Will new court rules boost non-court dispute resolution in family law?

Important changes to the Family Procedure Rules (FPR) earlier this year have provided parties with renewed encouragement and incentivisation to engage meaningfully with Non-Court Dispute Resolution (NCDR) from the outset. The aim is to facilitate an early resolution of financial claims on divorce and private law children matters away from the courtroom. 

Family disputes are private, personal and sensitive in nature and often lend themselves to resolution outside of formal court settings. Recognising this and under strain from an underfunded and backlogged court system, the family courts in England and Wales have increasingly encouraged parties to consider and engage in NCDR in recent years.

NCDR can be more cost-effective, efficient and flexible than formal court proceedings. It can be tailored to the specific needs and issues of the parties and their families, and it can ensure confidentiality, which cannot be guaranteed within court proceedings.

The changes to the rules came into force on 29 April 2024. The key changes are significant because:

The definition of “non-court dispute resolution” is widened so that this includes mediation, arbitration, evaluation through a neutral third party (such as the private Financial Dispute Resolution process) and collaborative law.

It is clear from the wording, which has been adopted that NCDR, is not limited to the processes listed above, which leaves the door open to the evolution of new forms of NDCR and parties and their advisers can think creatively about which form of NCDR is likely to be most appropriate in their case.

The Mediation Information and Assessment (MIAM) requirement takes on greater significance and the scope for avoiding MIAM attendance is restricted. 

The parties were previously required to attend a MIAM with an appropriately qualified family mediator before initiating court proceedings unless an exemption applied. In practice, however, that requirement often became a box-ticking exercise with parties claiming an exemption without proper or informed consideration of the possibilities of out of court dispute resolution processes. 

The rules relating to MIAMs have been tightened up. MIAM providers must now advise on the principles, processes and potential benefits of all forms of dispute resolution (not only mediation) and indicate to attendees which form may be the most suitable and why and how to proceed. The circumstances in which an exemption from a MIAM can be claimed have been limited too. Some previously available exemptions are no longer available and there is more of an onus on potential litigants to proceed with an online MIAM where attendance in person would be challenging in the circumstances. There will be early scrutiny by the court of compliance with the MIAM rules and evidence of any exemption claimed when a party initiates financial remedy proceedings.

Litigating parties must now set out, openly and at an early stage, their views on NCDR as a means of resolving their disputes.

The amended rules require parties to exchange with each other and provide to the court in a prescribed form an explanation as to how they have meaningfully engaged with NCDR and/or why they consider the court’s intervention to be necessary. The relevant form must be produced in advance of the first court hearing, and the court can request that new forms be completed before subsequent hearings, so that the court can monitor the parties’ positions regarding NCDR at each stage of the court proceedings.

The new rules make provision for judges to encourage parties to engage in NCDR during the litigation process.

The rules are clear that where “timetabling of proceedings allows sufficient time … the court should encourage parties, as it considers appropriate, to obtain information and advice about, and consider using, non-court dispute resolution and undertake non-court dispute resolution”. 

A judge can encourage parties to use the gaps in between hearings to explore NCDR or, significantly, can be more interventionist and adjourn proceedings for these purposes. Unlike previously, the parties’ agreement to such an adjournment is not required. Judges therefore have greater power to promote NCDR, and encourage parties to engage in it, during the litigation process. Parties who have failed to engage in NCDR may find that the judge simply adjourns the matter until they are satisfied that attempts have been made to resolve matters outside of court.

Parties can be penalised for lack of engagement with NCDR, so the new rules have “teeth”!

In financial remedy proceedings, the parties and their advisers will need to be alive to the possibility of costs sanctions for reluctance to engage with NCDR. Whilst the new rules do not go quite as far as making NCDR compulsory, amendments to the costs rules mean that failure to attend a MIAM or NCDR without good reason must be taken into account by a judge when considering whether to depart from the general starting-point that there should be no order as to costs. 

The message from the family court seems clear: parties should be engaging with NCDR processes from the outset meaningfully rather than defaulting to the court and they must be open to further and fresh attempts at NCDR as their case evolves. Judges should be actively encouraging and facilitating this to help ease pressure on the over-burdened family court system.

Advisers need to make sure that they provide clients with comprehensive advice in relation to the nature and appropriateness of NCDR options from the outset and on an on-going basis. They also need to be frank about the court’s expectations of parties in order to avoid risks of delays and cost penalties for clients reluctant to engage with NCDR.

The hope is that the new rules will increase the take-up of NCDR and navigate parties away from often distressing, drawn-out and expensive court proceedings. There is a concern, however, that in some cases parties will as a result of the rules engage in a NCDR process which is ultimately unsuccessful, and then turn to the court, which could result in higher costs and a lengthier process.

The signs so far are that judiciary is committed to make the new rules meaningful in practice:

In contemplation of the new rules, the judge in Re X (Financial Remedy: Non-Court Dispute Resolution) [2024] EWHC 538 Fam emphasised to family law practitioners the court’s expectation that serious effort must be made to resolve differences before proceedings and thereafter at any stage of the proceedings. Going forward the expectation should be that the court would keep the suitability of NCDR under “active review”. Providing guidance to practitioners, the judge explained how, if the new rules had already been in place, the case would have justified an adjournment to encourage NCDR.

This approach was reinforced in NA v LA [2024] EWFC 113 in which the judge emphasised that the court will give serious consideration to the appropriateness of NCDR at every stage of proceedings. Changing circumstances can prompt fresh consideration of NCDR and here the court stayed proceedings to allow for NCDR notwithstanding one side’s concerns in relation to non-disclosure. The judge was clear that the financial disclosure process could be managed through NCDR and, in particular, an arbitrator would have “teeth” to deal with a party who fails to provide full and frank disclosure.

The new pre-action protocol (PAP) for financial applications, which came into force on 31 May 2024, complements the new rules by underlining the importance of NCDR in financial cases. Legal representatives are expected to provide clients with a copy of the PAP and explain its meaning. Significantly, the PAP provides practical guidance as regards the court’s expectations for NCDR and now the court will scrutinise compliance with the new rules, and the guidance is clear that efforts to engage with NCDR must be tangible.

In terms of assessing the impact of these changes, it is still early days. The judiciary seem to have the bit between their teeth, and the changes cannot be ignored by practitioners, particularly given the potential costs consequences for their clients. It remains to be seen, however, whether potential litigants will be amenable to NCDR and whether significantly more family law disputes will actually be resolved by means of NCDR.

Many thanks to trainee Felicity Miles for their help in writing this article.

This publication is a general summary of the law. It should not replace legal advice tailored to your specific circumstances.

© Farrer & Co LLP, September 2024