The rise of the private FDR is something extraordinary to behold. While arbitration has proven a hard sell in family law, comparable to rolling a large boulder up a hill, private FDRs have taken flight, to the extent that in London and the South East, the decision to have a PFDR (or ‘pFDR’) has almost become the default in financial remedy claims involving more than modest assets.
This tendency towards privatisation has rapidly accelerated during lockdown as lawyers have been catapulted from the 19th into the 21st century, and become aware of the advantages of what Richard Susskind described as ‘ODR’, while court delays and backlogs have only grown.
Encouragement of the PFDR
Successive Presidents of the Family Division have encouraged the development of PFDRs. On 27 July 2018, Sir James Munby observed that:
I hope that the lead and other judges will take the opportunity to develop and encourage the use of “private” FDRs locally. A private FDR is a simple concept. The parties pay for a financial remedy specialist to act as a private FDR judge. That person may be a solicitor, barrister or retired judge. No additional qualification is required. The private FDR takes place at a time convenient to the parties, usually in solicitors’ offices or barristers’ chambers, and a full day is normally set aside to maximise the prospects of settlement. It takes the place of the in-court FDR.
Anecdotal evidence suggests that private FDRs have a very high settlement rate. Of course, each settlement frees up court resources to deal, sooner and more fully, with those interim and final hearings that demand a judicial determination.
On 24 February 2021, Sir Andrew McFarlane announced the successful completion of the Financial Remedies Court pilot, whereby England and Wales is now divided up into 18 FRC zones, and observed that:
I have noted that an increasing number of litigants are choosing to have their FDR conducted privately. I very much welcome this development. Private FDRs appear to have very high rate of success. Their successful use frees up more judicial time for the earlier hearing of those cases that are to be dealt with in court.
For what its worth, my own experience chimes with these views. I have appeared as counsel in several PFDRs and regularly sit as a PFDR judge. It is always an honour to be asked for an indication, and it is a great professional satisfaction where this leads to settlement, particularly in highly contentious cases.
But it only now that a judgment has been handed down (albeit a judgment on the papers, reminiscent of Munby P’s decision about arbitration in Re S [2014] EWHC 7) which considers the jurisdictional basis of the private FDR.
Facts of AS v CS
In AS v CS, Mostyn J dealt with a paper application to convert a First Appointment into an in-court FDR.
The factual background was as follows: (1) on 20 May 2020, the court made a preliminary order which provided for the First Appointment to be arbitrated, and a private FDR to take place on 23 October 2020; (2) the date for this PFDR was put back by agreement to 3 March 2021, as recorded in an order; (3) on 8 February 2021 a single joint expert’s report was received which caused the wife’s solicitors to propose a further adjournment of the PFDR so that questions should be answered; (4) the Husband’s solicitors disagreed and wrote to the court inviting Mostyn J to convert an adjourned First Directions Appointment (already in the diary for 10 June 2021) to be converted to a court FDR.
Mostyn J decided that he did not agree with the approach of either side.
Jurisdictional basis for FDR
At [7] Mostyn J commented that:
there is no specific power in Part 9 of the Family Procedure Rules to order that the parties should attend a private FDR. However, there is unquestionable power to disapply FPR 9.15(4). The court is empowered by FPR 4.1(4)(a) to make any order subject to conditions. Therefore, the order made by me on 20 May 2020 requiring the parties to attend a private FDR should be seen as a condition attaching to the order disapplying the standard in-court procedure. That condition can be expressed as an order. FPR 4.1(3)(o) empowers the court to “take any other step or make any other order for the purpose of managing the case and furthering the overriding objective”.
Support for the PFDR
At [14] Mostyn J repeats the judicial support for private FDRs which
“…are to be strongly encouraged. They seem to have a higher success rate than in-court FDRs. This may be a result of more time being available to the judge both for preparation and in the hearing itself. Private FDRs take a lot of pressure off the court system which is highly beleaguered at the present time. They free up judicial resources to hear cases that must be heard in court.
However, the following warning note was sounded:
…
Commitment to PFDR date
Practice points
- Firstly, there is no question that a private FDR is an extremely useful – form of dispute resolution. While the evidence remains anecdotal, the success rates (in terms of the parties reaching settlement following a PFDR indication) seem to be consistently high;
- Secondly, in AS v CS the court for the first time considered the jurisdictional foundations of ordering a PFDR, and also the problem that can arise when one party gets cold feet, for good reason or bad, and seeks to pull out. The decision of Mostyn J, which may surprise some, is that this should not be an option, any more than it is an option for a party to cancel a court-FDR;
- Thirdly, what this will likely mean in practice is that when the parties have agreed to a private FDR date (and assuming that this is recorded in an order), the court’s permission (or the parties’ consent) will be required before such a date is changed.
- Fourthly, it is plainly necessary that some common sense has to be applied here. Where one party legitimately requires further information, there might be little point in seeking to compel the listing of a PFDR before this information is available. After all when it comes to negotiation you can lead a horse to water etc.
Alexander Chandler
19 April 2021
Family Brief 