WHAT IS MEDIATION?
What is mediation?
By Joseph Wamback
Mediation assists parties with communicating their views and perspectives to each other with the ultimate goal of assisting in reaching a mutually satisfactory settlement.
When the settlement is achieved it is the opposing parties that have achieved it.
Mediators are involved to understand and direct discussions of the issues and to encourage a reasonable compromise for mutual benefit of the parties.
Mediation may involve settlement discussions some of which may be private between a party and the mediator. As such the mediator learns information and settlement positions which would prevent the mediator from acting independently as an arbitrator should mediation not result in a settlement.
A mediator is perceived by the parties as one who has power and must unequivocally ensure that he/she does not place any pressure on the parties with comments or expressed opinions.
ONTARIO CONSTRUCTION LIEN ACT REFORM
"A very long overdue and welcome change. I have been in the construction industry for 30 years and have witnessed first hand the frustration and costly litigation occasioned through the previous legislation"
Joe Wamback Q.Arb. www.wamback.net
For details and clarification see:
https://www.attorneygeneral.jus.gov.on.ca/english/construction_law_in_ontario.php
• Prompt Payment Regime (s. 7 of the Amendment Act)
• Cheap & Quick Interim Adjudication: Targeted Interim Binding Dispute Resolution (s. 8 of the Amendment Act)
• Greater Lien Rights (ss. 12-16 and 27-31 of the Amendment Act)
• Holdbacks (ss. 17-25 of the Amendment Act)
• Updated Definitions (ss. 1-2 of the Amendment Act)
• New Trust Fund rules (s. 8 of the Amendment Act)
AN OVERVIEW OF ONTARIO’S ARBITRATION ACT, 1991
PARTY AUTONOMY
The guiding principle behind Ontario’s Arbitration Act, 1991 (hereinafter the “Arbitration Act”) is party autonomy. Parties resolving disputes privately are able to design just about any process they want, subject to minimal Court oversight.
ARBITRATIONS IN ONTARIO
The Arbitration Act applies to domestic arbitrations in Ontario unless another act applies. For example, the Arbitration Act applies to family arbitrations where the Family Law Act also applies. But the Arbitration Act does not apply to labour arbitrations as the Labour Relations Act specifically states that the Arbitration Act does not apply.
DOMESTIC VS. INTERNATIONAL
Ontario’s International Commercial Arbitration Act applies to international arbitrations conducted in Ontario. Note that 2 parties located in Ontario cannot simply say their dispute is international in order to fall under the International Commercial Arbitration Act, the Arbitration Act will apply most of the time if both parties are in Ontario.
SPPA DOES NOT APPLY
With a few exceptions concerning evidence, the Arbitration Act is completely distinct from the Statutory Powers and Procedures Act. An arbitral tribunal established under the Arbitration Act is therefore not subject to the Statutory Powers and Procedures Act.
FLEXIBILITY
Parties to an arbitration can agree to exclude most provisions of the Arbitration Act, except for Scott v. Avery clauses (an agreement requiring arbitration before Court), equality and fairness, Court-directed time extensions, Court intervention in limited circumstances (see sections 46 and 48 for details) and enforcement of arbitral awards in Court. Arbitration agreements can be oral and can be amended by further agreement. Once a party attorns to the jurisdiction of an arbitrator, even if mistakenly, it is difficult to back out. If a party has committed to arbitration, any Court proceedings initiated by that party can be stayed.
ARBITRATOR
Parties can agree to arbitrate before any number of arbitrators. They can agree on a specific arbitrator or have one appointed by the Court. There are times when parties will want to appoint panels of multiple arbitrators with differing backgrounds, such as law and medicine. Arbitrators must be independent and impartial and disclose any circumstances that could give rise to a reasonable apprehension of bias. Arbitrators may be challenged for reasons of bias or a lack of necessary qualifications.
STARTING AN ARBITRATION
Arbitrations are commenced by one party serving a notice. Arbitral tribunals may rule on their own jurisdiction. They can determine procedure and the admissibility of evidence. An arbitral tribunal may appoint an expert if required. The arbitrator may issue a notice to witness, which has the effect of a summons. An arbitrator can administer an oath for a witness. AWARDS Arbitral tribunals must decide cases in accordance with the law, including equity and can order injunctions and other equitable remedies. Arbitral awards are binding and should be in writing with reasons, unless on consent. Awards may be amended within 30 days to correct minor errors or prevent injustices.
