Alternative Dispute Resolution in Family Law: Benefits, Risks, and Key Considerations

Published on Apr 7, 2023

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12 min read

Article Summary

As court systems become increasingly congested, more family law disputes are being directed to private mediation and arbitration. While these Alternative Dispute Resolution (ADR) methods can offer advantages in cost, privacy, and efficiency, they also present unique challenges and potential pitfalls. This comprehensive guide examines the key considerations when entering ADR processes, from understanding the binding nature of arbitration agreements to navigating complex issues like appeal rights, enforcement limitations, and cost structures.

Tags:

Family

Alternative Dispute Resolution

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A breathtaking aerial view of ocean waves gently crashing onto a sandy beach, with intricate patterns formed by the sand and water, symbolizing natural beauty, transitions, and resilience.

What Is Alternative Dispute Resolution?

As court congestion continues to grow, family law litigants face increasing pressure to resolve disputes through private mediation or arbitration services, paid for by the parties themselves. These Alternative Dispute Resolution (ADR) processes can provide more flexible, private, and sometimes faster resolutions than traditional litigation. However, they also come with important considerations that parties should understand before proceeding.

Mediation: A Voluntary Path to Agreement

Mediation is a voluntary, confidential process where an impartial third party facilitates open communication between parties. In this process, the mediator assists in reaching a resolution but cannot impose decisions. Family law mediation can be particularly valuable when parties are able to work together on resolving custody and financial issues.

For parties who choose standalone mediation but can't settle their differences, reverting to traditional family litigation remains an option. Since some form of alternative dispute resolution is typically required before trial, attending private family mediation can fulfill this requirement. Alternatively, parties may continue with dispute resolution by shifting from mediation to arbitration.

Arbitration: A Private Decision-Making Process

When parties cannot resolve their outstanding issues through mediation, the mediator can transition to the role of arbitrator, essentially functioning as a private judge with authority to make both interim and final arbitration awards. These awards can then be converted to court orders and enforced by the Court of King's Bench.

Unlike mediation, arbitration results in binding decisions. This distinction is crucial—parties entering arbitration should understand they are agreeing to be bound by the arbitrator's determination, with potentially limited options to challenge unfavourable outcomes.

When ADR May Not Be Appropriate

While Alternative Dispute Resolution offers many benefits, it is not suitable for all family situations. Certain circumstances can make these processes unsuitable or even counterproductive for resolving family disputes.

Two particularly challenging scenarios include:

High-Conflict Post-Separation Relationships

High-conflict post-separation relationships often present significant challenges in arbitration. In these situations, the goal of an uncooperative party may directly conflict with ADR's purpose of reaching fair, equitable resolutions. The end goal in a high-conflict separation often directly conflicts with the purpose of alternative dispute resolution, which is to:

  • Resolve outstanding issues in a fair and equitable manner

  • Allow the parties to remain civil

  • Decrease the financial cost of the separation process

Significant Power Imbalances

Relationships with significant power imbalances, with or without domestic violence, may also be poorly suited for ADR. During marriage, a dominant partner may have consistently prevailed in decisions. This dynamic can persist in alternative dispute processes, with the less powerful party acquiescing to maintain peace, potentially accepting unfavourable settlements despite independent legal advice.

As noted in the Alberta Court of Queen's Bench (now Court of King's Bench) decision in Lakhoo v. Lakhoo, 2015 ABQB 357:

"...where there is an imbalance of power between the parties, whether due to education, cultural or societal norms, financial resources or history of domestic violence, a mediator may have to employ strategies to rebalance power during the mediation process and ensure that one party is not unduly pressured or coerced into accepting a settlement that is grossly unfair."

While mediators and arbitrators can take steps to address power imbalances, in some cases the court system, with its formal procedures and protections, may better serve the interests of vulnerable parties.

The Binding Nature of Arbitration Agreements

When parties enter arbitration, they sign an agreement with the arbitrator that forms a legal and binding contract that cannot be unilaterally terminated later. This agreement, together with the Arbitration Act (Alberta), establishes the arbitrator's authority and the rules governing the process.

Before proceeding with arbitration, parties should thoroughly review the proposed agreement, ask questions, and request modifications where necessary. If the opposing party or arbitrator refuses changes that seem important to you, this might signal that arbitration is not your best dispute resolution option.

Appeal Rights in Family Arbitration

One of the most significant differences between arbitration and traditional court litigation concerns appeal rights. In court proceedings, parties generally retain the right to appeal decisions except in very limited circumstances. By contrast, arbitration agreements commonly include provisions that limit or even eliminate appeal rights.

Standard Appeal Options in Alberta Family Arbitration

In Alberta, family law arbitrators typically receive training through the National Family Law Arbitration Course, resulting in standardized agreements across the province. The standard arbitration agreement usually offers three appeal options:

The standard mediation/arbitration agreement used in Alberta contains the following appeal options:

" (a) In accordance with subsection 44 of the Arbitration Act (Alberta); or

(b) A party may appeal the Award on (choose one more more of the following)
☐ A question of law (meaning the Arbitrator misapplied the law)
☐ A question of fact (meaning the Arbitrator misunderstood a material fact);
☐ A question of mixed fact and law (meaning the Arbitrator correctly applied the law to an incorrect material fact); or

(c) The parties agree there will be no right of appeal from the Arbitrator's Award."

