Divorce settlements: private adjudication a better way to settle financial issues

Matrimonial law specialists have long been aware that when divorcing couples decide to take their disputes to court, such litigation can take an extraordinary toll on personal finances and well-being. The Financial Dispute Resolution (FDR) and Children's Dispute Resolution (CDR) procedures were introduced in 2003 and 2013 to offer a form of judiciary-facilitated mediation in court as part of the process.

These procedures have been enormously helpful. Yet, cost management and the willingness to settle continue to be a problem with highly conflicted couples. In a recent case before the District Court, the judge lamented that 60 per cent of the net family assets had been spent in legal costs. Over the past 20 years, people in Hong Kong have taken to engaging a retired judge or senior lawyer to conduct a private FDR. This has proved very successful. The nature of mediation is that the parties themselves must try to reach settlement - usually through a series of compromises. Unlike litigation, no decision is imposed upon them by a judge.

It doesn't work for everyone, as neither approach produces a binding decision without a judge's approval. But since January this year, there is a further alternative available to couples to resolve financial issues in matrimonial and family disputes: private adjudication.

This means divorcing couples can, by agreement, choose their judge (many retired judges are willing to take on this role) and can then establish their own timetable for resolving issues.

Private adjudication is only available for financial matters, not those involving child custody or the divorce itself. Yet, many things fall into place when financial issues are resolved.

What makes private adjudication special is that the parties agree to be bound by the decision of the private adjudicator. But it is very early days for this new procedure in Hong Kong. Anecdotally, there have been very few takers so far.

There seems be some nervousness about the idea, so it may be helpful to look at the arbitration scheme in England and Wales to see how it has flourished and how we in Hong Kong may perhaps follow suit.