11. Pilot Scheme on Private Adjudication of Financial Disputes in Matrimonial and Family Proceeding

11. Pilot Scheme on Private Adjudication of Financial Disputes in Matrimonial and Family Proceeding

Parties in family proceedings are encouraged to try to reach settlement through alternative dispute resolution (ADR), which means methods of resolution that are not court or trial based. Examples of ADR include Collaborative Practice, family mediation, financial dispute resolution (FDR), and children dispute resolution (CDR).

Private Financial Adjudication (PFA) is another option of ADR. Essentially, parties can choose to use the PFA procedure to settle their dispute with the help of an appointed adjudicator. PFA is similar to arbitration. This pilot scheme was initially introduced in 2015 and has been extended to run until January 2024.

Parties can choose to use the PFA process when their disputes involve the following issues:

• An application for ancillary relief, other financial orders and/or financial relief under Part II and Part IIA of the Matrimonial Proceedings and Property Ordinance (Cap. 192);
• An application for maintenance and/or financial orders under the Guardianship of Minors Ordinance (Cap. 13);
• An application under section 3 of the Separation and Maintenance Orders Ordinance (Cap. 16) for an order for payments under sections 5(1)(c), (d), (e) and 9 of the same ordinance;
• An application for financial provision under the Inheritance (Provision for Family and Dependants) Ordinance (Cap. 481);
• Any other applications of a financial nature in Matrimonial and Family Proceedings to which the court agrees that the procedures should apply; and
• An application for costs in respect of any of the above applications or proceedings.

The PFA process cannot adjudicate any of the following matters:

• Any proceedings for divorce (the main suit itself), nullity, judicial separation, and presumption of death and dissolution of marriage; and
• Any disputes on children’s custody, care and control, access, education or upbringing; and
• Any other proceedings not covered above

PFA applies strictly to financial disputes and has no bearing on matrimonial cause (ie any proceedings in relation to divorce; nullity; judicial separation; presumption of death and dissolution of marriage). If parties agree to use PFA, there will not be a trial in court for the issue of financial matters.

PFA can only be initiated after the exchange of Form E and the court advises parties to participate in family mediation and/or FDR before engaging in PFA.

The key difference between PFA and trial is that PFA requires parties to agree to this process, and mutually appoint an adjudicator to decide their dispute. Parties will have to engage in private adjudicator and agree between themselves who to appoint.

They will also have to agree to be bound by the decision made by that adjudicator. The decision will need to be approved by the Family Court. Only in very limited circumstances can the arbitral decision be challenge, e.g. error in law.

To participate in the PFA, the parties are required to sign a PFA agreement that sets out key terms and seek approval from the court. Some key terms that must be included are:

• Whether the parties have attended family mediation or a FDR hearing;
• The scope of issues that will be dealt with through the PFA process;
• After signing the agreement, the parties will jointly make an application to seek the court’s approval to appoint a private adjudicator and start the PFA. Court proceedings between the parties would also be stayed pending the PFA.
• Parties agree to be bound by the decision/s of the private adjudicator whether in terms of procedures or the adjudication. The adjudicator’s decision shall be final subject only to the overriding discretion of the court as to whether, and in what terms, to make the order/s embodying the decision and that the parties agree to take all necessary steps to see such orders are made.
• The parties will file a PFA report and a consent summons incorporating the terms of the decision of the adjudicator after the PFA. The parties will also dispose of matrimonial assets in accordance with these provisions

An example of a PFA agreement can be found in Practice Direction SL9.