A private FDR is a private equivalent to the mandatory second hearing in financial proceedings. However, the parties appoint their own private judge to evaluate and indicate the likely outcome in a financial dispute should the matter proceed to a final hearing.

The hearing (whether in court or private) takes place on a “without prejudice” basis, which means the parties have the freedom to put forward offers of settlement to which no future reference can be made openly. In other words, if the case does not settle at the FDR and goes to a final hearing (whether in court or arbitrated), no reference can be made to the offer one party might have made during the private FDR. Furthermore, the judge/evaluator will not be involved in the case again to protect the privilege of that hearing.

Private FDRs are intended to narrow or resolve the issues in dispute. They provide an opportunity to obtain a realistic and neutral indication of what a fair settlement would be and what a court would likely order if the matters were not resolved by agreement.

Private FDRs, as opposed to in-court FDRs, offer the flexibility of choosing your own private FDR judge and the time and location of your private hearing. The evaluator will have more time to assist the parties in reaching a settlement than an in-court judge and will be selected for their expertise on the key issues in the case.

Private FDRs are an extremely successful forum for reaching a settlement, with the vast majority of cases settling at or shortly after the hearing.

How do private FDRs work?

Private FDRs can take place before or after the issuing of court proceedings. Where court proceedings are already underway, proceedings will be adjourned to allow the private FDR to take place. This will replace the requirement to have an in-court FDR.

Many retired judges and barristers offer their services to act as a private FDR judge. There is the usual process of disclosure and the preparation of the key documents in the case setting out the facts, the areas of dispute and the respective positions on the issues upon which an indication is sought. As an external, private process, the private FDR judge will have ample time to read through the papers before the private FDR and dedicate a whole day (or more if necessary) to the private hearing to help the parties settle the matter.

Having read and heard the positions advanced by each party, the judge will indicate the likely range of outcomes if the financial dispute were to be decided by an in-court judge at a final hearing (or by an arbitrator at a final arbitration). The indication is not binding; rather, it is intended to aid settlement. If an agreement is reached, heads of terms are usually signed on the day and a financial consent order is subsequently prepared for approval by the court.