Arbitration has become more and more popular in the last few years, as litigants opt to resolve their issues outside of the formal courtroom and in the more informal setting of arbitration. Although not as formal as a courtroom, the arbitrator’s decision on the legal issues in front of him or her is generally legally binding. In fact, in some cases the reviewability of an arbitrator’s decision is extremely limited.
Also, there are a few important limitations on an arbitrator’s authority to decide legal issues. The Colorado Court of Appeals recently decided a case that required the Court explain how arbitration fits into the family law context, specifically divorce.
The facts of the case are quite simple, actually. Husband and Wife got divorced and, as a part of the divorce, Husband was to pay Wife $4 million over the course of several years. The payments were structured so that Husband would pay Wife a monthly amount for several years and then, after all marital property had been liquidated, Husband would pay Wife the remaining amount in a lump sum. The final part of the deal was that Husband was entitled to some credits, according to expenses he incurred while selling the property.
The parties agreed to use an arbitrator to settle any disputes they had. The arbitration clause in the separation agreement read:
The Parties agree that they will attempt to settle any claim or controversy arising out of or as a result of their dissolution of marriage through consultation and in the spirit of mutual cooperation. If such attempts fail, the specific dispute will be identified in writing and shall be mediated.
When it came time for Husband to pay Wife the remaining amount he owed, the two could not agree on an amount. Husband wanted to go to arbitration, but Wife did not. Eventually, Husband asked a court to tell Wife she had to enter arbitration, pursuant to the legally binding separation agreement she had signed. The couple went to arbitration, and Wife appealed the arbitrator’s decision.
The Court’s Discussion of Arbitration Agreements
Wife claimed that the arbitration agreement was not valid and therefore that the arbitrator’s decision was void. The Court had to decide if the dispute between the parties was within the scope of the arbitration agreement. If it was outside the scope of the agreement, the arbitrator would not have authority to decide the legal issue.
However, the Court noted that arbitration is the legally preferred method of dispute resolution and, when in doubt, the law will presume that the parties intended to submit themselves to arbitration. This presumption is strongest when the arbitration clause is broad, as it was in this case.
After further analysis, the Court determined that although Wife didn’t want to arbitrate at the current time, she had agreed to do so when she signed the arbitration agreement.
Arbitration Agreements and Colorado Divorces
Arbitration is not always the best way to go, although it can be good for some people in some situations. One of the biggest drawbacks to signing an arbitration agreement is that reviewability and appealability of an arbitrator’s decision is limited. This means that a non-judge can have final, legally-binding authority over serious legal issues that have a lasting impact on clients’ lives.
Are You Going Through a Colorado Divorce?
If you are going through a Colorado divorce, and you have already agreed to arbitrate, you can still benefit from having the assistance of a Colorado family law attorney at your side. An arbitrator, like a judge, listens to legal arguments and is not always receptive to emotional pleas. Therefore, having an experienced family law attorney to help you through your mediation is of great benefit for many Coloradoans. To speak to an experienced Denver divorce attorney, call 303-502-9422 today.