Sophisticated business people know that arbitration is much cheaper and simpler than litigation. Therefore, contracts will often include an arbitration clause that will pre-empt litigation by agreement of the parties.
Can arbitration be a substitute for divorce court proceedings in Illinois?
What Is Arbitration
Arbitration is “[t]he investigation and determination of a matter or matters of difference between contending parties, by one or more unofficial persons, chosen by the parties, and called “arbitrators,” or “referees.”” Black’s Law Dictionary (10th ed. 2014)
“The settlement of a dispute by arbitration is encouraged” Marriage of Haleas, 2017 IL App (2d) 160799
Arbitration can only happen in Illinois if there was a written contract agreeing to arbitration.
“A written agreement to submit any existing controversy to arbitration or a provision in a written contract to submit to arbitration any controversy thereafter arising between the parties is valid, enforceable and irrevocable” 710 ILCS 5/1
The written agreement to arbitrate must be clear as to what will be arbitrated.
“The parties to an agreement are bound to arbitrate only those issues which by clear language and their intentions expressed in the language show they have agreed to arbitrate…Arbitration agreements cannot be extended by construction or implication.” Clanton v. Oakbrook Healthcare Centre, Ltd., 2023 IL 129067, ¶ 29, 226 N.E.3d 1266
Soon-to-be married couples or already married couples may contract with each other under very specific terms.
“”Premarital agreement” means an agreement between prospective spouses made in contemplation of marriage and to be effective upon marriage.” 750 ILCS 10/2(1)
“A premarital agreement must be in writing and signed by both parties. It is enforceable without consideration.” 750 ILCS 10/3
That premarital agreement can include the terms upon which the parties will proceed with a divorce.
“Parties to a premarital agreement may contract with respect to:
…
(7) the choice of law governing the construction of the agreement; and
(8) any other matter, including their personal rights and obligations, not in violation of public policy or a statute imposing a criminal penalty.” 750 ILCS 10/4
The Illinois Uniform Premarital Agreement Act’s choice of law and the catch-all “any other matter” would surely include the right to contract for arbitration.
How Do You Enforce Arbitration In An Illinois Divorce?
If one party won’t agree to arbitration, then the party who wants to proceed to arbitration must file a motion to compel arbitration.
“[O]nce the trial court determines that a valid arbitration agreement exists, the court must compel arbitration” Board of Managers of the Courtyards at the Woodlands Condominium Ass’n v. Iko Chicago, Inc., 183 Ill. 2d 66, 74 (Ill. 1998)
“[T]he question of arbitrability…court proceedings are governed in accordance with the Illinois rules of procedure, including the procedures set forth in section 2(a) of the Illinois Uniform Arbitration Act (Uniform Act) (710 ILCS 5/2(a)” Sturgill v. Santander Consumer USA, Inc., 48 NE 3d 759 – Ill: Appellate Court, 5th Dist. 2016
“Proceedings to compel or stay arbitration.) (a) On application of a party showing an agreement described in Section 1, and the opposing party’s refusal to arbitrate, the court shall order the parties to proceed with arbitration, but if the opposing party denies the existence of the agreement to arbitrate, the court shall proceed summarily to the determination of the issue so raised and shall order arbitration if found for the moving party, otherwise, the application shall be denied.” 710 ILCS 5/2(a)
If the parties don’t agree that there was a valid contract to arbitrate, they must ask the divorce judge.
“Whether a contract to arbitrate exists must be determined by the trial court, not an arbitrator.” Brookner v. General Motors Corp., 2019 IL App (3d) 170629, ¶ 17.
Proof of a contract is simple…show the divorce judge the contract.
“To prove the content of a writing, recording, or photograph, the original writing, recording, or photograph is required, except as otherwise provided in these rules or by statute.” Rule 1002 – Requirement of Original, Ill. R. Evid. 1002
The court should take special care in ordering arbitration because the divorce case will effectively disappear from divorce court and all the rights that can be exercised therein.
“A motion to compel arbitration is essentially a section 2–619(a)(9) motion to dismiss or stay an action in the trial court based on an affirmative matter, the exclusive remedy of arbitration.” Sturgill v. Santander Consumer USA, Inc., 2016 IL App (5th) 140380, ¶ 21
Waiver Of The Right To Arbitrate An Illinois Divorce
Entry into a contract for arbitration does not require both parties to arbitrate if they agree to waive arbitration later.
“[I]t is well-settled law that a contractual right to arbitrate can be waived like any other contract right” City of Centralia v. Natkin & Co., 630 NE 2d 458 – Ill: Appellate Court, 5th Dist. 1994
If a party acts like the arbitration clause doesn’t exist, then they have abandoned their right to invoke their right to arbitration.
“[W]aiver must be deemed to have occurred when a party’s conduct has been inconsistent with the arbitration clause so as to indicate that he has abandoned his right to avail himself of such right” Gateway Drywall & Decorating, Inc. v. Village Construction Co., 395 NE 2d 613 – Ill: Appellate Court, 5th Dist. 1979
“In Illinois, waiver has been found when: (1) a party has instituted legal proceedings and participated in a trial on the merits (2) a party has filed an answer without asserting his right to arbitrate and (3) a party that has sought arbitration files a motion for summary judgment on an arbitrable issue” City of Centralia v. Natkin & Co., 630 NE 2d 458 – Ill: Appellate Court, 5th Dist. 1994
Challenging An Arbitrator’s Award In An Illinois Divorce
After arbitration is completed, the arbitrator will allocate assets, debts and support pursuant to whatever guidelines the arbitration agreement required.