APPEALS OPTIONAL
An arbitration agreement can eliminate appeals, including appeals on issues of law. Appeals can be made to the court if the agreement is silent on appeals. Arbitration agreements can provide for an appeal on questions of fact or mixed questions of fact and law. There are limited grounds to set aside an award, such as legal incapacity, invalid arbitration agreement, an issue is beyond the arbitration agreement, the composition of the arbitral tribunal is not right, the subject matter is not capable of being arbitrated (such as criminal law), a lack of fairness, misconduct by the arbitrator, or an award is obtained by fraud.
ENFORCEMENT
Arbitration awards may be enforced by the courts and the courts must give a judgment recognizing an award, subject to a few limitations. Arbitration awards may include costs, including legal fees and the cost of the arbitration. Furthermore, interest can be awarded.
LIMITATION PERIODS
Limitation periods are at play in arbitrations. If for any reason a decision of an arbitral tribunal is set aside, the time period during the arbitration may not form part of the time in computing the limitation period.
CREATIVE ARBITRATIONS
As indicated at the outset, much of the above is subject to party autonomy and parties can contract out of most of the Arbitration Act to determine their own process. This flexibility gives creative parties the opportunity to design an arbitration that will be fast, efficient and cost-effective.
WHAT IS ARBITRATION?
WHAT IS ARBITRATION?
by Joseph Wamback
Many alternatives exist to take you out of the court process, keep you from getting into it or shortcut the process for a quicker, more cost-effective result. Disputing parties can write their own rules to the extent of agreeing on a fair process and streamline procedures within their own deadlines, time table and hearing format.
Without an agreement, the process is the responsibility of the arbitrator and the rules of the Arbitration Act. It is a private process which is ideally suited to business disputes as all personal matters and decisions are confidential, unlike the court process. Lawyers are not initially involved in the dispute and the disputing parties may choose to resolve the dispute to their mutual benefit. This requires goodwill and common sense to move forward.
Communication, meetings and perhaps third party involvements are common elements of alternative dispute resolution (ADR). Frequently disputes are resolved and relationships return to normal. When consensus cannot be reached then arbitration may be warranted as a speedy cost-effective method of dispute resolution.
An independent arbitrator acts in a judicial manner hearing evidence and makes a decision. This results in the conclusion of the dispute subject to limited rights of appeal to a court depending on the arbitration agreement. The Arbitrator must provide each party with the right to be heard on all issues and to respond to the other parties’ pleadings.
The Arbitrators decision is rendered only after all of the evidence and arguments have been heard. The Arbitrator will avoid contact with the parties outside of the formal process to prevent any apprehension of bias and the influence of what may be heard or seen outside of the process.
The arbitrator may be any qualified person selected by or appointed by the parties as a single tribunal member or one of three (3) where each party appoints their choice of arbitrators and those arbitrators then select the third making the arbitration tribunal a three (3) member panel.
One of the main benefits of arbitration is that the parties retain the ability to choose who will decide on the dispute rather than be at the mercy of a court-appointed judge with little or no technical knowledge of the issues in dispute.
Arbitration is a good environment for experts who can use their experience and expertise to decide on the issues in dispute. Knowledge and understanding of a technical dispute is often of far greater importance than the understanding of legal and procedural issues.
In large complicated disputes, it may be beneficial to use a three (3) panel arbitration board with two technical experts and one legal expert acting as chair. If the parties in dispute are comfortable with a single arbitrator a fair, speedy cost-effective process can bring satisfactory solutions to a dispute that was beyond hopes of a settlement.
Arbitration agreement prevails:
Ontario court stays Uber driver’s proposed class action for employment benefits
Lauren Tomasich, Waleed Malik Topics:
Arbitration Agreements Class Action Waiver Feb 15, 2018
When an arbitration agreement and a putative class action collide, the general rule is that the arbitration agreement will prevail. In Heller v Uber Technologies Inc, Justice Perell of the Ontario Superior Court of Justice applied this general rule.
