Fawzy—A Triumph for Parents and Judicial Efficiency – By John P. Paone, Jr. and Megan S. Murray

In recent years, arbitration has become an increasingly popular litigation alternative for matrimonial practitioners and their clients. Arbitration gives the parties control to choose the individual who will decide their case and cuts down significantly on the time and expense of litigating a case from start to finish.

Especially today, where courts in nearly every vicinage have backed up trial calendars and judges have no time to accommodate continuous trials, arbitration frees up the court docket and gives parties an expedited resolution to their case.Twenty-five years ago, the Supreme Court in Faherty v. Faherty, 97 N.J. 99 (1984) approved arbitration of family law matters, including alimony and child support. Recently, in Fawzy v. Fawzy 199 N.J. 456 (2009), the Court expanded the holding in Faherty to provide that arbitration may also be utilized to resolve issues of child custody and parenting time. In a unanimous opinion (written by Justice Long), the Court held that the constitutionally protected right of parental autonomy includes the right of parents to choose the forum in which to resolve their disputes over child custody and parenting time. In those cases where the parties agree to arbitrate custody and parenting time, the court will confirm the arbitrator’s award unless either party proves that harm would result to the child as a result of implementation of the arbitrator’s decision.

The facts of the Fawzy case are relatively straight forward. Mrs. Fawzy filed a Complaint for Divorce in 2005, and during the course of the litigation, a guardian ad litem was appointed for the parties’ two (2) children, ages eight (8) and nine (9). In 2007, the parties agreed to submit their case to binding arbitration, including financial issues as well as the issues of child custody and parenting time. The parties further agreed that the guardian ad litem would serve as the arbitrator. To memorialize their Agreement, the parties testified, on the record before the trial judge, that they agreed to binding arbitration and that they understood that the arbitrator would be making a binding decision with regard to the issues in dispute, including the issue of custody and parenting time.

While binding arbitration was still in progress, Mr. Fawzy filed an Order to Show Cause to stop the arbitration. Mr. Fawzy argued that the issue of custody could not be submitted to arbitration as a matter of law and, alternatively, the agreement to arbitrate was not binding, as he was forced to sign it under duress. Mr. Fawzy’s Order to Show Cause was denied. Subsequently, the arbitrator issued a custody and parenting time award, granting the parties joint legal custody, with Mrs. Fawzy having primary physical custody subject to the parenting time of Mr. Fawzy. While arbitration on the financial issues was still in progress, Mr. Fawzy filed a second Order to Show Cause, seeking both to vacate the arbitration award and to disqualify the arbitrator from further participation in the case.

Mr. Fawzy’s Order to Show Cause was again denied, and Mr. Fawzy appealed, arguing that custody issues cannot be submitted to binding arbitration because it deprives the court of is parens patriae obligation to assure the best interests of the child. The Appellate Division, despite acknowledging Mr. Fawzy’s failure to prove that the arbitrator’s award would harm the children, held that child custody issues cannot be submitted to binding arbitration. The case was therefore remanded to the trial court for a hearing on custody and parenting time issues. Mrs. Fawzy filed a Petition of Certification to the New Jersey Supreme Court, and Mr. Fawzy filed a Cross-Petition as to the issue of whether a guardian ad litem could serve as an arbitrator in a child-custody proceeding. The Supreme Court granted both the Petition and Cross-Petition.

The issue in Fawzy was one of first impression in New Jersey. While the Faherty decision did not go so far as to allow for arbitration of custody and parenting time issues, the Court suggested that arbitration would be a favorable alternative to litigation:

We do not reach the question of whether arbitration of child custody and visitation rights is enforceable since that issue is not before us. However, we note that the development of a fair and workable mediation or arbitration process to resolve these issues may be more beneficial to the children of this state than the present system of courtroom confrontation.

Faherty, 97 N.J. at 100.

