(973) 403-9200
By Charles F. Vuotto, Jr., Esq.
OVERVIEW
By Order entered July 27, 2015, the Chief Justice of New Jersey Supreme Court, Stuart Rabner, effectuated substantial amendments to the rules governing the courts of the State of New Jersey effective September 1, 2015. Part and parcel of those revisions to the Rules of Court included a sea change in the arbitration of family law matters. The new and amended rules as well as related forms that are now part of the Appendix to the Rules of Court found their origin in the pronouncements of Justice Virginia Long about six years ago in Fawzy v. Fawzy, 199 N.J. 456, 482 (2009). As a result of Justice Long’s direction, the Supreme Court created the Ad Hoc Committee on the Arbitration of Family Matters (“Ad Hoc Committee”). The Ad Hoc Committee was established to formulate rules, forms and procedures to address arbitration in family law matters. It worked diligently to carry out its task from the time it was created in or about December of 2013 to the date that the Ad Hoc Committee issued its report on February 9, 2015.[i]
As indicated in the Ad Hoc Committee’s report, Fawzy charged the Supreme Court Family Practice Committee with developing forms and procedures for the arbitration of family law matters pursuant to the Uniform Arbitration Act (“UAA”) (to wit: N.J.S.A. 2A:23B-1 to 32). The report goes on to explain that Johnson v. Johnson, 204 N.J. 529 (2010) extended the charge to include the Alternative Procedure for Dispute Resolution Act (“APDRA”) (to wit: N.J.S.A. 2A:23A-1 to 9). The Ad Hoc Committee’s report goes on to note that, in furtherance of the court’s charge in Fawzy, with additional considerations under Johnson, that the Family Part Practice Committee developed forms and a script in its 2009 – 2011 cycle, and again in the 2011-2013 cycle. The proposed rules, forms and procedures were developed by the committee and presented to the court. Each attempt, however, resulted in a submission that was rejected by the court due to differences in opinion from the public on the intent of the applicable case law and statutes. As explained in the Ad Hoc Committee’s report, “members of the public argued that the proposed forms were confusing, complicated and lengthy, made the arbitration process too similar to litigation, did not provide procedures for the review and enforcement of awards and were inconsistent and unclear.” Therefore, the Ad Hoc Committee “was selected to address the concerns of the public and develop a procedure that was acceptable to all parties.” As such, “the Ad Hoc Committee was comprised of representatives from the judiciary, the family bar and the civil bar including experts on arbitration.”In the course of complying with their charge, the Ad Hoc committee drafted amendments to existing rules, new rules, a questionnaire for litigants to answer and sign, a disclosure form for the arbitrator/umpire to sign and two form agreements (one under the UAA and one under the APDRA) to “formalize the procedures and to address the concerns that were previously raised through the public comments.”
This article will first address the changes to the Rules of Court and then the significant forms that are now part of the Appendices to the Rules of Court.
REVISIONS AND ADDITIONS TO THE RULES OF COURT
First, R.4:21A-1 was amended to add sub-paragraph (f), which provides that “arbitration in Family Part Matters shall be governed by R. 5:1-5.” R. 5:1-4 (providing for differentiated case management in civil family actions) was amended to add an “Arbitration Track.” A new rule was created, to wit: R.5:1-5 simply entitled, “Arbitration” and provides the bulk of the new provisions.Lastly, the second new rule is R.5:3-8, which addresses the review and enforcement of arbitration awards. These amended and new rules are discussed in greater detail below.
R.5:1-4. Differentiated Case Management and Civil Family Actions
In addition to the “Priority,”“Complex,”“Expedited” and “Standard”tracks, the Supreme Court has now added the “Arbitration Track.” The rule provides that at any point in a proceeding, the parties may agree to execute a Consent Order or Agreement to arbitrate or resolve the issues pending before the court pursuant to the UAA, APDRA or any other agreed upon framework for arbitration of disputes between and among parties to any proceeding arising from a family or family-type relationship except as provided by R.5:1-5(a)(1)[ii]. R.5:1-4(a)(5) further provides that if the parties elect to arbitrate, the litigation shall be assigned to the Arbitration Track, and the arbitration shall proceed pursuant to R.5:1-5. Further, issues not resolved in arbitration shall be addressed in a separate mediation process or by the court after the disposition of the arbitration.