Let's examine what each option means:

Option A refers to Section 44 of the Arbitration Act (Alberta), which permits appeals on questions of law, fact, and mixed law and fact if explicitly allowed in the agreement. Without specific provisions for legal questions, the Court of King's Bench may still permit such appeals, but only if the issue's importance justifies it and the determination will significantly affect the parties' rights.

Option B allows parties to select which types of appeals will be permitted:

  • Questions of law (when the arbitrator misapplied the law)

  • Questions of fact (when the arbitrator misunderstood material facts)

  • Questions of mixed fact and law (when correct law was applied to incorrect facts)

Importantly, parties only have full appeal rights if all three categories are selected. Otherwise, appeals are restricted to only the selected categories.

Option C eliminates appeal rights entirely, regardless of whether the arbitrator made reviewable errors. This represents the most significant limitation compared to traditional court litigation.

Understanding the Implications

Most parties entering arbitration don't fully comprehend these appeal options' significance. The choice can have profound consequences if the arbitration contains errors or produces unexpected results.

For example, if a party selects the "no appeal rights" option and the arbitrator misinterprets the law or misunderstands critical facts, the party has no recourse. Similarly, selecting only "questions of law" for appeal rights leaves no remedy if the arbitrator made a significant factual error.

These limitations contrast sharply with court litigation, where parties generally retain more comprehensive appeal rights for significant legal and factual errors.

Termination of the Arbitration Process

A family mediation/arbitration agreement forms a three-way contract between the parties and the arbitrator. Some agreements outline grounds for arbitrator resignation, while others allow arbitrators to resign at any time. By contrast, standard agreements only permit parties to terminate the arbitrator's services by mutual agreement.

The recent case of SZ v JZ, 2022 ABQB 493 provides some reassurance that parties may revert to litigation when an arbitrator resigns. In this case, the parties entered a consent order agreeing to mediation/arbitration for twelve outstanding issues. Eight months later, the arbitrator unexpectedly resigned citing workload concerns.

When the mother subsequently brought a parenting application to the Court of King's Bench, the father opposed it, arguing the court lacked jurisdiction and must appoint a new arbitrator. The father relied on subsection 16(1) of the Arbitration Act, which states:

"16(1) When an arbitrator's mandate terminates, a substitute arbitrator shall be appointed, following the procedures that were used in the appointment of the arbitrator being replaced."

However, the court noted that the parties' agreement specifically named the arbitrator as the sole arbitrator for their dispute. Therefore, subsection 16(1) didn't apply. Instead, the arbitration terminated under subsection 41(1)(c) of the Act, which states:

"41(1) An arbitration is terminated when

...

(c) the arbitrator's mandate is terminated, if the arbitration agreement provides that the arbitration is to be conducted only by that arbitrator."

This distinction proved crucial in the case. The Court ruled that since the arbitration agreement specified a particular arbitrator to conduct the arbitration, the resignation of that arbitrator terminated the entire arbitration process, allowing the parties to return to court.

Based on this decision, parties to mediation/arbitration agreements should consider specifying that arbitration is to be conducted solely by the named arbitrator. This precise wording allows parties to return to litigation if the arbitrator later resigns or if the parties jointly agree to terminate their services, rather than being forced to continue with a new arbitrator they may not have chosen.

Solicitor-Client Costs in Arbitration

In both court proceedings and alternative dispute resolution, successful parties may receive partial or full indemnification for legal fees, known as "costs." While court cost awards are highly discretionary and often based on Schedule C of the Alberta Rules of Court, arbitration costs may be either discretionary or contractual.

Section 53 of the Arbitration Act allows arbitrators to award costs on a solicitor-and-client basis, party-and-party basis, or any other basis, with party-and-party being the default if not specified in the agreement. Notably, when costs are addressed in arbitration agreements, solicitor-client costs (which provide greater coverage of legal fees) are often the default.

When reviewing an arbitration agreement, parties should examine these provisions carefully:

First, the costs of enforcing an arbitration award. Since arbitration is private, parties must take additional steps to convert awards into court orders. Standard agreements often provide that parties who must apply to enforce awards will receive solicitor-client costs for that application.

Second, the costs of appeal. If a party unsuccessfully appeals an arbitration award to the Court of King's Bench, agreements may automatically award solicitor-client costs to the other party.

The recent case of Suri Holdings Inc v Jung, 2022 ABKB 714 confirms that while contractual terms governing costs will be considered by courts, they don't override the court's discretionary control over cost awards during litigation. This provides some protection, but parties should still carefully consider cost provisions before signing arbitration agreements.

