In the recent case of Spencer v Spencer [2025] EWFC 431, the family court confirmed that confidentiality remains central to the arbitration process but clarified the limited circumstances in which arbitral materials (including the arbitral award) may be disclosed in related court proceedings. Steve Pires, a trainee solicitor in our Divorce and Family department, examines the decision and why it highlights arbitration as one of the preferred routes for those who value confidentiality.

Background

The parties, Earl Spencer and Countess Spencer, agreed that the financial aspects of their divorce would be resolved through arbitration under the Family Law Arbitration Scheme. Arbitration of family disputes has gained traction in recent years as an alternative to court proceedings due to its private and confidential nature and the fact that disputes are usually resolved more quickly than through the court system.

Family arbitration is a form of private dispute resolution in which the parties agree to appoint a suitably qualified person (an arbitrator), normally a retired judge or senior barrister, to adjudicate their dispute and make an award or determination. It can be used to resolve financial disputes on divorce and disputes concerning child arrangements. Key benefits of arbitration are that it allows the parties to avoid a hearing in open court and the risk of widespread media attention, without sacrificing the formality and structure of a court-like process and a binding legal outcome.

One of the issues that had to be determined in this case was the wife’s potential liability to the husband’s current partner, Professor Jarman, who had brought an action against the wife in the King’s Bench Division (KBD) for alleged misuse of her personal information. In those proceedings, Professor Jarman made a Part 36 offer to the wife to settle her claim (ie, a formal settlement offer under Part 36 of the Civil Procedure Rules with specific costs consequences if it is not accepted and the case proceeds to trial).

The arbitrator made an award on the basis that he expected the wife to accept the Part 36 offer and that she could do so without an admission of unlawful conduct. She could do this by making a statement in open court (SIOC) in the KBD proceedings, stating that she accepted the offer, but did not admit any unlawful conduct. The arbitrator expected the husband to indemnify the wife against any sums owed in connection with the wife’s acceptance of the Part 36 offer. The arbitrator included in his award a schedule of matters that were agreed between the parties, which included disclosure of specific paragraphs of his award to the wife’s media lawyers and Professor Jarman’s media lawyers. This would allow them to apply for permission to disclose these paragraphs into the KBD proceedings.

The wife’s media lawyers requested that the arbitrator reconsider part of his award because there was a risk that the SIOC could be interpreted as the wife’s acceptance of liability. The arbitrator emailed the parties, declining to reconsider his award. He added that disclosure of the relevant paragraphs would assist the wife in the event there was a disagreement between the wife and Professor Jarman on the contents of the SIOC, because the judge in the KBD would have the benefit of the disclosed paragraphs when resolving the disagreements on the contents of the SIOC. The arbitrator later gave permission for disclosure of the relevant paragraphs identified in his award into the KBD proceedings.

Key issues

When the husband and wife applied to court to convert the arbitrator’s award into an enforceable court order, the wife sought further disclosure from the arbitration process, namely:

• Disclosure of the arbitrator’s email.
• Disclosure of the full award and other material from the arbitration proceedings to the wife’s media lawyers.
• Permission for the wife to rely on the disclosable paragraphs in any dealings with the media to “defend her reputation”. The wife, in oral evidence, even went as far as to seek permission to place the entire award in the public domain if required to counter wrongful stories about her in the media.

The judge’s deliberations

Mr Justice Peel referred to Emmott v Michael Wilson & Partners Ltd [2008] Civ 184, which confirmed the general principle that arbitration is private and confidential. This means that both parties must not disclose or use for any other purpose any documents prepared for, disclosed or produced in an arbitration.

Emmott also established the exceptions to this general rule, which include: (i) with the expressed or implied consent or the parties, (ii) where the court has given permission, (iii) where it is reasonably necessary for the protection of an arbitrating party’s legitimate interests and (iv) where the interests of justice (or public interest) require disclosure.

Article 16.1 of the Family Law Arbitration Scheme Arbitration Rules confirms that disclosure “may be necessary to challenge, implement, enforce or vary an award in relation to applications to the court or as may be compelled by law”.

In determining these issues, Mr Justice Peel conducted a balancing exercise. In particular, he considered the wife’s right under article 6 of the European Convention on Human Rights (ECHR) to a fair trial in the KBD proceedings, her article 8 ECHR right protecting her personal reputation and her article 10 ECHR right to freedom of expression. Mr Justice Peel also considered the husband’s article 6 and 8 rights, noting in particular that it was the husband’s intention when entering the arbitration that it would be confidential and out of the public eye.

The judge’s decision

Mr Justice Peel considered that the arbitrator clearly envisaged disclosure of the relevant paragraphs as it would enable the wife to present her case as to the appropriate wording of the SIOC. It was clear that disclosure would enable her to correct any misleading impression made by Professor Jarman in the KBD proceedings, thereby enabling her to protect her reputation.

The judge said the disclosure allowed by the arbitrator was proportionate and directed at the specific issue of being able to assert the circumstances in which acceptance of the Part 36 offer was made. However, Mr Justice Peel decided that allowing further disclosure would be disproportionate and would invade the essential confidentiality of the arbitration process. This was especially the case as the parties did not invite the arbitrator to adjudicate on this issue.

In addition, Mr Justice Peel allowed extracts from the arbitrator’s email to be disclosed to the media lawyers for the wife, the husband and Professor Jarman, as they clarified the arbitrator’s thinking behind the disclosure authorisation.

Mr Justice Peel specifically rejected disclosure “to any person within, arising from, or for the purpose of discussing the Jarman claim”. This was on the basis that it would not be appropriate for the wife to refer to the disclosed paragraphs before her witness statement is referred to in open court. Otherwise, the wife would have been able to deploy the material unilaterally before any open-court proceedings had taken place to determine the terms of the SIOC. In his view, that would present a significant and disproportionate interference in the confidentiality of the arbitration.

Mr Justice Peel further rejected the wife’s suggestion that she should be able to deploy the contents of the award (which included personal details of the parties and their financial affairs) in the KBD proceedings or in the wider public domain. He decided that the arbitrator had carefully identified the paragraphs of the award that would enable the wife to be able to argue for a contextually accurate SIOC, and none of the additional paragraphs would be relevant to this issue.

Finally, Mr Justice Peel allowed disclosure of the whole award to the wife’s media lawyers as they needed sight of the full award in order to be able to represent the wife fully, especially as it may have a bearing on how they choose to advance the wife’s case.

Although Mr Justice Peel allowed further limited disclosure from the arbitration proceedings, he emphasised the importance of confidentiality in arbitration. He did not allow disclosure that would disproportionately interfere with such confidentiality.

Conclusion

This decision highlights that the court will strike the right balance between confidentiality and protecting a party’s legitimate interests when faced with legal issues which sit outside of the arbitration process, but which are intrinsically linked to matters which occurred within the arbitration itself.

Sam Longworth, partner in the Divorce & Family team at Stewarts comments:

“The facts of this particular situation are unusual and the judgment therefore limited in general application, but the use of arbitration as a means of ‘private court’ by separating couples is now common place and growing exponentially.  Were it not for the tangential proceedings, the outcome of the parties private court dispute would have remained entirely confidential and out of the public eye, irrespective of their high profile.  This, and the added benefit of speed of resolution, has made arbitration and its private court offering the go to route for resolving disputes for our clients.”

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