Arbitration in North Carolina
The North Carolina Family Law Arbitration Act provides the ability to use arbitration instead of court hearings to resolve disputes relating to alimony, child custody, and child support.
Aristotle is reputed to have said:
“Equity is justice in that it goes beyond the written law. And it is equitable to prefer arbitration to the law court, for the arbitrator keeps equity in view, whereas the judge looks only to the law, and the reason why arbitrators were appointed was that equity might prevail.”
Arbitration provides an alternative to a court hearing on matters relating to a divorce.
Couples may agree to arbitrate any controversy other than the divorce using arbitration.
Prenuptial agreements may be considered written agreements to arbitrate except in matters relating to:
- Minor Children
- The actual divorce
- Rights and responsibilities that may not be modified due to statutory laws
Rights and Responsibilities relating to Arbitration that cannot be Waived
When a couple agrees to arbitrate their disagreement, they may waive different aspects of the arbitration rules pertaining to their situation. They may also elect to vary the effect of submitting to arbitration. Waivers must be in writing.
There are significant restrictions on what can be waived prior to the time a controversy arises. For example, any portion of a prenuptial agreement requiring the waiver of any of the following rights or responsibilities of parties involved in arbitration will not be honored:
- The right to submit to arbitration may not be waived
- The right to be represented by counsel (an attorney) at any hearing or proceeding may not be waived
- The right arbitrators have to:
- Administer oaths
- Issue subpoenas
- Take dispositions
- Enforce provisions of law compelling a person to testify or submit evidence
- The right to submit a motion to the court to submit to arbitration
- Provisions that interfere with the right of the State to be the jurisdiction for arbitration or for the State to enter judgment on an award under the agreement
- Less restrictive requirements for notice of arbitration hearings as required under the North Carolina Rules of Civil Procedure
- The arbitrator’s disclosure requirements:
- Relating to a financial or personal interest in the outcome or an existing or past relationship with any of the parties to the agreement or their counsel, representatives, witnesses, or other arbitrators.
- Facts the arbitrator learns after being appointed that a reasonable person would consider likely to affect the impartiality of the arbitrator
- The right to timely objection to the appointment or continued use of an arbitrator based upon a required disclosure
- The grounds for vacating an award when an arbitrator is objected to for cause, or
- The grounds for vacating an award if the arbitrator failed to disclose facts he or she was required to disclose
- The presumption that an arbitrator did not act with impartiality if he or she failed to disclose when disclosure was required
- The right of the Court to determine whether a valid agreement for arbitration exists when one party refuses to proceed with the arbitration
- The right of the Court to determine whether a condition that triggers arbitration has been satisfied
- Claims that the issue to be arbitrated lacks merit shall not result in a refusal or stay of arbitration
- Provisions that seek to limit the civil immunity of arbitrators
- The ability of the court or arbitrators to modify awards for post-separation support, alimony, child support, or child custody unless the parties agreed in writing that the award may not be modified
- The ability of the court to seal orders
- The right to appeal arbitration awards
- The acceptability of electronic signatures
- Time limits on applying for modifications
- The ability of the court to confirm awards
- The ability of the court to award costs for arbitration
- The arbitrator’s right to modify or correct an award for the following reasons:
- Based on a miscalculation of figures, or an evident mistake in the description of a person, thing, or property referenced in the award
- When the award is on a matter not submitted to arbitration
- When the award is imperfect in a matter of form that does not affect the merits of the controversy
- Before a final award is made
- To clarify the award
- The ability to vacate an award as the result of:
- Corruption, fraud, or other undue means
- Evident partiality by an arbitrator who should have been neutral
- Misconduct that prejudices the rights of a party to arbitration
- The absence of an arbitration agreement and the hearing was objected to on those grounds
- The arbitrator exceeding his or her powers
- The arbitrators:
- Refusal to postpone a hearing when postponement was justified
- Refusal to hear material evidence to the controversy
- Violating other rules applicable to arbitrators
- The court determines that the award for child support or custody is not in the best interest of the child
- An award for punitive damages being clearly erroneous
- A judicial review finding the arbitrator committed an error of law that prejudiced a party’s rights
- The right of the court to order a new arbitration hearing, if appropriate
- The right of the court to hear child support and custody cases when the arbitration award was not in the best interest of the child
The application to vacate an arbitration award must be made within 90 days of the award or 90 days of when fraud, corruption or other undue means is known or should have been known.
The fact that a court could not, or would not, order the award is not grounds for refusing to confirm an award.
The right to challenges arbitration awards based on agreements made before an award is made will be allowed.
Arbitration agreements that attempt to waive rights that cannot be waived are not void. The agreement will be read as if the sections that are not allowed do not exist. Other than the areas that may not be waived, a party to an agreement to arbitrate may waive requirements related to arbitration if the agreement is in writing.
Arbitration: Interim Relief and Interim Measures
Interim relief may be sought from a court when the arbitrators have not yet been appointed or when they are unavailable
Courts may order:
- Attachment or garnishment
- Temporary restraining orders
- Preliminary injunctions
- An order for claim and delivery
- Appointment of a receiver
- Delivery of money or other property into court
- Notice of lis pendens
- Any relief permitted by Federal law or treaties with the United States
- Other orders required to preserve assets or documents that would prejudice the effectiveness of the arbitration
Arbitrators who have cause to suspect that any child is abused or neglected shall report the case to the department of social services.
Benefits of Arbitration
Arbitration can provide numerous benefits in comparison to a court hearing.
- Evidence submitted during arbitration is confidential.
- The cost of arbitration can be lower than a court hearing.
- The evidence that is allowed is more relaxed than in court hearings
- Arbitration may be faster than a court hearing
- Arbitration schedules consider the needs of the parties involved so someone who has out of town commitments can schedule around their other obligations
- Arbitration is less formal and may be less stressful than a court hearing
Detriments of Arbitration
Arbitration has a few drawbacks.
- Unless there was a procedurally incorrect process used or other unacceptable behavior on the part of the arbitrator, the award cannot be appealed
- A third party makes the decision, just like during a court hearing. Collaboration Law Procedures and mediation allow the parties to contribute to the decisions
You are entitled to counsel during arbitration related to your divorce. When important matters relating to equitable distribution, alimony, child custody, and child support are being decided you deserve the benefit of having a professional on your side.
At McIlveen Family Law Firm, we realize the uniqueness of everyone’s circumstances. For specific questions about your situation, you may schedule a consultation with us so we can help you understand your options. You can then make an informed decision on whether arbitration is right course of action for you to take.
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