The Fawzy Court acknowledged that in the twenty-five years since Faherty, judicial support for arbitration has increased across the nation. Indeed, the majority of jurisdictions that have addressed whether arbitration of custody and parenting time issues is appropriate have concluded that parents are empowered to submit these issues to arbitration in the exercise of their parental autonomy. Moreover, scholarly reports on this subject have emphasized the benefits of arbitration as a means to minimize the harmful effects of divorce litigation on both children and parents. In contrast to the win/lose framework of custody litigation, “arbitration conducted in a less formal atmosphere, often in a shorter time span than a trial, and always with a fact-finder of the parties’ own choosing, is often far less antagonistic and nasty than typical courthouse litigation.” Fawzy at 472 (quoting Joan F. Kessler et al, Why Arbitrate Family Law Matters?, 14 J. Am. Acad. Matrimonial Law. 333 (1997)).

Despite the Court’s emphasis on the public policy arguments in favor of arbitration, Fawzy was ultimately a case turning on constitutional interpretation and “the intersection between parents’ fundamental liberty interest in the care, custody, and control of their children, and the state’s interest in the protection of those children.” The Court held that because parental autonomy includes the right of parents to make decisions regarding custody, parenting time, health, education and welfare of their children, the right to parental autonomy must therefore include the right to submit issues of child custody and parenting time to an arbitrator for disposition. So long as the parties agree to arbitrate issues of custody and parenting time, courts have no power to superimpose their decision as to what is in the best interests of the children:

…[t]he bundle of rights that the notion of parental autonomy sweeps in includes the right to decide how issues of custody and parenting time will be resolved. Indeed, we have no hesitation in concluding that, just as parents “choose” to decide issues of custody and parenting time among themselves without court intervention, they may opt to sidestep the judicial process and submit their dispute to an arbitrator whom they have chosen.

Fawzy, 199 N.J. at 477.

Because the agreement of parents to arbitrate custody and parenting time is a fundamental liberty interest, the standard of review of an arbitration decision is significantly more limited than the best interests standard utilized in litigating a custody case. The Court held that a parent seeking to overturn the decision of the arbitrator must show that the arbitrator’s decision would result in harm to the child. In the absence of a claim of harm, the parties are limited to review of the arbitrator’s award under the Arbitration Act of 2003.[1] Moreover, even in those cases where a parent makes a prima facie showing that harm will result to the child as a result of the arbitrator’s decision, the trial court must first address the claim of harm before making any further inquiry as to the best interests of the child. Only in the event that the court finds evidential proof that harm will result to the child, will the presumption in favor of the parents’ choice of arbitration be overcome. In those cases, the court will set aside the arbitrator’s award and decide custody and parenting time de novo based on the best interests of the child.

The Fawzy Court made clear that the harm standard is not easily satisfied and that it is a significantly higher burden than a best interests analysis. An arbitrator’s decision will not be overturned because one parent claims that he or she is the better parent or because one parent is unsatisfied with the amount of parenting time he or she received. Rather, only evidence, such as proof that the custodial parent has a substance abuse issue or debilitating mental illness, which would substantiate a claim that actual harm will result to the child in that parent’s care will be sufficient.

In an effort to ensure that courts will have the ability to properly review an arbitrator’s award of custody and parenting time, Fawzy held that additional procedural requirements are mandated. Specifically, in addition to the general rules governing arbitration under N.J.S.A. 2A:23B-1 to 32, child custody arbitration requires that a record of all documentary evidence by kept; that all testimony be recorded verbatim; and that the arbitrator state in writing or otherwise record his or her findings of fact and conclusions of law with a focus on the best interests standard. If these procedural guidelines are not met, the arbitrator’s award is likely to be vacated with the potential for an entirely new trial on the issue of custody and parenting time.

In addition to the procedural requirements set forth above, parents who choose to arbitrate custody and parenting time must enter into a written or recorded agreement pursuant to the requirements under N.J.S.A. 2A:23B-1. The agreement must state in clear language: 1) that the parties understand their entitlement to a judicial adjudication of their dispute and are willing to waive that right; 2) that the parties are aware of the limited circumstances under which a challenge to the arbitration award may be advanced and agree to those limitations; 3) that the parties have had sufficient time to consider the implications of their decision to arbitrate; and 4) that the parties have entered into the arbitration agreement freely and voluntarily, after due consideration of the consequences of their doing so. Additionally, in the event the parties are not submitting all issues to arbitration, the arbitration agreement should state with specificity the issues which are to be decided by the arbitrator.[2]