The plaintiff argued that his proposed class action should not be stayed because (1) the claim was based on an alleged employment relationship and therefore outside an arbitrator’s jurisdiction, or (2) the arbitration agreement was unconscionable. Justice Perell rejected both arguments and stayed the proposed class action.
Background
The plaintiff commenced a class action alleging that Uber drivers in Ontario are employees of the defendants and entitled to the benefits of Ontario’s Employment Standards Act, 2000. The defendants moved to stay the action as the plaintiff had entered into contracts referring any disputes to an arbitration in the Netherlands. As a threshold matter, Justice Perell found that the International Commercial Arbitration Act, 2017, applied to the parties’ arbitration agreement because it was an international and commercial arbitration agreement. However, he added that the governing principles and result would have been the same even if the Arbitration Act, 1991 applied.
Proposed class action stayed
Justice Perell noted that absent legislative language to the contrary, courts must enforce arbitration agreements and refer a dispute to arbitration unless it is clear that the matter falls outside the agreement. The plaintiff presented two arguments for why his action should not be referred to arbitration, both of which were rejected. First, the plaintiff argued that the claim was outside an arbitrator’s jurisdiction because it was based on an alleged employment relationship. This argument failed because a challenge to an arbitrator’s jurisdiction must be first resolved by the arbitrator unless the challenge is based solely on a question of law. The Employment Standards Act, 2000 does not explicitly preclude arbitration. The plaintiff’s challenge raised a question of mixed fact and law (i.e., whether the plaintiff and other class members were employees) and, therefore, it had to be determined by the arbitrator. Second, the plaintiff argued that the arbitration agreement was illegal or void because it was unconscionable. Justice Perell rejected this argument as well. There was no basis for saying that the defendants preyed on class members, and the fact that the agreement referred disputes to arbitration in the Netherlands did not make the parties’ bargain improvident. Justice Perell also rejected the argument that the agreement was unconscionable because it was a standard-form contract where class members had no bargaining power.
Conclusion
As we have previously noted, enforcing arbitration agreements (which favours diverting claims away from the courts) may sometimes be in tension with the policy underlying class actions (which favours providing greater access to the courts). As a result, some provinces have enacted legislation that specifically precludes arbitration agreements that foreclose recourse to the courts in the consumer protection context. However, the decision in Heller is a helpful reminder that, outside such limited circumstances, the general rule is that arbitration agreements must be enforced. Class action plaintiffs will not find it easy to avoid the effect of arbitration agreements that they have agreed to.
Fast Track Arbitration By Michael Butterfield
Time is money.
When disputes arise, we all look for fast, efficient and fair methods of resolution.
Fast track arbitration protocols developed by ADR Institute of Canada can save time and money. They provide a framework to resolve many disputes within as little as three months. In the commercial world, lawsuits can take the focus away from the business, strain cash flow and drain entrepreneurial energy.
The longer that the dispute drags on, the more damage there is to the enterprise.
Arbitration offers a faster alternative to litigation. While some arbitrations can take an extended period of time, the ability of the parties to select what process applies to their arbitration means that they can select rules to fast track their arbitration.
ADR Institute of Canada (ADRIC) “Arbitration Rules” provides for fast track arbitration under the Simplified Arbitration Procedure.
These arbitrations can generally be concluded within three months—the goal being a just, speedy, and cost-effective resolution.
The following are the key features of the Simplified Arbitration Procedure under Rule 6.2 of the ADRIC Rules.
The goal of fast track arbitration is to balance the requirements of justice with the need for speedy resolution.
(A speedy, but unfair, resolution is unjust.)
Unlike the court process, the Arbitrator is actively involved in designing the process and ensuring fair treatment.
The arbitration tribunal is a single arbitrator (6.2.2. (a)).
The parties exchange statements within 10 days of the arbitrator being appointed (6.2.2. (b)).
The requirements are described in Rule 4.10 which requires that the statements lay out the nature of the claim, the defenses, and counterclaim, if applicable.
The rule provides for the exchange of digital copies of any documents intended to be relied upon in the arbitration.
Preliminary matters under Rule 2.3 must be completed within 90 days of appointment. However, the goal should be within 45 days in order to conclude proceedings within three months.
These include procedural issues but also such relief as interlocutory injunctions.
