London has long been heralded as the divorce capital of the world, with recent years seeing a number of high-profile cases involving substantial settlements and significant media attention. Notable examples include that of Sheikh Mohammed bin Rashid al-Maktoum in 2021, believed to be the largest divorce settlement in UK history, that of Sir Christopher Hohn and Jamie Cooper-Hohn in 2014 where the settlement represented nearly half Chris Hohn’s fortune at the time, and that of Farkhad Akhmedov and Tatiana Akhmedova in 2017, a case noted for its complexity and the value (and location) of assets at stake.

These cases helped cement London’s reputation as a jurisdiction that often awards substantial settlements to a financially weaker spouse, making it a preferred venue for many. However, a change to the family courts launched this week heralded as a “watershed reform” by Sir Andrew McFarlane, President of the Family Division, will lead to significantly enhanced transparency.

Starting from Monday, 27 January 2025, journalists and legal bloggers will be permitted to report on family court cases across England and Wales. This move extends transparency beyond the previous pilot courts (see our article earlier this year, Lifting the veil on proceedings in the family courts), allowing media representatives to request transparency orders to report proceedings, access key documents, and interview families, provided anonymity is maintained. Judges retain discretion to deny such requests, but there is now a presumption in favour of reporting. The scheme will cover public law cases, such as those involving local authorities, private law cases, such as custody battles, and financial remedy disputes.  While aiding transparency, the concern is that proceedings which are in themselves “stressful enough”, will now have the additional worry of personal and sensitive material being reported on by media.

It remains to be seen the extent to which this will have a chilling effect and push people to other processes and jurisdictions.  However, recent years have already seen an increase in the use of arbitration and mediation in divorces, both of which still protect confidentiality.  This has been actively promoted in an attempt to ease pressure on the courts and promote amicable settlements. Amendments to the Family Procedure Rules, effective from 29 April 2024, broaden the definition of Non-Court Dispute Resolution (NCDR) to encompass methods such as mediation, arbitration, neutral third-party evaluations, and collaborative law. Parties are now expected to actively consider and engage in NCDR before initiating court proceedings. Failure to do so without valid justification may result in cost sanctions, where a judge could order the non-compliant party to pay the other’s legal fees. Additionally, courts have the authority to adjourn proceedings to encourage participation in NCDR, even without the parties’ agreement.

Against this backdrop, it is perhaps unsurprising that the rich are increasingly using private arbitration to settle divorces. In 2024, there were 130 financial settlement arbitrations, up from 89 in 2023. Arbitration offers a faster resolution, typically within six months, compared to up to two years in court, and provides a private forum for dispute resolution with a timetable that can be arranged to suit the parties, rather than be governed by the courts. While arbitration can be expensive upfront, it may save costs in the long term by avoiding prolonged litigation and multiple court hearings. Many feel the court system is adversarial, stressful, and rigid and that arbitration provides a more collaborative environment focused on resolving disputes efficiently and amicably. High-value or complex financial disputes are more likely to be resolved through arbitration, as it allows parties to appoint experts suited to their specific needs.

While growing in popularity, arbitration is not without its challenges. It may not be affordable for all parties, especially those with limited financial means and concerns have been raised that less wealthy spouses may feel disadvantaged in the arbitrator selection process. Decisions made in arbitration are binding but not as easily enforceable as court orders, requiring court involvement for enforcement in some cases.

Of course, mediation, often a prerequisite before proceeding to court, is likely to be cheaper and faster than both court or arbitration. The mediation process encourages cooperation, preserving relationships, which is especially important when children are involved. Again, an attraction is that the process remains confidential but with a mediation both parties keep control of the outcome, rather than handing this over to a third party to adjudicate.  However, this requires both parties to agree to mediate and produces an outcome which is not legally binding unless converted into a legally enforceable consent order.  It is thus not suitable in cases involving power imbalances, complexity, or when one party is uncooperative. It thus seems an unlikely challenger for high stakes spats.

Whilst too early to call the impact of these changes, one thing is clear – considering the communications aspect of family proceedings, including how to respond to transparency orders, will be ever more important in advising clients.