The “Carrot and the Stick” – Is my spouse or partner obliged to negotiate and if so, how?
Emily Kozien-Colyer Legal Director at Manders Law takes a look at why non-court dispute resolution (NCDR) matters within divorce and financial proceedings, and how you ignore it as an option at your peril!
The no-fault divorce provisions which came into place in April 2022 have been described as “the biggest shake-up in divorce law for 50 years” (see the gov.uk press release and original quote here). We considered the impact of this change in an article, titled “No fault divorce – working on the sequel”.
Granted, our main reasons for the title were that a. we’re a musical bunch at Manders Law and b. a readable and accessible blog needs a ‘hook’ (thank you, Elvis Costello). But, as it transpires, coming this April there is indeed a sequel, as explained below.
In April 2024 the family court procedure rules relating to non-court dispute resolution (NCDR) within divorce and financial proceedings, will change to ensure parties in proceedings and their legal representatives will be challenged to really, REALLY, consider alternative or non-court methods for resolving their dispute, or else face cost consequences (potentially – more on that below).
NCDR – what does this mean in the context of divorce and financial proceedings
Non-court dispute resolution (otherwise ADR or alternative dispute resolution) doesn’t exactly spring to mind for a lay person. Currently, the definition is:
‘non-court dispute resolution’ means methods of resolving a dispute, including mediation, other than through the normal court process
From April 2024 the definition will be widened to include other specific methods of dispute resolution. The definition will be:
‘methods of resolving a dispute other than through the court process, including but not limited to mediation, arbitration, evaluation by a neutral third party (such as a private Financial Dispute Resolution process) and collaborative law’
See our article here, in which we review a recent case and discuss the different methods and options of dispute resolution in detail.
How do family court proceedings work?
In order to properly understand the non-court options, it is necessary to understand the court process. Clients are often and understandably shocked by how long both divorce and financial proceedings can take.
Divorce process
Part of the change in rules in April 2022 was to introduce a new 20-week period (or minimum wait) between issuing a divorce application and a conditional order for divorce (which states that the parties are entitled to a divorce). It is then necessary to wait at least 43 days (6 weeks and 1 day) after the date of the conditional order before applying for a final order, which ends the marriage.
There is a vital link between the divorce and financial proceedings, but otherwise the proceedings are dealt with separately, which means by different courts and applying different timetables and timescales. So far so confusing to the lay person.
Financial proceedings
There are three main stages, or hearings in financial proceedings. These are the:
- First Appointment or First Directions Appointment
- Financial Dispute Resolution hearing (FDR)
- Final Hearing
The FDR is a judge-led negotiation which takes place in court. It is subject to judicial availability and the court timetable. The problem is that a. the court system is under intense pressure (a subject in itself for another article) which often results in a delay in listing hearings and b. each “stage” of the proceedings can only be decided step by step. Parties need to engage in step 1 (the First Appointment) or reach an active (and court approved) agreement to “skip” step 1 before they can get to step 2 (the FDR). Time consuming and costly right?
Generally, it is not possible to “skip” the FDR, and the court will not list (set a date for) the Final Hearing until an FDR has taken place. Subject to the issues in dispute it may be necessary for a directions’ hearing to take place after the FDR in order to decide what needs to be done in order to properly prepare for the Final Hearing. All in all, a fully-contested court process can take at least 12 – 18 months.
A fact-specific assessment should be made in each case, but generally it is good practice not to finalise the divorce until the financial proceedings have been resolved (either by agreement or determined by the court).
NCDR – why does it matter in divorce and financial proceedings?
This is the context in which non-court dispute resolution options and methods should be considered. Parties in litigation should be aware of the potential outcomes (whether by reference to time, legal costs, or otherwise) of resolving a dispute through either the court process or a non-court process. If it works well NCDR should reduce the pressure on the court system and, potentially, enable parties to resolve disputes efficiently and in a more cost-effective way. Some of the methods may be or feel less adversarial, which clearly has a benefit for families and/or some individuals.
The crux, however, is making it work. NCDR is dependent on parties and their representatives engaging in good faith. At the end of a relationship, often when trust is low, how do you engage or negotiate in good faith?
Often, the reality is parties need to be actively encouraged to engage and there should be consequences if they do not do so. This is where the new rules come in (and the “carrot and stick” analogy).
Three key changes that will affect financial proceedings on divorce:
As well as a change to the definition, the three main changes from April 2024 are:
- Parties will be obliged to set out their position regarding NCDR on an open basis as part of the court process. This means that the court will see what each party says about NCDR (and whether it is suitable or unsuitable in the financial proceedings OR where there is a disagreement regarding finances) and make case management and potentially cost decisions (see below).
- Currently the court has the power to adjourn (pause) proceedings to allow for NCDR to take place, but the parties must agree. The requirement for the parties to agree will be removed. The court will have the power to “encourage parties” to engage in NCDR.
- Importantly, there will be a change to the cost rules. The court’s power to “encourage” the parties will be backed up by a provision which enables it to depart from the general rule of “no order as to costs”.
This means that if a party does not have a good reason not to engage in NCDR there may be cost consequences. The decision will be at the discretion of the judge dealing with the case. There may be initial reluctance and caution by the judiciary given the significance of the change. The key to early adoption and embracing the change is for your legal team to push for consequences in appropriate cases.
What next for separated couples?
There is debate about whether this is enough. Whether the court should have the power to compel parties to participate in NCDR, with ‘automatic’ cost consequences if they do not do so.
What is clear is that this is a sequel to the continuing effort to reform and to update divorce and family law. More changes are necessary and, along with April showers, may be inevitable.
For now, individuals involved in financial proceedings and practitioners need to be aware – the old rules are out and non-court options for resolution will need to be carefully and cogently considered.
For an initial FREE consultation on any aspect of family law, call Manders Law on 01245 895 105 or email us here.
Note: this blog is intended to give an overview (rather than comprehensive guidance and advice) on your legal or financial position and is provided for information only. It is not an endorsement of any product or service provider.