There are no oral discoveries unless the parties agree or at the arbitrator’s discretion (6.2.2. (d)).
There are no transcripts of the proceeding (6.2.2. (e)).
The approach to oral evidence is also streamlined.
Evidence in chief is presented in affidavit form, subject to oral cross-examination, and re-examination (6.2.2. (f)).
The parties can decide to forego oral evidence completely and proceed solely on affidavits and documents.
This is similar to a Chamber’s Application in superior courts.
The arbitrator is responsible for maintaining the Record of Arbitration which includes all documents relied upon in the arbitration, exhibits, affidavits and any other documents pertinent to the arbitration procedure (6.2.2. (g)).
Once the hearing concludes, pursuant to Rule 4.26.1, the arbitrator must deliver the award and reasons within 14 days.
Since arbitrators can withhold their award pending payment of their fees, it is beneficial to ensure all deposits are paid in advance.
In some cases, the arbitrator may offer a flat fee for service.
The fundamental benefit of arbitration is that the participants control the process.
By selecting the appropriate rules, the parties can ensure speedy and just resolution.
The goal of every arbitration is to let the parties get back to what they do best – building their business.
The Appeal of Arbitration
by William G. Horton C.Arb., FCIArb
In an article in the last edition of ADR Perspectives, Murray Smith suggested that arbitration is losing its appeal and that the only way to correct that is to provide greater recourse to the courts to correct “aberrant results”. However, the opposite can be said to be true.
Consider the opening premise of Mr. Smith’s recent article that “in a recent survey…66% of respondents said they might not choose arbitration because of difficulty in appealing” and “arbitrators not following legal rules was a major problem for 43%”.
Leaving aside the usual questions about surveys such as who was asked, who responded and how were the questions formulated, consider the results cited by Mr. Smith.
Apparently, 34% of respondents would consider arbitration despite the difficulty of appealing and 57% of respondents did not consider that “arbitrators not following legal rules” was a major problem.
Those results indicate that a substantial proportion of parties to commercial disputes are open to dispute resolution that provides a true alternative to the courts.
Arbitration is intended to appeal to those who have that desire, not to people who cling to the view that the only legitimate outcome to a dispute is one that has been blessed by the courts.
Arbitration exists to serve the objectives of the former group, not the latter. The statistics cited by Mr. Smith demonstrate that, when it is presented as a true alternative to court litigation, arbitration is able to capture a significant share of the dispute resolution market.
Mr. Smith suggests that arbitration is now “inconsistent with the needs and expectations of commercial parties”.
This assertion is open to question.
Most data on this subject tends to result from surveys of lawyers who have asked each other what is best for their clients.
The best way, however, to understand the needs and expectations of commercial parties is for a lawyer to speak to his or her client.
In that discussion, the lawyer can explain,
“I have two options for your business dispute. In one option you and the other side choose the decision maker, or a decision maker is chosen for you by a judge or reputable institution.
You will get a decision in about a year or less and you will have to accept it one way or the other.
In the other option, I cannot tell you anything about the background or qualifications of the decision maker other than that he or she has been appointed a judge.
I also cannot tell you how long it will take to get to the initial decision or how long it will take to get to the final decision.
You may win or lose at each stage but only the final decision will count.
As with the first option, you will have to accept the final decision one way or the other.”
Assume the client then asks:
“Which method will result in the greatest chance of winning?”
What is the answer to that question?
It is not rational from a client’s point of view to spend exponentially more money and time on a process that is no more likely to produce a favourable result.
Mr. Smith suggests that the adoption by the Supreme Court of Canada of a reasonableness standard in deciding appeals from arbitration awards on points of law is troubling.
He asks “When is it reasonable to be wrong?
The law has been correctly applied or it has not?”
Few clients have an interest in or wish to contribute to the “development of the law”.
Few care whether the reason they lost or won was the same reason that someone else in another case (that may or may not be somewhat similar) lost or won.
For those who do care about such things, arbitration is not a good option. The benefits of arbitration as an alternative to court litigation are most fully realized when the parties agree to accept the judgment of the chosen decision maker on all matters of fact, law and procedure that are in dispute. Indeed, that is the essence of arbitration.
The notion that broad arbitration appeals would allow for the correction of error is itself open to question.
