Introduction

Currently, parties in matrimonial and family proceedings are encouraged to attempt settlement through different modes of alternative disputes resolution (“ADR”) such as family mediation, financial dispute resolution and the children dispute resolution pilot scheme before going to trial. A 3-year pilot scheme for a private adjudication of financial disputes, namely the Private Financial Adjudication (“PFA”), was introduced in 2015 seeking to provide families with an additional option of ADR to seek a final determination of specific financial disputes other than through trial in the Family Court. This pilot scheme for PFA, which had been extended twice for 3 years each to 18 January 2021, was recently extended for another 3 years up to 18 January 2024 with some modifications.

What is PFA?

Applicability and characteristics of PFA

The PFA procedure applies to any application for financial orders and/or financial relief, as well as any other applications of a financial nature to which the Court agrees that the procedures should apply in matrimonial and family proceedings. The PFA process is similar to arbitration and requires parties to agree to be bound by the decision of the mutually appointed adjudicator.

Prior to the PFA, the parties are usually required to consider participating in family mediation and/or financial dispute resolution, and should also have made financial disclosure by exchanging the parties’ respective Form E, unless there is good reason for not doing so.

PFA agreement

In order to proceed with PFA, the parties are also required to sign a PFA agreement setting out, among others, the following key terms:-

1.         Whether the parties have attended family mediation or a financial dispute resolution hearing and if not, why not;

2.        The scope of the PFA agreed by the parties, i.e. whether the PFA includes all, or only a particular issue of the financial dispute such as maintenance pending suit for spouse or interim maintenance for children;

3.        Within 14 days of signing the agreement, the parties shall jointly make an application by way of consent summons to seek the Court’s approval for appointment of the private adjudicator, commencement of the PFA, and a stay of all or part of the proceedings between the parties pending the PFA;

4.        All parties agree to be bound by the decision(s) of the private adjudicator, subject only to the overriding discretion of the Court as to whether, and in what terms, to make the order embodying the decision; and

5.        The parties shall file a PFA report and a consent summons incorporating the terms of the decision of the private adjudicator after the PFA.

Finality of decision made by adjudicator

One of the characteristics of PFA that deters practitioners from recommending it to parties in financial disputes is that the parties will be bound by the decision of the private adjudicator, subject to the overriding discretion of the Court. If a party to the proceedings does not agree that the decision of the adjudicator should be made into a court order by consent, then that party may apply to the Court for further directions and show cause as to why that party should not be bound by the decision(s) of the private adjudicator. Following the authorities in England, in exceptional cases where there has been an obvious miscarriage of justice, an aggrieved party may be able to seek leave from the Court to set aside the decision on the limited grounds that the adjudicator was wrong in law or fact.

Due to the finality of decision made by adjudicator, it has been suggested that PFA may be more applicable to deal with interim orders such as maintenance pending suit and interim maintenance, since such interim orders are subject to variation on change of circumstances, as well as an ancillary relief claim seeking for periodical payments to maintain themselves and their children.  

Accredited adjudicators

The Institute of Private Family Adjudicators (Hong Kong) has created an accreditation process under which a specialist panel of family law practitioners with at least 10 years post qualification experience will be qualified to sit as adjudicators. Such family practitioners are required to have successfully completed the training course on family adjudication run by the Institute. Recently, the first batch of 24 Hong Kong lawyers have sought accreditation.

First case in Hong Kong resolved under PFA

Despite the introduction of PFA in 2015, the first PFA only took place in May 2020 and the decision was delivered by the adjudicator in July 2020. The parties in that case agreed to resolve their disputes under PFA because of the COVID-19 pandemic which delayed their ancillary relief trial originally fixed in April 2020 to November 2020. The children’s aspect of the case had already been resolved and the parties were keen to move on with their lives. Besides, since the parties in that case were ready to proceed to trial, in the sense that all the evidence was ready and the bundles were all prepared, a long adjournment of the ancillary relief hearing would have meant that significant costs would be incurred in updating the evidence and preparing new documents. By making use of the PFA procedures, the matter was resolved within a few months. It could take a much longer time if the matter was to be dealt with by the Court.

Takeaway

Bearing in mind that family judges usually have very heavy caseloads, and in light of the COVID-19 pandemic which has caused significant delays to Court proceedings, PFA allow parties in matrimonial and family cases to choose their adjudicator and take advantage of benefits such as flexible timetables, swifter resolutions and confidentiality of decisions. Currently, PFA is only applicable to financial disputes. Learning from the successful example of the scheme for arbitration on children issues in the UK, the judiciary should consider expanding the PFA to children’s matters as well.