New report shows how arbitration in Canada is increasing as a means of dispute resolution

Benefits of arbitration include cost savings, speed, and efficiency, says co-author Barry Leon

New report shows how arbitration in Canada is increasing as a means of dispute resolution

A new report on international and domestic commercial arbitration by individuals and businesses based in Canada shows that arbitration is an increasingly popular way of settling disputes.

By “working cooperatively and energetically, and together with Canadian businesses, governments, and institutions, the practice of arbitration will see significant growth in the coming years,” co-authors Barry Leon and Janet Walker said in releasing the report.

Janet Walker is an independent arbitrator at Toronto Arbitration Chambers, Atkin Chambers in London, and Sydney Arbitration Chambers. Barry Leon is an arbitrator and mediator with Arbitration Place. FTI Consulting, a global business advisory firm, supported survey planning, deployment, and data collation and analysis. 

“This will have a positive impact on the Canadian economy,” they said, “as it will enable Canadian businesses to resolve disputes more efficiently and cost-effectively, “in turn making Canada a better place to transact and invest.”

The first Canadian Arbitration Report 2024 recently released indicates that of the firms who responded, 71 percent stated the number of lawyers increased by between 10 and 25 percent in the three years between January 2020 and December 2022, while 30 percent noted the percentage of arbitration-related cases increased within the same range.

Five percent indicated the number of arbitration lawyers increased by 25 to 49 percent, while 14 percent said arbitration increased within those parameters. Those who said both the number of lawyers and the amount of arbitration work remained the same were 21 percent and 41 percent, respectively.

Leon says that he believes that the survey shows how well Canada is doing when it comes to being a venue for arbitration. “You’re getting more Canadian counsel, more Canadian arbitration experts and, importantly, more Canadian companies looking at Canada as a venue when they might have looked internationally in the past.”

Leon says that the first report offers “a sort of baseline” to help build a better trajectory of arbitration in Canada. “Anecdotally, I would say if you walked into a litigation department and asked who there was doing arbitration, a couple of hands would go up. Now  it seems that arbitration is a part of everyone’s dispute resolution practice.”

The report’s nine sections include summaries of the  wealth of data covering a wide range of topics, including: 

  • a profile of Canadian-based arbitration practitioners – arbitrators, arbitration counsel and experts, and diversity in Canadian arbitration  
  • tribunal appointments and composition, appointments of former judges, preference for one or three arbitrators, and arbitrators’ rates 
  • arbitration agreements, how often they are included in commercial contracts, why parties sometimes choose litigation, preferred seats and institutions, and when and why parties choose ad hoc arbitration  
  • types of disputes generally and those involving Canadian-based practitioners  
  • the arbitral process, including length of hearings, use of mediation, settlement rates, partial awards, use of expert evidence, engagement in international cases, when experts are retained, and joint expert reports  
  • satisfaction with arbitration in Canada, and suggestions for improvement  

Data was received and processed through a double-blind system to preserve confidentiality – those involved in analyzing the data and preparing the report had access only to anonymized data.

Leon notes that among its benefits, arbitration is flexible, more customizable and can be less expensive. “You can get a choice of (agreed upon) decision maker. You can decide whether it is one person or a panel. And it can typically be done more quickly and efficiently.”

He adds that during the COVID-19 pandemic, it became apparent that an arbitration model could be used in a remote setting to resolve disputes. Procedures have been developed to accommodate a hybrid model incorporating streaming technology such as Zoom with in-person hearings.

That also means that parties to arbitration, experts and those making the rulings in a commercial case can participate from virtually anywhere.

While judges are trained and educated to participate in any court-based litigation, Leon says that arbitration can allow for choosing arbitrators with more experience in the type of dispute the parties are trying to resolve.

Court judges are often assigned to a case randomly and may or may not have the experience to deal with a particular matter. For those who want discretion, arbitration also has the advantage of being held in private rather than open court for the public to hear.

Another advantage to arbitration, Leon says, is that the parties agree to the ground rules in settling the dispute, including whether the judge’s decision will be binding on them. And while restrictions are tighter, there is theoretically an opportunity to challenge a binding decision through a judicial review.

Still, for most parties involved in arbitration, the opportunity to find a resolution without going to court, along with the confidence both sides will get a fair hearing, is enough for them to go along with what an arbitrator decides.

As for the growing importance of Canada as a venue for arbitration, Leon says, “We have a good system for jurisprudence,” where domestic and international parties can feel comfortable in the proceedings and outcome. While having a place where parties think the justice system will be reliable and supportive, Leojn also notes that there is a New York Convention that most countries have signed on to, including Canada, to enforce arbitration awards.

Leon adds that Canadian arbitration services should continue to develop a profile domestically and internationally by “writing, speaking, going to conferences - staying on the radar and letting people know we Canadians can do it. 

The 2024 arbitration report, Leon says, should help arbitration practitioners – arbitrators and tribunal assistants – provide better services and also help corporate counsel in planning and contracting for their dispute resolution needs and managing their disputes effectively.

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