Whereas the court should generally honor the preference of counsel who agree as to the track assignment, R.5:1-4(b) permits the court discretion to assign a case to a different track for good cause. Importantly, the good cause exception does not apply to a case assigned to the Arbitration Track. Further, if it is not clear from an examination of the information provided by the parties as to which track assignment is most appropriate, the court is presently empowered to assign the case to the track that “affords the greatest degree of management.” However, the court may not assign a case to the arbitration track under those circumstances. Similarly, the authority granted by R.5:1-4(c) to reassign a case to a track other than that specified in the original notice on the court’s motion or on an application by a party does not apply to assignments to the Arbitration Track. Lastly, R.5:1-4(c) provides that an action assigned to the Arbitration Track may be reassigned to the track assignment most appropriate if the parties mutually elect to opt out of the Arbitration Track by Consent Order or Agreement.
R.5:1-5. Arbitration
The first new rule is R. 5:1-5 and applies to all Agreements to Arbitrate (“Agreements”) and all Consent Orders to Arbitrate (“Consent Orders”), including but not limited to those entered into pursuant to the UAA, APDRA or any other agreed upon framework for Arbitration or resolution of disputes between and among parties to any proceeding heard in the family part with the exception of certain issues, which cannot be arbitrated. Those issues are: (A) the entry of the final judgment of annulment or dissolution of relationship; (B) action involving the Division of Child Protection and Permanency; (C) Domestic Violence Actions; (D) Juvenile Delinquency Action; (E) Family Crisis Action; and (F) Adoption Actions.
R.5:1-5(b) lists specific prerequisites to arbitrating a family law dispute. The first of these require that the parties, prior to the execution of any agreement or entry of a Consent Order, each review and execute the Arbitration Questionnaire, which is now set forth in Appendix XXIX-A. Each party’s questionnaire shall be attached to the Agreement or Consent Order. This form will be more fully discussed below.
Although there are significant clauses in the form agreements to arbitrate that are now contained within the Appendix to the Rules (Appendix XXIX-B and Appendix XXIX-C) that are advisable, although discretionary, the court has set forth in the body of the Rules of Court various substantive provisions that are mandatory. (Caveat: Additional mandatory provisions are referenced in the “Introductory Notes” preceding each of the form agreements, as detailed below.) Specifically, R.5:1-5(b)(2)(A) provides that any Agreement or Consent Order to Arbitrate in a pending family law matter shall state that:
In addition to the foregoing, R.5:1-5(b)(2)(B) provides that in all family proceedings involving child-custody and parenting-time issues, the Agreement or Consent Order shall provide that:
Further, R.5:1-5(b)(2)(c) provides that in all family proceedings involving child support issues, the Agreement or Consent Order shall provide that the award shall state, in writing, findings of fact and conclusions of law with a focus on the best-interests standard, and consistent with R. 5:6A and Rules Appendix IX.
R.5:1-5(b) (2)(D),(E) and (F) refer to the templates for the form Agreements (i.e., the form under the UAA found in Appendix XXIX-B;the form agreement to resolve disputes pursuant to the APDRA found in Appendix XXIX-C; and the Arbitrator/Umpire Disclosure Form found in Appendix XXIX-D). Further still, R.5:1-5(b)(3) provides that if parties have entered into an Agreement or Consent Order to arbitrate or an arbitration award has issued, the certification filed pursuant to R.4:5-1(b)(2)[iii] shall so state.
