Taking matters to arbitration instead of the courts can result in a more efficient, focused and cost-effective process.
“It has to be given greater importance. Look at Europe — most commercial disputes are resolved through arbitration and there’s good reason for that,” says Gay, who is senior counsel with the civil litigation section of the Department of Justice in Ottawa.
He says Canada has the lowest use of arbitration in the Commonwealth, far less than what is used in the United Kingdom, Australia and New Zealand.
Some argue arbitration can cost as much as a trial, but it all depends on whether the right process is in place with the right arbitration agreement. And that’s where Gay says education has to come in.
“Most counsel who conduct arbitrations treat it like a case. If you’re going to treat it like a case along the rules of civil procedure and not designing a process that works, then it can be as expensive or more expensive. It’s about designing a process that works,” he says.
While public law matters are not suited to arbitration — anything involving Charter claims or anything of public interest should never go to arbitration — even copyright or patent matters that have some bearing on others and public knowledge of what has happened are not suitable, but matters such as construction disputes are well suited to arbitration.
It’s not a path she has chosen frequently, but, on occasion, Marni Dicker has used arbitration to settle civil commercial matters in her time as general counsel in the construction industry. The benefits, she says, of going the path of arbitration include the ability to choose an arbitrator and facility you are comfortable with.
“If I think arbitration will get me a more expedient result, I will go that route,” she says. “I do feel if there are narrow issues to be resolved or if there are personality issues, mediation can be a good way to go.”
Dicker, who is executive vice president and general counsel of development company LiveWorkLearnPlay, and formerly of Infrastructure Ontario, has used arbitration on several instances in her career in-house, but she says, in her experience, it can be “just as expensive” as going to trial.
The upside should be a more controlled scenario where the parties in charge of getting to a decision have greater experience in the sector in question.
“Most litigators these days will tell you going to court is a bit of a gamble,” says Gay. “You don’t know who you are going to get, whereas when you do an arbitration you know who you are going to get, and you’ve agreed on that person — someone who has expertise in the subject matter.”
Gay says he has dealt with construction delay claims in front of qualified arbitrators who have been able to resolve issues for parties in cases he says he would never put before a court. Court, he says, has become “a high-risk game.”
Dicker says she likes “binding arbitration” if it will be more expedient and gets a binding result that allows the parties to move forward.
The Alberta Energy Regulator has two internal alternative dispute resolution processes and as part of its hearing process, it has a binding dispute resolution process (they differentiate it from arbitration because they have separate appeal mechanisms and processes than what is provided for in the Arbitration Act).
“As a result, we are strong proponents of alternative dispute resolution and use it to help create efficiencies,” says Keely Cameron, legal counsel with the regulator. “Our processes are available both to resolve stakeholder disputes, but we also offer ADR in certain cases to resolve internal disputes. In terms of our civil litigation experience, we have not used binding arbitration; however, we have used our mediation staff to facilitate discussions, which has been very successful in terms of resolving litigation.”
Some like arbitration because it can be considerably faster and cheaper if done well.
“What most counsel fail to realize is that when you do an arbitration it can be custom tailored for the needs of your file. That’s where the savings are,” says Gay. “If you look at litigation, 90 per cent of all your costs are in discovery. That’s where you can customize the process to the case you are faced with. That’s where you achieve efficiencies financially.”
The release of R. v. Jordan by the Supreme Court has diverted judicial resources to criminal cases to meet time requirements put on the system. That should be prompting more civil matters to seek alternative measures for resolution, says Gay.
“The frustrating part is that while Jordan has put added pressures on the courts, we have the tools to alleviate the pressures right before us. We have an army of retired judges and specialists that can be engaged,” he says.
Gay does object to lumping arbitration in with mediation. “Most law schools teach both topics together and I think that if we are going to break the cultural impediment that we currently face in this province, we need to de-link these two concepts,” he says. “The fact is that arbitration is under-utilized in Ontario and this is due to the cultural impediments where lawyers in this province and elsewhere in Canada somehow view the courts [as] the only true vehicle that can dispense justice. This is far too narrow and has put us in a difficult spot.”
Gay says change in this area requires a multi-pronged approach that includes educating lawyers and law students on the practice of arbitration. Arbitration capacity in the province should be built up by allocating funds, much like what British Columbia did with its International Arbitration Centre, and that the courts push arbitration where possible. “We have reference provisions in the Ontario Rules of Civil Procedure that allow judges to offer a form of arbitration on actions that are before the courts. While they are in the rules, they are not being used,” he says.
Gay concedes it may require some minor tweaking of the rules and the support of the provincial attorney general, but it is “well within reach,” he says.
“You have reference provisions in the rules of procedure that allow for arbitration on consent and they’re not used,” he says. “Talk to most lawyers and they don’t know what the reference provisions in the rules are. We have mechanisms in the rules; we just need the courts and Attorney General of Ontario to lend some support to that process.”
Too often, the focus is on tailoring the process after the agreement has been signed, but Gay’s advice to in-house counsel is that the arbitration clauses put into agreements be very carefully reviewed before signing.
“In most cases, in-house counsel will adopt a clause that says ‘we hearby agree to arbitration,” but to me that is not enough. You have to start thinking well ahead of what you are going to do with your dispute and include it with part of your agreement with your party before the dispute is triggered,” he says.