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NJ Family Legal Blog Pertinent Information As It Relates To New Jersey Family Laws

BEST PRACTICES FOR DIVORCE ARBITRATION

Posted in Mediation/Arbitration

As noted in yesterday’s post on  Minkowitz v. Israeli, the Appellate Division held that once you serve as a mediator, cannot then serve as an arbitrator, absent prior written consent to the dual role.  But the decision written by Judge Lihotz did more than that.  She seemingly opined upon what should be the “best practices” for binding arbitration, in large measure noting that the trial court was too involved in the process after arbitration was agreed to.

 

Flowchart And 3d Character Shows Process Or Procedure Stock Photo*Image courtesy of FreeDigitalPhotos.net

The decision noted, as follows:

We close with these observations.    Arbitration, particularly binding arbitration, must be purposefully chosen, and the parameters must be designated in a contract between the parties. If binding arbitration is selected as the forum for resolution of disputes, a litigant cannot jump back and forth between the court and the arbitral forum. By its very nature, arbitration does not permit such a hybrid  system.  Further,  arbitration “should be a fast and inexpensive way to achieve final resolution of . . . disputes and not merely a way-station on route to the courthouse,” Borough of E. Rutherford, supra, 213 N.J. at 201 (internal quotation marks and citations omitted). Attempts to return to the court, except to confirm the final arbitration award, are at odds with this objective.

In the matter at bar, the parties’ contract concisely defined matters to be addressed in arbitration, yet from commencement, the Family Part maintained involvement such as scheduling case management and entertaining a motion for a protective order, both of which fall directly within the adjudicatory responsibilities of the arbitrator. N.J.S.A.  2A:23B-17e. Moreover, the parties held a mistaken belief that court intervention was permitted to check the decisions of the arbitrator.   This is untenable. The Act’s provisions are unmistakable: once binding arbitration is chosen and the arbitrator(s) named, the court is no longer involved in reviewing or determining the substantive issues.     The court’s role is circumscribed to confirm a final arbitration award, correct obvious errors, and consider whether the award should be vacated, only when one of the limited bases set forth in N.J.S.A. 2A:23B-23 has occurred.  The piecemeal approach  demonstrated here prolonged the final result and eliminated the main benefit of arbitration, “to provide an effective, expedient, and fair resolution of disputes[.]“    Fawzy, supra,  199 N.J. 470 (citations omitted).

Finally, had the parties actually followed the path of binding arbitration, the need for a PSA would be obviated because an issued arbitration award would be confirmed by court order assuring compliance. No separate agreement memorializing the order is needed. Insistence upon preparation of a PSA appears to result from habit, not necessity.

Lastly, we do not mean to suggest parties who seek to arbitrate disputes should abandon all hope of amicable resolution.   We urge parties to exhaust possible settlement alternatives prior to contracting for arbitration.   If arbitration is accepted, parameters for settlement discussions should be set by the arbitrator.  (Emphasis added.)

I think that this last part of the case will be particularly helpful to the bench and bar.  I have seen judges handle this in a whole host of ways, without any hint of uniformity.  What this doesn’t say is what should happen procedurally with the divorce.  I have had some judges insist that the parties get divorced before going to arbitration, which brings with it a whole host of COBRA and ERISA issues, to name a few.  Other judges, who allowed the parties to proceed to arbitration, actively case managed the arbitration to make sure that it proceeded quickly, even if the parties and arbitrator wanted otherwise.  This is clearly because the case remains on the active docket and thus could look bad from a statistics perpective.  A resolution suggested by others would be to create an “arbitration track” to take these cases out of the normal divorce case statistics. In any event, any guidance to procedural uniformity is a good thing.

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Eric Solotoff is the editor of the New Jersey Family Legal Blog and the Co-Chair of the Family Law Practice Group of Fox Rothschild LLP. Certified by the Supreme Court of New Jersey as a Matrimonial Lawyer and a Fellow of the American Academy of Matrimonial Attorneys, Eric is resident in Fox Rothschild’s Roseland and Morristown, New Jersey offices, though he practices throughout New Jersey. You can reach Eric at (973)994-7501, or esolotoff@foxrothschild.com.