Despite upholding the submission of custody and parenting time issues to binding arbitration, the Court held that it could not uphold the award of the arbitrator in Fawzy. The Court held that the agreement entered into by the parties was insufficient, as without a written agreement to arbitrate, the oral record of the parties’ agreement had to reflect that the parties understood their rights, knew what they were waiving, and that they were aware of what review was available. The Court held that based on the agreement placed on the record before the trial court, it could not find that this standard had been met.[3]

After addressing the right to submit custody and parenting time issues to binding arbitration, the Court turned to the issue of whether parents have full discretion over the selection of the arbitrator. Mr. Fawzy contended that the arbitration award could not be upheld based on the conflict of interest which existed by having the guardian ad litem serve as arbitrator. The Court agreed with Mr. Fawzy, holding that a guardian ad litem cannot be chosen to serve as arbitrator due to the inherent conflicts which could arise as a result of this situation. The Court reasoned that the arbitrator’s role is to make an award based solely on the evidence adduced during arbitration. However, if the arbitrator previously served or is serving as guardian ad litem and has investigated the matter, he is likely privy to facts unknown to both parties and which are outside of the record. Moreover, to the extent the arbitrator has interacted with the parties during his investigation or made preliminary reports, he could be exposed to a claim of partiality under the Arbitration Act. Finally, the Court pointed out that an individual serving in this dual role could be forced to testify as guardian ad litem if the case goes back to court.

The Fawzy decision is a victory for divorcing parents and our justice system. The case recognizes that the onset of matrimonial proceedings does not limit the ability of parents to make voluntary choices relative to their children without judicial interference. It also promotes binding arbitration, a less litigious alternative to trial, which often expedites a resolution and diminishes the already overbooked docket of the courts.

*John P. Paone, Jr. is a past chair of the New Jersey State Bar Association Family Law Section and is currently 2nd Vice President of the New Jersey Chapter of the American Academy of Matrimonial Lawyers. He is a Certified Matrimonial Law Attorney and serves by appointment of the New Jersey Supreme Court as a member of the Matrimonial Committee of the Board on Attorney Certification. He is the senior partner of Paone & Zaleski in Woodbridge where he limits his practice to divorce and family law.

**Megan S. Murray is an associate with the Law Offices of Paone & Zaleski in Woodbridge, New Jersey. Before joining the firm, she served as clerk to the Honorable Judge Paul Kapalko, Presiding Judge, Family Part, Monmouth County. Ms. Murray is the co-chair of the Young Lawyer’s Subcommittee of the Family Law Section of the New Jersey State Bar Association for the 2009-2010 year. Ms. Murray also serves as an editor for Dictum, the newsletter for the Young Lawyer’s Division of the New Jersey State Bar Association.

[1] Pursuant to this Act, an arbitration award will only be set aside under the following conditions: (1) the award was procured by corruption, fraud, or other undue means; (2) the court finds evident partiality by an arbitrator; corruption by an arbitrator; or misconduct by an arbitrator prejudicing the rights of a party to the arbitration proceeding; (3) an arbitrator refused to postpone the hearing upon showing of sufficient cause for postponement, refused to consider evidence material to the controversy, or otherwise conducted the hearing contrary to section 15 of this act, so as to substantially prejudice the rights of a party to the arbitration proceeding; (4) an arbitrator exceeded the arbitrator’s powers; (5) there was no agreement to arbitrate, unless the person participated in the arbitration proceeding without raising the objection pursuant to subsection c. of section 15 of this act not later than the beginning of the arbitration hearing; or (6) the arbitration was conducted without proper notice of the initiation of an arbitration as required in section 9 of this act so as to substantially prejudice the rights of a party to the arbitration proceeding. N.J.S.A. 2A:23B-23(a).

[2] The Fawzy Court directed the Supreme Court Committee on Family Practice to develop a form agreement to be used by attorneys and judges in cases where the parties wish to submit custody and parenting time to binding arbitration.

[3] In fairness to the trial judge, the Court noted that the trial judge did not have the benefit of this opinion and the standards set forth therein and, moreover, may have believed that all the details of the arbitration had been worked out and explained by the lawyers.