You can dispute the arbitrator’s decision by claiming that the arbitration contract didn’t exist or wasn’t valid. “The issue of whether a contract to arbitrate exists must be determined by the court, not an arbitrator.” Bahuriak v. Bill Kay Chrysler Plymouth, Inc., 337 Ill. App. 3d 714, 719 (2003)
For example, I have never seen an arbitration contract with a termination date. “[C]ontracts of perpetual duration are terminable at will by the parties” Jespersen v. Minnesota Mining & Manufacturing Co., 288 Ill. App. 3d 889, 893 (1997)
Therefore, if the arbitration process is not yet finished, either party can simply terminate their cooperation with the agreement.
If the arbitration contract is valid, you have to live with the arbitrator’s decision unless one of the following situations were present:
“Upon application of a party, the court shall vacate an award where:
(1) The award was procured by corruption, fraud or other undue means;
(2) There was evident partiality by an arbitrator appointed as a neutral or corruption in any one of the arbitrators or misconduct prejudicing the rights of any party;
(3) The arbitrators exceeded their powers;
(4) The arbitrators refused to postpone the hearing upon sufficient cause being shown therefor or refused to hear evidence material to the controversy or otherwise so conducted the hearing, contrary to the provisions of Section 5, as to prejudice substantially the rights of a party; or
(5) There was no arbitration agreement and the issue was not adversely determined in proceedings under Section 2 and the party did not participate in the arbitration hearing without raising the objection; but the fact that the relief was such that it could not or would not be granted by the circuit court is not ground for vacating or refusing to confirm the award.”710 ILCS 5/12
Remind the court that “the judicial power in this State is vested solely in the courts,” and this power includes “the authority to judicially interpret and construe….statutes when necessary.” People ex rel. Harrod v. Illinois Courts Comm’n, 69 Ill. 2d 445, 472-73 (1977)
The arbitration agreement may NOT have allowed the arbitrator to weigh in on the law which means the arbitration agreement can be tossed aside and sent to the courts. “Generally, the nature and extent of an arbitrator’s power will depend upon what the parties agree to submit to arbitration.” Board of Trustees of Community College District No. 508, Cook County v. Cook County College Teachers Union, Local 1600, AFT, AFL/CIO, 74 Ill. 2d 412, 419 (1979)
But if the arbitration agreement is not explicit as to the limits of its scope, the arbitration will likely still stand as being all-encompassing. “When parties agree to submit a dispute to arbitration, it is presumed that…in the absence of an express reservation, the parties agreed that everything, both as to law and fact, which is necessary to the resolution of the dispute is within the authority of the arbitrator.” Hollister Inc. v. Abbott Laboratories, 170 Ill. App. 3d 1051, 1060-61 (1988)
In lieu of throwing out the arbitrator’s decision entirely, either party can ask for a mere modification of the arbitrator’s award under the following circumstances.
“Upon application made within 90 days after delivery of a copy of the award to the applicant, the court shall modify or correct the award where:
(1) There was an evident miscalculation of figures or an evident mistake in the description of any person, thing or property referred to in the award;
(2) The arbitrators have awarded upon a matter not submitted to them and the award may be corrected without affecting the merits of the decision upon the issues submitted; or
(3) The award is imperfect in a matter of form, not affecting the merits of the controversy.” 710 ILCS 5/13
Simply being dissatisfied with the arbitrator’s decision and how the arbitrator came to that decision is not sufficient to throw out or modify that binding result.
A court “may not modify an arbitration award upon a request to, in effect, reconsider the merits of the case.” Marriage of Haleas, 2017 IL App (2d) 160799
An arbitrated result may be brought back to court, however, if a party believes the result violates public policy. “A court must not enforce a private agreement that is contrary to public policy. ” In re Marriage of Best, 387 Ill. App. 3d 948, 951 (Ill. App. Ct. 2009)
Specifically, any agreement, binding or not, regarding children must still have the approval of the court. “The law severely limits on public policy grounds the enforceability of contracts affecting the custody and support of minor children.” In re Marriage of Best, 387 Ill. App. 3d 948, 951 (Ill. App. Ct. 2009)
If the arbitration agreement benefits one party excessively, that arbitration agreement may be found to be unconscionable and, thus, be void.
“A contract [to arbitrate] will be found substantively unconscionable where its terms are so one-sided that they oppress or unfairly surprise an innocent party, when there is an overall imbalance in the obligations and rights imposed by the bargain, or when a significant cost-price disparity exists. Unequal bargaining power and other circumstances surrounding the transaction are to be considered when deciding whether an agreement is enforceable.” Hwang v. Pathway LaGrange Property Owner, LLC, 2024 IL App (1st) 240534
If you are putting an arbitration clause in an Illinois prenuptial agreement, you are invoking contract law that will baffle most Illinois family law practitioners. If your prenuptial agreement has an arbitration clause, you need to know how to waive or preserve that right to arbitration depending on your circumstances.
To learn more about the arcane corners of Illinois family law, contact my Chicago family law firm to schedule a free consultation with an experienced Chicago divorce lawyer.
