Advancing Private Adjudication of financial disputes in matrimonial and family proceedings

The first Private Family Adjudication (‘PFA’) was held recently in Hong Kong. It reportedly ran smoothly and led to a swift decision. It prevented a significant delay in ancillary relief trial proceedings, which had been adjourned due to the impact of Covid-19 on the Courts.

Private Family Adjudication is a form of dispute resolution seeking to provide families with an option to seek a final determination of specific financial disputes other than through trial in the Family Court. The process is similar to arbitration and requires parties to agree to be bound by the decision of the mutually appointed adjudicator.

The Judiciary first introduced the Pilot Scheme on Private Adjudication of Financial Disputes in Matrimonial and Family Proceedings (otherwise known as ‘Pilot Scheme’) on 9 January 2015. Despite this, no known case had proceeded through PFA.

Other processes presently offered for dispute resolution by the Family Courts are Family Mediation, Financial Dispute Resolution (‘FDR’), and Children Dispute Resolution (‘CDR’). These processes are routinely encouraged and in many instances required within divorce and children’s proceedings. They have been resoundingly successful.

Unfortunately, not all financial applications can be resolved within these processes despite parties’ best efforts. In such cases, parties will benefit from a swift determination, from a privately engaged adjudicator within a timetable designed around them. The Family Court is ordinarily busy. It can take months to fix hearing dates and even longer to obtain final decisions. The public health situation surrounding the Covid-19 pandemic and the resulting General Adjournment Period has exacerbated these delays.

In short, PFA requires the following:-

1. Parties to have exchanged financial disclosure by way of Form E;
   
   
2. Parties should have attempted another mode of dispute resolution such as Family Mediation or FDR;
   
   
3. Parties are to sign a Private Financial Agreement setting out key agreed terms including:-
   
   
   1. the scope of the financial dispute to be resolved by the PFA;
   2. agree to appoint and be bound by the decision of the Adjudicator; and
   3. a consent summons signed by both parties shall be submitted to the Court within 14 days of the Adjudicator rendering his or her decision.
      
      
4. The Court’s approval is sought for the key terms of the PFA. If so approved, the proceedings shall be adjourned for a period to allow the PFA to proceed; and
   
   
5. Post PFA the parties shall file a PFA Report and consent summons embodying the decision.

Specialist practitioners consider the expansion of dispute resolution processes to be generally beneficial to clients in divorce disputes. Processes such as PFA allow clients to create and control their own process and take advantage of benefits such as expedited timetables, swifter resolutions and private decisions. However, concerns have arisen around PFA due to the lack of appeal process. As with all new processes, this anxiety creates a reluctance to engage in it.

The Institute of Private Family Adjudicators has recently created an accreditation process which will see a specialist panel of family law practitioners who will be qualified to sit as adjudicators. This will encourage the adoption of PFA for families in financial disputes and maintain Hong Kong’s position as a leading jurisdiction in Family Law within the region.

Joanne Brown

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Disclaimer: This publication is general in nature and is not intended to constitute legal advice. You should seek professional advice before taking any action in relation to the matters dealt with in this publication.