The losing party and its counsel are no more likely to accept the final decision as correct if it is expressed in a court judgment than if it is expressed in an arbitration award.
Furthermore, given that at least 50% of the parties to both lawsuits and arbitration lose the case or some part of it, it is hard to accept that one process produces more “predictable” results than the other.
Ultimately, the issue for parties and their counsel is
“What process are you prepared to accept as legitimate for determining a commercial dispute?
What process best serves your business needs in terms of cost and time?” Many will choose the courts and many will choose arbitration.
Those who choose arbitration should avoid making arbitration resemble court litigation.
Those who prefer the courts should not seek to hobble the basic value proposition of arbitration by subjecting arbitration awards to merits review by the courts.
It is all about giving the business community a clear alternative that many, if not most, may find valuable.
Expert Determinations
by Allison Kuntz
Parties frequently agree to have their disputes determined outside of the courts by way of either arbitration or expert determination.
Arbitration is typically used to resolve claims based on disputed facts and law between the parties, while an expert determination is typically used to settle a term of a contract or decide a discreet technical issue.
These two types of proceedings are intended to be quite different and have different consequences.
Expert determination is a purely contractual creature where the parties agree not only to its process, but to be bound by its result.
To the extent the parties have not made the expert determination process sufficiently certain it is possible to challenge its enforceability in court, but the courts will not easily set the process aside given its origins in the terms of the parties’ contract and the principle that parties should be held to their bargains.
To the extent the parties have not agreed on a detailed process for their expert determination, the expert is entitled to establish their own process and rely only on their own skill, judgment and experience in making their decision.
This is important to consider when agreeing to an expert determination because experts are not required to follow the rules of procedural fairness or natural justice, which means if a party is expecting or desires a process by which they are entitled to submit evidence and respond to opposing arguments, they may be disappointed.
That said, if the parties structure their process to essentially mirror an arbitral (or litigation) process and ultimately ask their expert to resolve a disagreement in light of conflicting evidence and competing contractual interpretations, for example, the court may determine that they have actually agreed to an arbitration.
This is possible even where the parties have included express language in their agreement that the appointed third party will be acting as an expert and not as an arbitrator.
One of the reasons a party may want to have their expert determination deemed an arbitration is to expand their rights to challenge the decision (which although limited in arbitration are even more limited in expert determination) or for ease of enforcement.
An expert determination will not be final and binding unless it is designated as such in the parties’ agreement.
If an expert determination is final and binding then it can only be challenged on very narrow grounds such as fraud, collusion or a material departure from instructions.
If the expert simply gets it wrong there is no remedy against the decision per se, although it is possible to bring an application against the expert for negligence because experts conducting expert determinations do not share the same immunity from prosecution as arbitrators.
Parties can extend the scope of judicial review by adding “save in the case of manifest error” after “final and binding”, but should note that manifest error does not allow the reviewing court to re-examine the merits of the case, or scratch below the surface of the decision.
Rather, Canadian courts have accepted a definition of manifest error as an “error in law on the face of the award…that you can find in the award or a document actually incorporated therein…”
Further, the manifest error must be “apparent on the award, not the record….”
English courts have opined extensively on the meaning of manifest error in the context of expert determinations and in doing so have reiterated the high and limited threshold for review: “oversights and blunders so obvious and obviously capable of affecting the determination as to admit to no difference of opinion”;
an error which is “obvious or easily demonstrable without extensive investigation”;
an error that requires “swift and easy persuasion and rapid recognition of the suggested error”;
and an error that is obvious on the face of the decision and does not require a lengthy enquiry to identify it.
In respect of enforcement, given the legislative back drop and support for arbitral proceedings and awards, they can be enforced with relative ease compared to a decision in an expert determination.
In order to enforce a decision in an expert determination the successful party must commence a proceeding and argue that the parties should be bound by their contractual decision to have the expert make the determination.
Parties may choose the comparatively informal process of an expert determination over arbitration because they believe the expert will be sufficiently qualified to determine either a discrete technical issue or an anticipated disagreement such that the parties can benefit from the presumed convenience, expediency and lower cost of that process.
These are all good reasons to choose expert determination, however, the parties’ expectations for the process and the consequences of it should be thoroughly considered prior to embarking on that path.
