## Facts

- Susan and J. Roger Faherty divorced after a 17-year marriage and had four dependent children.
- Before the divorce, the parties (each represented by counsel) executed a detailed property settlement agreement that was incorporated into the divorce judgment; the judgment stated the court made no findings on the agreement’s reasonableness.
- The agreement required arbitration (under AAA rules) as a condition precedent to court action for “any financial dispute” arising from the agreement, including disputes over changed circumstances and the need to modify support.
- The agreement addressed property division and support, including promissory notes totaling $165,000 to Susan secured by escrowed stock and life insurance.
- Disputes arose regarding alleged arrears in alimony and child support and enforcement of a promissory note; Susan sought enforcement in the Chancery Division.
- Roger moved to compel arbitration and asserted changed circumstances warranting reduced future support.
- The trial court compelled arbitration of both arrears and the requested support reduction.
- After lengthy arbitration, the arbitrator set arrears in Susan’s favor and denied Roger’s request to reduce future support.
- Susan moved to confirm the award; Roger cross-moved to vacate, arguing the arbitration clause was unenforceable on public policy grounds and the award was clearly erroneous.
- The trial court confirmed the award; the Appellate Division dismissed the appeal as without merit; the New Jersey Supreme Court granted review.

## Issues

1. Whether an arbitration clause in a separation agreement incorporated into a divorce judgment is enforceable for financial disputes, including alimony and support modification claims.
2. What level of judicial review applies to arbitration awards in domestic-relations matters, particularly where child support and children’s welfare are implicated.
3. Whether the arbitration award should be vacated or modified based on alleged legal error, including failure to credit a tax payment and continuation of alimony after remarriage.

## Decision

- The New Jersey Supreme Court held the arbitration provision was generally enforceable and not void as against public policy.
- The Court held parties may agree to arbitrate alimony and related support disputes, including modification disputes, subject to limited judicial oversight where children’s interests are affected.
- The Court affirmed confirmation of the award under the narrow review permitted by the arbitration statute, rejecting challenges based merely on alleged factual or legal error.
- The Court modified the award in two respects: (1) crediting Roger for a tax payment, and (2) eliminating any improper continuation of alimony after Susan’s remarriage.
- The judgment was affirmed as modified.

## Legal Principles

- Arbitration is favored in New Jersey, and agreements to arbitrate financial disputes arising from separation agreements are generally enforceable.
- Parties may commit alimony and support disputes, including modification claims based on changed circumstances, to binding arbitration as a prerequisite to seeking judicial relief.
- Courts retain supervisory authority to ensure outcomes affecting child support do not adversely affect the substantial best interests of the children.
- Judicial review of arbitration awards is limited to statutory grounds for vacatur or modification and narrow public policy concerns; courts do not reconsider the merits de novo.
- An arbitration award may be modified when a discrete portion conflicts with governing law (e.g., alimony generally ends upon remarriage absent an express contrary agreement) or when a correctable error can be fixed without reopening the merits.

## Conclusion

The court enforced a divorce settlement’s arbitration requirement for financial disputes and confirmed the resulting award under limited review, while making narrow modifications to correct a tax-credit error and prevent alimony from continuing after remarriage, consistent with children’s welfare and established domestic-relations law.


Faherty v. Faherty, 477 A.2d 1257 (N.J. 1984)