Private Financial Dispute Resolutions (private FDRs)

In recent years, and particularly following the COVID-19 pandemic, the family courts in England and Wales have suffered significant backlog, resulting in delays for couples seeking a divorce.

As a result, divorcing couples are increasingly turning to alternative methods of dispute resolution. Seeking a private Financial Dispute Resolution (FDR) hearing has become popular, particularly amongst high-net-worth individuals.

A private Financial Dispute Resolution is where parties voluntarily appoint a judge to help them engage in negotiations outside of court, helping divorcing couples to settle disputes confidentially and efficiently.

What is a private FDR?

As the name suggests, a private FDR is essentially a private version of the court-based FDR, which is usually the second hearing in financial remedy proceedings, where the focus is on reaching a settlement. Indeed, the FDR is where most cases settle.

A FDR appointment is a judge-led negotiation hearing, which takes place “without prejudice”, meaning that what is said at the FDR, including any offers or concessions, cannot be used against a party in later court hearings. This provides an opportunity for open negotation, as parties can discuss issues frankly and try to reach a settlement, without having to fear that an offer they make could be held against them later.

At a FDR, the judge cannot impose a settlement on the parties but will offer guidance on the potential settlements which could be imposed by the court if the case proceeds to a final hearing. The parties will not give evidence at the FDR, and it is anticipated that the parties will use the time to focus on negotiating a settlement.  

A private FDR or ‘pFDR’ is an extension of this, following the same format except that they are not conducted by the courts. Parties elect to privately fund and choose their own judge who will have more time to listen to and consider the case compared to the state-funded court process. 

If you’re considering or going through a divorce and would like to explore methods of alternative dispute resolution to come to an agreement with your spouse, we can help. Click below for a free initial consultation with one of our expert divorce solicitors. 

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Why have a private FDR?

A private FDR has several advantages over a FDR conducted through the courts, namely:

• Control and autonomy - the judge will be chosen by the parties, allowing them to select someone with the necessary knowledge of the case’s circumstances. Furthermore, the judge’s proposed settlement is not legally binding, but serves as guidance.
• Greater attention - the judge will not be subject to the same time limitations as a court judge and, in contrast, will not have any other hearings scheduled for the same day, giving them far more time to prepare and thoroughly study the case.
• Flexibility - parties can schedule a pFDR at their own convenience rather than having the court set the timetable, which can make it feel far less intimidating. 
• Speed and cost efficiency - it is often much quicker to arrange a pFDR compared to waiting for a FDR in the court, and as such, they can be more cost-effective overall.
• Confidentiality - pFDRs are typically held in private settings, such as the office of one party’s lawyers, ensuring that any personal information is kept private.
• Less adversarial - many couples find pFDRs less adversarial, due to the more informal setting and the focus on helping parties come to a settlement, rather than imposing one.

It is also becoming increasingly common for pFDRs to take place over two days rather than just one so as to maximise negotiating time between the parties once they have an indication from the judge. 

When can a private FDR take place?

A private FDR can take place in the presence or absence of ongoing court proceedings for divorce or dissolution. It can be arranged before proceedings have even been issued, proving very cost-effective if agreement is reached early on. If court proceedings are ongoing, an adjournment must be applied for until the private FDR takes place. 

What to expect from a private FDR

A private FDR will usually consist of the following steps:

• Advance preparation: Once the legal expert has been appointed and the date set, the parties will prepare for the private hearing. Normally, without prejudice offers will be exchanged in advance of the date to establish each side’s attitude to the case. Position statements including the case facts, relevant financial information, agreed points, and points of dispute will be prepared, along with a bundle of key documents, for the legal expert.
• Day of the private hearing: On the day, submissions will be made by the representatives on each side and, considering those along with the documents, the legal expert will give an indication or opinion on the case.  With this indication, the parties are in a better position to negotiate. A series of without prejudice offers are likely to be exchanged in an effort to settle the matter. This may all happen on the day of the private hearing with the hope that settlement is reached, or it may continue in the days that follow (often in writing). 
• Agreement reached: When an agreement is reached between the parties, the heads of agreement can be taken to court, set out formally in a court order and approved by a judge. All else being equal, the separating couple can move ahead for the final order of divorce or dissolution. 
• No agreement reached: When agreement cannot be reached and the parties have not yet issued formal court proceedings, they may then decide to do so. Where court proceedings have been issued, the parties will have to return to the court for directions on how next to proceed and to set a date for the final contested hearing. 

Costs of a private FDR

Given the fact that private FDRs decrease the time spent involved in legal proceedings, they are a cost-effective process. When negotiating, parties should always take into account the additional financial resources (often in the thousands, or sometimes tens of thousands of pounds) that will be wasted if a matter goes to a full contested hearing.

frequently asked questions:

How is a private FDR different to arbitration?

The main difference is that arbitration results in a legally binding decision. Although a private FDR is similar to arbitration in that they are both alternatives to going to court, and parties jointly appoint someone to preside over proceedings, arbitrators come to a decision which is final and binding, whereas judges in pFDRs do not impose a binding settlement, but help parties negotiate and advise what a settlement in the family court may look like.

If a settlement is reached at a private FDR, will it be binding?

No, any agreement or settlement reached at a private FDR will not be legally binding unless it is formalised by the court with a consent order.

Can I have a private FDR without starting court proceedings?

Yes, a private FDR can take place before court proceedings begin, or at any stage once proceedings have been initiated.