Arbitration is a legal method for resolving disputes between two or more parties without going to court. The process is similar to the dispute resolution method known as mediation – the parties meet at pre-arranged time and place and discuss the issues forming the dispute, presenting evidence and witnesses where relevant.
Arbitration relies on a neutral, independent arbitrator (often called an arbiter) to make the final decision on how to solve the dispute.
Sometimes several arbitrators attend the dispute meeting known as a tribunal. Arbitration in Canada is legally binding through the Arbitration Act. It may be imposed on disputing parties as mandatory arbitration or adopted voluntarily in preference to court action. Arbitration in Ontario is now a mandatory legal procedure for some disputes involving Ontario family law.
Benefits of Arbitration
Arbitration is a faster and more informal way of resolving disputes than going to court. The process is confidential, whereas topics discussed in court can be heard by the general public; usually the contract between the arbitrator and disputing parties often contains a confidentiality clause. Arbitration is also much more cost effective than going to court because the arbitrators fees are usually lower than court fees and on top of this, there are no extensive court documents to fill out. Arbitration also helps to stop further deterioration in existing relationships between the disputants – a point particularly important where family and business relationships are concerned. Most arbitrators specialise in various fields of arbitration and it is possible to engage the arbitration services of an arbitrator in a particular field like family law or business law. A court judge on the other hand does not specialise and is not always equipped to understand all aspects of the dispute under review. A particular benefit for disputes involving international arbitration is that any arbitral awards made are much easier to enforce in other countries than local court judgments.
Family Arbitration
Arbitrators are sometimes called upon by family members or by the courts to settle family law disputes, like child custody, divorce, division of assets, access issues (both to children and property) and child support. Awards from family arbitration can only be enforced in court when the arbitration process has been performed in line with Canadian law. Canada Family Law Act dictates that before engaging in arbitration to resolve a family dispute, all parties involved must take independent legal advice at their own expense otherwise the arbitration award will not be recognized in a court of law.
Ontario courts recognise the value of arbitration in solving family disputes by imposing mandatory arbitration on some family cases instead of bringing them to trial. All arbitration cases involving children and young people under the age of 18 have to be made in the child’s best interest. Ontario courts along with the Canada government also ensure that vulnerable parties choosing arbitration are better protected during arbitration cases. This is reflected when dealing with disputes over domestic violence; the victim does not have to debate the issue with the aggressor as would be the case in mediation. Likewise, if the arbitrator thinks that person is being bullied into arbitration or is not completely sure of his or her rights, the arbitrator can terminate the arbitration tribunal. If an arbitrator suspects that domestic violence involving a child has taken place, the arbitrator is legally bound to notify the police and or the child welfare agency.
With the mix of different cultures and religions in Canada, some people prefer to turn to their own religious leaders for family arbitration. Any arbitral awards made are only enforceable in court if they are made according to Canada law rather than religious values by someone who is qualified to arbitrate. It should be noted that arbitrators do not have the power to change a family’s official status e.g. an arbitrator cannot annul a marriage or provide a divorce or decide the parentage of a child – all of these instances are matters for the court.
Ontario Family Arbitration: Arbitration Act 1991
Commercial Arbitration
Arbitration is a popular method of resolving business disputes between business in Canada as well as between international businesses and Canadian companies. Sometimes the use of arbitration should a dispute arise is written into a commercial contract and in other circumstances companies choose arbitration as a preferred method of dispute resolution rather than going to court. As business relations become more global, Canada recognises and is a signatory to the International Commercial Arbitration Act. This means that international disputes between one or more companies based outside of Canada can be solved through commercial arbitration and the solutions imposed by the arbitrators, known as the arbitral awards, will be recognized and upheld in court.
Attending Arbitration
All parties involved in the dispute (excluding children) must physically attend the arbitration session. One or more arbitrators will also be present. Each side may also bring along their lawyer if they wish but this is not mandatory. Witnesses may be called to give evidence, but they will be asked to leave once they have done so.