Lastly, R.5:1-5(c) provides that any action pending at the time that an agreement or Consent Order to Arbitrate is reached shall be placed on the Arbitration Track referenced in R.5:1-4 for no more than one year following Arbitration Track Assignment, which term may be extended by the Court for good cause. This paragraph further provides that cases assigned to the Arbitration Track shall be given scheduling consideration when fixing court appearances in other matters. This provision was intended to help avoid situations where some judges gave little or no deference to scheduled arbitration dates in other matters being arbitrated by counsel before the court.
Rule 5:3-8. Review and Enforcement of Arbitration Awards
The second new rule is R. 5:3-8 and provides for procedures to review and enforce Arbitration Awards consistent with the UAA and APDRA. The Ad Hoc Committee addressed the procedures to enforce final and interim awards by an arbitrator or umpire. Essentially, this rule relates back to the statutory framework, with some tweaking as to interim awards. As we know, it is common for family law litigants to seek interim relief from the court by way of pendente lite orders for alimony, child support, restraints against the dissipation of assets and various other forms of relief. Depending on the issues to be arbitrated, an arbitrator or umpire may be faced with the same issues. Any award issued would have little impact if it could not be enforced in a timely manner, not only upon the conclusion of the manner, but also during its pendency. R.5:3-8(a) addresses the procedure for the confirmation of final or interim economic awards (except for child support awards that are governed by subparagraph(c)). R.5:3-8(a) provides that as to such economic awards (other than child support), either party may apply to the court by motion, the return date for which may be shortened by the court pursuant to R.1:6-3 (a), or summarily pursuant to R.5:4-1 if no other family action is pending, to confirm a final or interim arbitration award. This Rule requires the court to confirm and enter a judgment in conformity with the final award of the arbitrator, or confirm or enter a pendente lite order in conformity with an interim award of the arbitrator, unless the court determines to correct, modify or vacate the final or interim arbitration award pursuant to the procedures and standards set forth in the UAA (paragraphs 23 or 24)(unless the parties have expanded the scope of review in accordance with paragraph 4(c)); the APDRA (paragraphs 13 or 14); or any other applicable statute or agreed upon framework under which the parties have agreed to arbitrate their dispute.
R.5:3-8(b) addresses the procedures for the confirmation of final or interim custody and parenting time awards. The same procedures as detailed under R.5:3-8(a) are applicable with the added direction that the award should not be entered if the court finds that:
Under R. 5:3-8(c) the court is given direction regarding the procedures for confirmation of a final or interim child support award. Again, the same procedures are detailed as referenced above pursuant to R. 5:3-8(a) with direction to confirm the award unless the court finds that there is evidential support establishing a prima facie case of harm to a child with provisions similar to those detailed above with regard to R. 5:3-8(b) (i.e., confirmation of final or interim custody and parenting time awards).
NEW FORMS
As previously stated, the Ad Hoc Committee has created various forms to assist litigants and attorneys in resolving family law matters through arbitration or alternative dispute resolution.Inclusive thereof are forms for arbitrating under the UAA and APDRA. These forms are now part of the appendices to the Rules of Court. As stated within the Ad Hoc Committee’s report, these form agreements contain “Explanatory Notes” as guides for attorneys and parties who are less familiar with the arbitration/alternative dispute resolution process. The form agreements contain mandatory and optional sections that incorporate important language from the UAA and the APDRA. Importantly, the Ad Hoc Committees report notes that the form agreements allow the parties to agree on standards of review, except those that cannot be waived by statute, and offer options for parties to consider including: reconsideration, expansion of the scope of judicial review under the UAA and an appeal to an Appellate arbitrator/umpire. The form agreements also contain provisions about enforcing pendente lite awards of the arbitrator/umpire. These option provisions dovetail with the new rule 5:3-8 about enforcing awards.