No Power to Hold Parties in Contempt

Although arbitrators hold quasi-judicial roles, they aren't judges, and their boardrooms aren't courts. Their authority comes from the arbitration agreement and the Arbitration Act, giving them less power than courts to enforce compliance.

In Alberta, arbitrators may order specific actions, issue injunctions to prevent certain behaviours, and make monetary awards, including costs to deter problematic conduct. However, unlike Court of King's Bench justices, arbitrators cannot hold parties in contempt because there is no "court" for the party to be in contempt of.

This limitation becomes problematic in high-conflict post-separation relationships with repeated breaches of arbitration awards. Rule 10.52 of the Alberta Rules of Court specifically establishes when contempt of court may be declared:

"Declaration of civil contempt

10.52(3) A judge may declare a person to be in civil contempt of Court if

(a) the person, without reasonable excuse,

(i) does not comply with an order, other than an order to pay money, that has been served in accordance with the rules for service of commencement documents or of which the person has actual knowledge,..."

As the rule specifies, this power applies only to the Court of King's Bench and Alberta Court of Appeal, not to arbitration proceedings.

Rule 10.53 further outlines potential punishments for contempt, including:

  • Imprisonment until the contempt is purged

  • Imprisonment for up to 2 years

  • Fines and potential imprisonment for non-payment

  • Striking out documents, staying proceedings, or dismissing claims

  • Cost awards against the person in contempt

To bring a contempt application for failure to follow an arbitration award, parties must first apply to convert the award into a court order, which cannot be done while the award is under appeal. If an award is being appealed, the party is left without enforcement mechanisms, potentially allowing the "bad actor" to disregard arbitration awards under appeal with limited consequences.

Benefits of ADR When Appropriate

When a matter is suitable for mediation/arbitration, there can be significant benefits for all parties involved. These advantages make ADR worth considering in many family law situations.

Some key benefits include:

  1. Efficiency and Timeliness: Parties can reach a full and binding separation agreement quickly after separation, sometimes avoiding months or years of litigation.

  2. Potential Cost Savings: The overall expense may be less than proceeding to trial, particularly if matters resolve at the mediation stage without requiring arbitration.

  3. Collaborative Problem-Solving: Parties often set aside anger and learn to work cooperatively to resolve issues, avoiding having decisions imposed upon them. This collaborative approach can be particularly valuable for parents who must continue co-parenting after their legal matters conclude.

  4. Certainty and Closure: If mediation doesn't resolve all issues, the arbitrator can make binding decisions on remaining disputes, providing finality to the process.

  5. Specialized Expertise: In some cases, arbitrators may have specialized knowledge in particular areas of family law that can benefit complex cases beyond what might be available in general court proceedings.

The success of ADR often hinges on both parties approaching the process in good faith with a genuine desire to reach reasonable resolution, which is why assessing whether your situation is appropriate for ADR is so important.

Protecting Your Interests in Arbitration

Before entering family arbitration, consider these protective measures to safeguard your rights and ensure the process serves your needs. The decisions you make when entering an arbitration agreement can have significant long-term consequences.

Based on the case law and experience in this area, we recommend you:

  1. Get expert legal advice: Thoroughly understand the agreement's provisions and their implications. Consult with a lawyer who can explain how each clause might affect your specific situation, paying particular attention to appeal rights, termination provisions, and cost structures.

  2. Secure appropriate appeal rights: Carefully consider which appeal rights are important to protect. In many cases, selecting all three appeal categories provides the best protection, though this may be negotiable depending on your circumstances.

  3. Be cautious about limiting appeals: Be wary of agreements that eliminate appeal rights entirely. While this may make the process more final and potentially faster, it removes an important safeguard against errors that could significantly impact your future.

  4. Plan for arbitrator unavailability: Consider including clear language about arbitration termination if the appointed arbitrator resigns or becomes unavailable, allowing a return to litigation rather than automatic appointment of a new arbitrator.

  5. Remember ADR is a choice: Arbitration is optional. If you're uncomfortable with proposed limitations or sense a power imbalance that ADR might exacerbate, traditional court litigation may better protect your interests despite potential delays.

The SZ v. JZ case provides an important reminder of the value of including specific language in arbitration agreements about what happens if an arbitrator becomes unavailable. Without such language, parties may find themselves locked in a process they no longer wish to pursue.

Making an Informed Decision

Family law matters involve important rights and interests that can affect you and your children for years to come. Alternative dispute resolution can offer advantages in appropriate cases but requires careful consideration of all provisions in the proposed agreement.

By understanding the benefits and limitations of ADR before signing an agreement, you can better protect your interests while potentially gaining advantages in privacy, efficiency, and specialization. The key is ensuring you enter the process with full awareness of what you're agreeing to and its potential consequences.

If you are considering alternative dispute resolution for your family law matter or are already engaged in the process, The Calgary Legal Team can help you navigate these complex issues. Our experienced family lawyers can review proposed agreements, explain your options, and help you make decisions that best protect your legal rights while working toward efficient resolution of your family law issues.

This article was last edited on Mar 30, 2025