Last-Best Offer Arbitration in Family Law Disputes

One of the most significant advantages arbitration offers over litigation is the ability to design a bespoke dispute resolution process tailored to the circumstances of the particular case, offering no more bells and whistles than those which are absolutely necessary for the arbitrator to fairly resolve the legal issues. Not only can participants decide what level of disclosure must be met, whether evidence is required and how any evidence will be presented, and whether time limits on oral evidence and arguments and page limits on affidavits will be helpful, they can also decide whether the arbitrator will resolve their dispute by applying “the law” or by applying another standard such as conscience or equity. The point, of course, is to get through the arbitration process as quickly, cheaply and fairly as possible.

Last-best offer arbitration, also called final offer arbitration or baseball arbitration, as a result of its use in resolving MLB salary disputes, is one such procedural option. In this process, the parties privately exchange preliminary settlement offers before providing their last, best offers to the arbitrator. The arbitrator resolves the dispute by selecting the final offer which seems to be the most appropriate in the circumstances of the case. The arbitrator does not have the authority to adapt, adjust or combine aspects of the offers, only to choose one or the other.

As an arbitrator, I appreciate the fact that the options available to me boil down to a choice between Offer A and Offer B. I also appreciate how the process forces participants to balance their natural impulse toward personal gain against a less partisan perception of the law and fairness to the family as a whole. The last-best offer process seems to me to push parties further toward a holistic approach to the legal issues than offers to settle exchanged in litigation, which are intended to promote resolution through the threat of increased costs.

Here’s how the last-best offer process works for me, using a protocol adapted from the International Centre for Dispute Resolution‘s “Final Offer Arbitration Supplementary Rules.” Bear in mind that this process must be discussed and agreed to at the very outset of the arbitration.

A. Preliminary offers to settle

Once the discovery and disclosure process is substantially complete, the parties will prepare and exchange at least one offer to settle. These preliminary offers to settle will not be provided to me. The offers should be clear and comprehensive, and address each issue in the case in clear, unambiguous terms capable of acceptance. Any amounts payable as retroactive support, as prospective support, or as an equalization payment must be specified rather than left to subsequent calculations.

Counsel should be thoroughly familiar with the applicable law, the tests that must be met and the evidence they will present, and be well into the hearing preparation process, before drafting their offers to settle.

1. The parties exchange initial settlement offers at least three weeks before the date of the hearing.

2. The parties exchange follow-up settlement offers, prepared in light of the initial settlement proposal received from the opposing party and the content of any discussions between counsel on the merits of those initial proposals, at least two weeks before the date of the hearing. (This step is optional.)

B. Final offers to settle

After the follow-up offers to settle have been exchanged, the parties will prepare their last, best offers to settle. Note that I will not read the parties’ offers until the hearing has concluded.

3. The parties provide me with their final offers to settle at a specific time on a specific date at least one week before the date of the hearing. I will provide each party with the offer submitted by the other once both offers are received.

Counsel should advise me as soon as possible if an offer is accepted and the hearing becomes unnecessary. I always appreciate being able to free up time in my calendar.

C. The hearing

I will resolve the dispute by selecting the final settlement offer which, in my opinion, is most appropriate and most fair in light of the applicable law and the circumstances of the case. However, I must have information or evidence of some nature if I am to make a rational choice between the parties’ offers.

In mediation-arbitration processes, the parties may agree that I will consider only the information and documents I receive during the mediation phase in making my decision.

In arbitration and in mediation-arbitration processes, the parties may agree that I will consider only evidence and documents received at or prior to the hearing. Evidence may be provided in writing, through statements of agreed facts, admissions and affidavits, or through oral testimony. Evidence may also be provided through a combination of written and oral evidence, as might be the case if a witness’s evidence in direct is provided by affidavit but is subject to oral cross-examination.

A hearing will not be necessary if the parties agree that I will make my decision considering only written evidence, most commonly statements of agreed facts, or only information from the mediation phase of a mediation-arbitration process.

D. The arbitrator’s decision

I will open and read the parties’ final settlement offers once the hearing has concluded, and select the best settlement offer as soon as possible thereafter. My award will reproduce the terms of that offer.

Counsel may agree that I will provide reasons for my selection, usually in summary form, or that I will not provide reasons for my selection. (Note that I cannot provide reasons for decisions based on information received during the mediation phase of a mediation-arbitration process.)

While decisions made without reasons will always be available more quickly than decisions that require reasons, be aware that the absence of reasons will make appeals profoundly challenging, if not actually impossible. Some parties will appreciate the resulting finality of such awards; others will want to hedge their bets and preserve the ability to appeal an adverse outcome.

Other resources

I encourage counsel taking family law files to arbitration to review the following books, both of which offer good suggestions for the creative design of arbitration processes:

Marvin J. Huberman, ed., A Practitioner’s Guide to Commercial Arbitration (Toronto: Irwin Law, 2017)

Ann C. Wilton & Gary S. Joseph, Family Law Arbitration in Canada (Toronto: Thomson Reuters, 2012)

Other writing of mine on arbitration and mediation that may also be of interest is available in the Library section of my firm’s website.