Arbitration Timings
Arbitration is a much faster solution to solving disputes than taking legal action and some disputes may be resolved in a matter of hours. Arbitration can be sought immediately rather than relying on the courts to process paperwork and set dates for hearings. Solutions are also far faster to reach when all parties sit down together, present their case and listen to each others arguments resulting in the arbitrator making a final award. The length of an arbitration session depends on a variety of factors, including the complexity of the case and how well the parties have prepared for arbitration.
Arbitration Location
Arbitration tribunals can take place at a any location chosen and agreed by all parties involved. This could be, for example, at one of the disputant’s homes or office, the arbitrator’s office or a lawyer’s office. In cases of mandatory arbitration, disputants may choose to use a room at the courthouse. A neutral meeting place is more likely to foster a more successful arbitration tribunal than meeting on another party’s territory. When choosing the arbitration location, you should also try to meet any special needs of the other participants and provide access to food and drinks as well as comfortable seating.
Finding an Arbitrator
An arbitrator must be unbiased, neutral and independent and must have established the trust of all parties involved in the dispute. The arbitrator may not work solely as an arbitrator; they may be a lawyer or businessperson trained in arbitration techniques. Both parties should agree on an arbitrator unless one is appointed by the court as in cases where mandatory arbitration is necessary and it is wise to select an arbitrator with experience in the area of the dispute. For example, choose an arbitrator who is well versed in divorce law for divorce disputes.
Many arbitrators are also qualified as lawyers, although it is not necessary to hold a legal qualification to be a successful arbitrator. Arbitrators must obtain qualifications in arbitration in order to practice and they should conform to Canada laws on arbitration.In Ontario family law cases, any arbitrator involved in family law arbitration must have been trained in Ontario family law. They must also have completed a course enabling them to screen each party involved in the dispute for power imbalances and domestic violence.
An arbitrator is not allowed to make a decision, which the disputants could not have decided for themselves. It is worth noting that they can only arbitrate over issues defined in the Arbitration Agreement. Arbitrators cannot ask or permit any of the parties to break the law. There are procedures in place to complain or sue the arbitrator if you believe the arbitration was not conducted fairly or according to the law.
Find a Greater Toronto Area Arbitrator
Arbitration Fees
Arbitration is cheaper than going to court because the process is so much faster, does not involve court fees and it is not necessary to have a lawyer present. Arbitrators work in the private sector and set their own rates, which should be established before any agreement to engage arbitration services is made. The cost of engaging an arbitrator is sometimes divided equally among the disputants, or parties involved may agree to split common costs. Often the arbitrator allocates costs as part of the arbitrary award. In addition to the arbitrator’s fee, there may be additional costs such as the hire of a room where the arbitration tribunal is held.
If an arbitration award is disputed, further costs may be incurred if the arbitral award is not honoured. In such cases the party who originally won the arbitration award can ask the arbitrator to take out an Enforcement of Arbitration Notice and file this with the court to ensure that the award is enforced legally.Costs for enforcement are usually added to the costs of the losing party.
Arbitration Preparation
Prior to the arbitration tribunal, all parties involved should draw up an Arbitration Agreement, which clearly states what issues the arbitrator is to decide; issues not included in the agreement cannot be discussed at the arbitration session and thus the arbitrator cannot make decisions over them. The Arbitration Agreement must be in writing and signed by the arbitrator, the parties involved in the arbitration process and independent witnesses. It should also state that the arbitration will be governed solely by Canadian law.
The Arbitration Tribunal
At the arbitration tribunal, both sides present their arguments using witnesses and / or evidence to support their case. All parties must disclose all information relevant to the dispute beforehand; in family arbitration, this may involve disclosing finances. At the end of the arbitration each side states their desired outcome to the arbitrator. Finally the arbitrator makes a legally binding award enforceable in court. The Arbitration Act allows for plenty of leeway in making an award, however, the arbitration tribunal must have been conducted in a manner that is fair to both sides. The arbitrator produces a written agreement, which clarifies the arbitral award and the reasons for making it.
Enforcing Arbitration Awards
Some disputants do not comply with the arbitral award and in this event, the awarded party must go to court to enforce the award. The law relating to arbitration in Canada is governed by the Arbitration Act. If the award involves financial payments, it can be enforced in court as a money judgment. If the award applies to an unusual case and it is not enforced, the court may refer the case back to the arbitrator.