Arbitral award increased following husband’s non-disclosure

It is well known that both parties to financial remedy proceedings on divorce have a duty to make full and frank disclosure of their means, both to the court and to the other party.

The duty begins when the parties are required to file financial statements, and continues until the conclusion of the proceedings. Accordingly, any material changes to a party’s finances between initial disclosure and the conclusion of the case must also be disclosed.

But what if the parties had their case decided in arbitration? Obviously, the parties must make full disclosure before the arbitrator makes their award, but does the duty of disclosure continue after the award has been made? An arbitral award has to be given effect by being made into a court order. Does the duty of disclosure continue until the order has been made?

The judge in a recent case has held that it does.

In the case the arbitrator heard the case in May 2022, and made his award in July 2022, although it was not finalised until January 2023. Thereafter, the parties attempted to agree the terms of a draft court order, but were unable to do so.

At that point the wife reached the conclusion that the husband had failed to provide full and frank disclosure to her and to the arbitrator, and so she issued an application to the court to set aside the award, and to receive substantially more.

The arbitrator had found the marital assets to be worth some £4.8 million, and made an award that essentially divided that equally between the husband and the wife.

The central issue in the case was the value of the husband’s businesses. Following the arbitration hearing it transpired that the businesses were worth some £3.6 million more than the arbitrator had found. The husband failed to disclose this, as he believed that his duty of disclosure had ended when the arbitration hearing concluded.

The judge hearing the wife’s application held that the husband should have disclosed the increase in value of his businesses, and that if he had done so that would have made a significant difference to the arbitrator’s award.

Accordingly, and after taking other factors into account, the judge ordered that the wife should receive £1.16 million pounds more, plus £200,000 in respect of her costs.

You can read the full report of the case here.

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