Questionnaire Form (Appendix XXIX-A)
The first form is a questionnaire that is to be reviewed and executed by each party prior to execution of an Agreement or Consent Order submitting a family law matter to arbitration/alternate dispute resolution. The questionnaire contains ten specific questions (with an additional four questions if child support, custody and/or parenting time is in issue), as to which each party must either check “yes” or “no.” Each party must certify by signing the questionnaire that he or she has read each and every question contained therein and that the responses are truthful. The purpose of the questionnaire is to verify to the court (in any subsequent proceeding)that the party has read the Agreement or Consent Order, understands its terms, understands that he or she has the right to a trial to resolve whatever issues are being submitted to arbitration/alternate dispute resolution, that he or she is waiving his rights to appeal and has limited ability to challenge the awards of an arbitrator/umpire, has had time to consider the implications of his/her decision to arbitrate, is doing so freely and voluntarily, is not under the influence of any substance, had all of his or her questions answered and agrees to be bound by the arbitration/ADR Agreement or Consent Order.
If child support, custody or parenting time are in issue, each party must also reflect their understanding that an award pertaining to said issues can be vacated if either party can establish that it threatens or poses a risk of harm to the child or children, that a party will not be able to challenge, vacate, modify or amend the award solely because he or she thinks the best interest of the child are better served by a different decision, and understand the requirements regarding maintaining documentary evidence and creating a record.
Agreement to Arbitrate Pursuant to the Uniform Arbitration Act (“UAA”), N.J.S.A. 2A:23B-1 et. seq. (Appendix XXIX-B).
The “Introductory Note” to the form agreement under the UAA is important to review. First and foremost, the note states that, “the Supreme Court of New Jersey endorses the use of Arbitration and other Alternative Dispute Resolution processes for the resolution of disputes.”The introductory note further states that the parties and their counsel may use the form included within the Appendix to develop an Arbitration Agreement or Consent Order for the arbitration of certain family law disputes under the UAA and R.5:1-5(a) of the Rules of Court. It is important to note that the parties may agree to arbitrate certain family law disputes if there is no pending proceeding in the Superior Court of New Jersey, Family Part. Further, the introductory note makes it clear that the provisions of the form included within the appendix are acceptable to establish an enforceable arbitration agreement under the UAA. However, the introductory note also cautions that the form attached under Appendix XXIX-B should not be used for proceedings under the APDRA. Rather, the form attached under Appendix XXIX-C should be used for proceedings under the APDRA.
The introductory note also cautions that the parties should understand that adding certain clauses may increase the time and cost of arbitration. For example, electing to strictly apply the Rules of Evidence, permitting full discovery under the Rules of Court, requiring a full verbatim transcript of the proceeding where not required by case law or requiring full findings of fact and conclusions of law where not required by case law, can and likely will significantly increase the duration and cost of the arbitration process.
The explanatory note also advises litigants and their counsel that certain provisions of the annexed form are required to assure the enforceability of the Arbitration Agreement. Specifically, these paragraphs are paragraph 1 (relating to a knowing waiver of rights, consent to arbitration, scope of arbitration and entry of a judgment on arbitration award); paragraph 2 (delineating the issues to be arbitrated); and paragraph 4 (stating that the judgment on the award rendered by the Arbitrator may be entered in any court having jurisdiction thereof). The explanatory note also advises litigants and their attorneys of provisions that are required in any arbitration involving children, including custody, parenting time or child support issues. These include paragraph 1 (as stated above); paragraph 14 (required record keeping); paragraph 16 (relating to documentary evidence to be held by the Arbitrator until the issuance of the award); and paragraph 17 (regarding the required findings and form of the award).
Lastly, the introductory note advises litigants and counsel of certain paragraphs that should be agreed upon to avoid later disputes (i.e., paragraphs 6, 7, 9, 11, 15, 18, 19, 20, 22 and 29), and refers to the remaining provisions of the form agreement as offered for consideration by the parties and their counsel in planning the arbitration proceeding.
Agreement to Resolve Disputes Pursuant to the New Jersey Alternative Procedure for Dispute Resolution Act (“APDRA”), N.J.S.A. 2A:23A-1, et seq. (Appendix XXIX-C)
The introductory note relative to the form agreement under the APDRA is almost identical to that related to the form agreement for the UAA. However, it bears review as certain paragraph references are different since it refers to a different form.
