed by all relevant parties, or as may be directed by the arbitrator.’

Unlike litigation, it is not sufficient to serve someone with notice of permission to intervene if so advised, on the basis that they might later be bound by any findings. A good example is an application to vary a settlement in financial remedy proceedings. FPR 9.13 requires service on at least the trustees and the settlor (if living). That is sufficient under the litigation rules to bind them by a litigated outcome. It would not be sufficient to bind them by an arbitrated outcome. Any third party must actively give their consent to be bound by the result of an arbitration.

Enforcement and the ‘peremptory order’

An arbitration has started. A party is accused of dragging their heels, or maybe worse. What can be done? AA 1996, s 1(c) generally exhorts the court to keep its nose out of arbitration, but s 41(5) later says this:

‘If without showing sufficient cause a party fails to comply with any order or directions of the tribunal, the tribunal may make a peremptory order to the same effect, prescribing such time for compliance with it as the tribunal considers appropriate.’

Under s 41(7) the arbitrator can draw inferences, award costs and so on. All well and good. But when that is not sufficient, s 42 steps in:

‘(1) Unless otherwise agreed by the parties, the court may make an order requiring a party to comply with a peremptory order made by the tribunal or (as the case may be) the emergency arbitrator.

(2) An application for an order under this section may be made –

(a) By the tribunal or the emergency arbitrator (upon notice to the parties),

(b) By a party to the arbitral proceedings with the permission of the tribunal or the emergency arbitrator (and upon notice to the other parties), or

(c) Where the parties have agreed that the powers of the court under this section shall be available.

(3) The court shall not act unless it is satisfied that the applicant has exhausted any available arbitral process in respect of failure to comply with the peremptory order.

(4) No order shall be made under this section unless the court is satisfied that the person to whom the peremptory order was directed has failed to comply with it within the time prescribed in the order or, if no time was prescribed, within a reasonable time.’

All of which begs the question of what ‘a peremptory order’ is in the first place.

In the recent case of Tecnimont SpA v LLC Eurochem North-West-2 [2025] EWHC 3151 (Comm), Butcher J said this at [53]:

‘Thirdly, I do not consider that in section 41(5) the words “peremptory order” were intended to mean only an “unless” order, though it would doubtless include “unless” orders. The definition of peremptory in the Act, under section 82(1), refers to a peremptory order as:

“one made under section 41(5) or made in the exercise of any corresponding power conferred by the parties.”

That still leaves one with the meaning of the word “peremptory”. Ordinarily, the word “peremptory” has the sense of absolute and admitting of no refusal, debate or delay. It is therefore not confined to a conditional or “unless” order.’

Therefore, turning a ‘regular’ arbitral direction into a ‘peremptory’ order is similar to the endorsement of a penal notice onto a court order. It can be made at the time; it can be added later. Since the advent of the standard drafting precedents – which contain the obligatory words of warning on the face of almost every financial remedy order – financial remedy practitioners have sometimes lost sight of the significance of endorsing an order with warnings about the consequences of disobedience. Our civil law cousins, and indeed our private law siblings, have long been conscious of this.[[2]]

So, what form should a peremptory order take? Given the general philosophy of the AA 1996 and the IFLA rules, a peremptory order is one by which the arbitrator gives back to the parties (or to itself) the right they had previously given up to involve the court. As Butcher J comments, that need not formally be an unless order, but it must be an order which makes clear that any breach can attract a court-based sanction. Once that peremptory order is in place, the full range of options open to a court on any interim enforcement issues comes into play.

Finally, in Emmott v Michael Wilson & Partners Ltd (No 2) [2009] EWHC 1 (Comm) at [56], Teare J approved this passage from Commercial Arbitration by Mustill and Boyd (LexisNexis, 2nd edn, 2001):

‘The principle is well recognised, and is an essential element in the scheme of the Act, as a counterpart to the wide powers entrusted to the arbitrator and the explicit encouragement to use them with boldness and imagination. Unnecessary meddling by the court both falsifies the trust which the legislature and the parties have placed in the arbitrator and discourages arbitrators from employing them boldly in the future. If the courts do not back up the arbitrator even when faced with the temptation to put right a procedural decision which it would itself have made differently the Act will be a failure.’

After all, the IFLA rules at Article 15 do not permit a party unilaterally to walk away from arbitration once it has begun, and AA 1996, s 41(4) provides that if a party simply fails to turn up, the arbitration can continue in their absence. This is a rarely used but very important power.

Back to biscuits

To further over-stretch my earlier metaphor, if the difference between an FDR and a PFDR is the availability of biscuits, then understanding the difference between arbitration and litigation requires a meditation on the Jaffa Cake; sold as a biscuit, but with enough specific qualities to make Hector the Inspector (your friendly neighbourhood taxman) think they were eating a cake. As the First-tier Tribunal put it in Pulsin’ Ltd v Commissioners for HMRC [2018] UKFTT 775 (TC) at [61]:

‘In the case of United Biscuits (LON/91/160) concerning Jaffa Cakes the tribunal determined that certain characteristics of the Jaffa Cake were cakelike: ingredients, that it was friable like a cake and had the texture of a cake; however, a Jaffa Cake was also the size and shape of a biscuit, packaged and sold alongside biscuits and presented to be eaten with the fingers and not, as might be expected of a cake, eaten with a fork. The product was nevertheless determined to be a cake.’

And so with dispute resolution, a judge has much broader powers but an arbitrator can use their narrower powers in a much more imaginative way. Only certain people can address a judge but, within reason, anyone can address an arbitrator unless restrictions have been agreed in advance or the smooth running of the arbitration is impeded. Enforcement of interim arbitration awards requires a few additional steps, but ultimately can be sent off to be dealt with by a judge whose job is to back up the arbitrator when needed. Parties can pick an arbitrator whom they like the look of, but the court staff will (forgive the pun) peremptorily allocate a judge. Arbitration is no cheaper, but it is most certainly quicker. Appellate oversight is now reasonably similar, even if the ‘serious procedural irregularity’ ground has to be looked at slightly differently because the roadmap mandated by the FPR does not apply. Ultimately, just as mid-afternoon peckishness can be resolved by some cake or a biscuit depending on one’s mood, most financial remedy disputes can be resolved equally well with litigation or arbitration, even if only one of those can safely be dunked into your coffee.

[[1]]: See Alexander Chandler’s excellent article, ‘The unbearable pointlessness of the questionnaire’ [2019] Fam Law 197.

[[2]]: See, for example, the decision of Baker J in CH v CT [2018] EWHC 1310 (Fam).