Private Arbitration – A Solution to Courthouse Gridlock?

The recent outbreak of COVID-19 is forcing the Ontario court system to evolve in order to maintain access to justice. Unfortunately, the Ontario courts remain significantly backlogged and while some hearings have resumed, most trials are still being adjourned and many civil matters will likely take even longer to be heard than in the past.

Arbitration is an adversarial process much like court. Unlike court, however, arbitration is a private forum where the procedure is set by the parties and/or the governing contractual provisions. As such, arbitration may offer a faster way to have disputes adjudicated, particularly in this time of uncertainty.

When can a dispute be referred to arbitration?

Arbitration may be required when the parties have agreed contractually to refer a matter to arbitration. Regardless, nothing prevents parties from agreeing to refer a matter to arbitration rather than taking their dispute to court. Parties may also agree that the decision of an arbitration is final and binding.

What are the advantages of arbitration?

Speed. One of the primary advantages of arbitration is that the timing of the hearing is not dependent upon the court docket. Hearings can be scheduled whenever the arbitrator and the parties are available.

Flexibility. Arbitration offers parties increased flexibility, particularly in terms of how the hearing is conducted. For example, an arbitration hearing can be conducted in writing, or partially in writing with a limited number of witnesses, or with cross-examinations only. Parties can set other constraints such as on the nature and amount of pre-hearing discovery, time limits for the length of witness testimony, number of documents, etc.

Choice. Private arbitrations offer parties more choice than traditional court proceedings. Depending on why a matter is being referred to arbitration, it may be up to the parties to agree upon an arbitrator. This allows parties the opportunity to seek out an arbitrator who has specific expertise in the area in question. Sometimes an arbitrator may be appointed by a third party.

Privacy. Traditional court proceedings are entirely open to the public. Sealing orders are generally only granted where it is necessary to prevent a serious risk to an important interest, and reasonable alternative measures will not prevent the risk. The decision whether to grant a sealing order is always in the hands of a Judge, regardless of whether both parties consent. In an arbitration, the parties can agree to keep the proceeding confidential.

Certainty. An appeal of an arbitrator’s decision may not be as likely, as courts tend to show deference to arbitrators.

 

The rules of each arbitration will differ depending on what the parties agree upon, as well as the terms of the applicable arbitration clause and/or arbitration agreement. Before considering whether to refer a matter to arbitration or when drafting an arbitration clause, we strongly encourage you to contact our Kanata office for a no obligation consultation.