Arbitrator/Umpire Disclosure Form (Appendix XXIX-D)
In order to verify the independence of the arbitrator or umpire, the Rules of Court require that a disclosure form be reviewed and executed by the arbitrator/umpire prior to execution of an Agreement or Consent Order submitting a family law matter dispute to arbitration or ADR process. The preamble to the form states that, “it is important that the parties have complete confidence in the arbitrator/umpire’s impartiality. Therefore, any past or present relationship with the parties, their counsel, or potential witnesses, direct or indirect, whether financial, professional or social, or of any other kind must be disclosed. Any doubt should be resolved in favor of disclosure.”The form contains 13 separate questions, which must be answered either “yes” or “no” by the arbitrator/umpire. Should the answer to any question be “yes” or if the arbitrator/umpire is aware of any other information that may lead to a justifiable doubt as to his or her impartiality or independence or create an appearance of partiality, then the arbitrator/umpire is required to describe the nature of a potential conflict(s) on an attached page. The arbitrator/umpire must then sign the disclosure form indicating that he or she understands that the duty to disclose is a continuing duty, which requires him or her to disclose at any stage of the arbitration, any such interests, or relationship that may arise, which are recalled or discovered. The form further states that his or her failure to do so may be grounds to vacate the award.
CONCLUSION
It is critical for any attorney representing a litigant contemplating entering into an Agreement or Consent Order to arbitrate under the UAA, APDRA or any other agreed upon framework for arbitration or ADR to review the amendments to R.5:1-4 and the new Rules of Court, to wit: R.5:1-5 and R.5:3-8.
Further, it is important to recognize that the form agreements attached as Appendix XXIX-B and XXIX-C are provided to help develop an Arbitration Agreement or Consent Order. These forms, other than mandatory provisions as stated in the Introductory Note to each form must be tailored to the particular facts and circumstances of each case.
[i]Its report can be found on the New Jersey Judiciary website at http://www.judiciary.state.nj.us/reports2015/adhoc_family.pdf. The report was then released for public comment. It was supported by the New Jersey State Bar Association. Ultimately, it was adopted in its entirety in the new rules effective September 1, 2015.
[ii] R.5:1-5(a) prohibits resolution of the following issues by way of Arbitration or Alternate Dispute Resolution: (A) the entry of the final judgment of annulment or dissolution of relationship; (B) action involving the Division of Child Protection and Permanency; (C) Domestic Violence Actions; (D) Juvenile Delinquency Action; (E) Family Crisis Action; and (F) Adoption Actions.
[iii] Said Rule states, “Notice of Other Actions and Potentially Liable Persons. Each party shall include with the first pleading a certification as to whether the matter in controversy is the subject of any other action pending in any court or of a pending arbitration proceeding, or whether any other action or arbitration proceeding is contemplated; and, if so, the certification shall identify such actions and all parties thereto. Further, each party shall disclose in the certification the names of any non-party who should be joined in the action pursuant to R. 4:28 or who is subject to joinder pursuant to R. 4:29-1(b) because of potential liability to any party on the basis of the same transactional facts. Each party shall have a continuing obligation during the course of the litigation to file and serve on all other parties and with the court an amended certification if there is a change in the facts stated in the original certification. The court may require notice of the action to be given to any non-party whose name is disclosed in accordance with this rule or may compel joinder pursuant to R. 4:29-1(b). If a party fails to comply with its obligations under this rule, the court may impose an appropriate sanction including dismissal of a successive action against a party whose existence was not disclosed or the imposition on the noncomplying party of litigation expenses that could have been avoided by compliance with this rule. A successive action shall not, however, be dismissed for failure of compliance with this rule unless the failure of compliance was inexcusable and the right of the undisclosed party to defend the successive action has been substantially prejudiced by not having been identified in the prior action.”