Arbitration

DEFINITION OF ARBITRATION

Arbitration is a legal procedure for resolving disputes using one to three neutral, private persons called "arbitrators". The arbitrator is a decision-maker appointed by or on behalf of the parties to the dispute to decide the issues in dispute by applying rules of law and equity, unless the parties have agreed that some other rules or format will apply. The decision of the arbitrator is final and binding, unless otherwise agreed.

FUNCTION OF THE ARBITRATOR

An arbitrator acts like a judge. It is the arbitrator's job to make a decision resolving the matter in dispute. Unlike judges, arbitrators are not bound by the decisions of other arbitrators. Arbitration is a private process. Any awards made that may be cited or found in various reports are not precedents. Some commercial arbitration statutes require the arbitrator to decide the dispute "by reference to law”. The parties may give the arbitrator authority to decide on what is fair and reasonable, but this is only where the parties have so agreed in writing after the arbitration has commenced.

QUALITIES OF AN ARBITRATOR

Most arbitrators are chosen because of their known skill as an arbitrator and their experience with the subject matter of the dispute.

The skills normally associated with a person who practices as an arbitrator are the ability to listen, discern, analyze and separate complex
issues; recognize relevant and irrelevant information; deal promptly with unusual problems and surprises; make sound decisions and hand down reasoned awards. In addition, an arbitrator should possess the personal capability to practise fairness and firmness in a courteous manner while exhibiting the ability to manage the arbitration process with patience and tact, keeping the proceedings and the parties on track and moving the hearing towards its proper and final conclusion.

The experience that the arbitrator has with the subject matter of the dispute is usually determined through personal inquiry and discussion with the prospective appointee, review of a resume provided and verification of credentials with persons given as references. This evaluation of the arbitrator's experience should be done prior to the preliminary meeting.

In addition, an arbitrator should have a working knowledge of the law of contract, tort, evidence and the rules of natural justice, the applicable arbitration statutes and the rules governing the conduct of the arbitration.

DUTIES OF THE ARBITRATOR

The arbitrator must treat the parties fairly and equally. The arbitrator must be neutral on the issues and willing to listen to the arguments
put forward by the parties. An arbitrator cannot be a witness or advocate for either party in the arbitration. The arbitrator must disclose to the parties any matters which may affect the arbitrator's neutrality or impartiality. Ideally, the disclosure should occur before the commencement of the arbitration, but the duty to disclose continues throughout the arbitration proceedings.

Although an arbitrator has a wide measure of discretion in resolving a dispute, the arbitrator must exercise that discretion in accordance
with the relevant law. The arbitrator's duty is to resolve the issues in dispute. The arbitrator has no authority to decide anything else. Notwithstanding the foregoing remarks, an arbitrator who is a member of the Institute has a duty to abide by and comply with the Institute's Code of Ethics.

The arbitrator has no power to delegate the responsibility to make a decision to someone else. For instance, the arbitrator cannot refer the
dispute to an expert to make a decision. If there is a panel of three arbitrators, those three arbitrators are a unit and none of them can act in the absence of the others. They cannot delegate to any one of them the authority to make a decision. This must be differentiated from the authority to write the award. That is simply putting in writing the decision made by all three people. The arbitrators must discuss the award as a tribunal and seek to reach a common decision. The point to remember, however, is that no member of the arbitration panel can act alone or take evidence or visit the site without being accompanied by the rest of the panel and the parties. However, where there is a tribunal of three, the chairperson may act alone on purely administrative matters such as arranging the time and place of meetings.

Arbitration proceedings are conducted in private. The arbitrator has a duty to maintain confidentiality, and often the parties will require the arbitrator to sign a confidentiality agreement.

LAWYERS AS ARBITRATORS

As arbitration and other methods of dispute resolution become increasingly acceptable, more lawyers will be using these techniques to resolve
disputes, rather than resorting to a remedy through the courts. A lawyer's skills and training are in many ways suited to arbitration. Lawyers serving as arbitrators need to recognize the difference between litigation and arbitration. For example, arbitrators must balance the parties' need to persist to a resolution of the dispute against the need to be overly technical. It is true that arbitration is an adversarial process but it need not be confrontational. Arbitration offers the advantage of flexibility and, to a degree, informality which is not available in court proceedings where the more rigid rules of court determine how the proceedings will be taken. Lawyers as arbitrators should remember the nature and purpose of arbitration and take advantage of those qualities wherever appropriate so that the arbitration does not become an episode of litigation outside of the courtroom.

RULES OF NATURAL JUSTICE

The arbitration process is a legal procedure and although the rules of evidence and procedural rules are much more relaxed than they are in court, they are definitely there. There is one rule which, if broken, will inevitably permit an award to be set aside. That is the rule of natural justice, i.e. the practice of "fair play" in presenting and hearing a case.

Basically, natural justice imposes two obligations: First, the arbitrator must give those affected by the decision a chance to know the allegations against them and the facts to support those allegations before the decision is made, must listen to both parties, must allow each party to present its case fully and to answer the case of the other side. Second, the decision-maker has to be unbiased and to make the decision relying on only the evidence presented.

The first obligation compels the arbitrator to hear all relevant evidence. The arbitrator must not hear oral evidence or argument from
one party in the absence of the other party. The arbitrator must not receive any document from one party without ensuring the other party receives a copy. If evidence or argument is to be presented in a hearing, both parties must receive adequate notice of the hearing, whether or not both parties have indicated a willingness to attend or participate in the proceedings. The parties must each be given a reasonable opportunity to present their cases. This means the dates chosen and the time allotted to the parties should be convenient and fair to both.

With respect to the duty to be unbiased, the arbitrator must be, and appear to be, impartial. This duty applies to both the arbitrator's
words and actions. The arbitrator must not adjudicate on any dispute if the arbitrator would benefit in some way by a decision made in favour of one of the parties. The arbitrator must have no connection, either direct or indirect, with a party that creates the appearance of partiality. Actual bias is irrelevant - it is the perception of bias that determines whether the arbitrator has breached this duty. The test is whether a reasonable person conversant with all the facts would think it likely that the decision-maker is biased. If the arbitrator is in doubt, the prudent course is to disclose the situation to the parties and ask them if they object to the arbitrator commencing or continuing to act.

The arbitrator may have to make a special effort to remain, and be seen to remain, impartial. For example, the arbitrator's impartiality may be tested where a party is challenging or criticizing a previous decision of the arbitrator, or the arbitrator's manner and conduct in the answering of questions or the apparent attention given to either party. The arbitrator has overriding duty to act fairly and dispassionately. The arbitrator must take care not to associate with one party more than the other. Furthermore, if one party reveals information relevant to the arbitration proceedings to the arbitrator, the arbitrator must ensure that the information is communicated to the other party, and that that party is given the opportunity to comment on the information to the arbitrator.

Arbitration OPTIONS

There are many forms of arbitration. The following summaries identify some of the more common classifications of arbitration.

BINDING ARBITRATION

This is the normal form of arbitration. This form produces a conclusive decision in a dispute made by a neutral party called an arbitrator. The authority by which the award binds the parties may exist in the parties' agreement, a statute, or a court's decision.

COMPULSORY ARBITRATION

A form of arbitration which compels the parties to submit their dispute to arbitration for a binding decision and, in some cases such as
with public employees, forego their right to strike. Although the parties may contract to submit to compulsory arbitration in the event of a dispute, compulsory arbitration is often prescribed by statute and the arbitrator appointed by the government. The intent is to avoid litigation.

FINAL OFFER ARBITRATION

A form of arbitration wherein each party, following a hearing, submits its final or best offer to the arbitrator, and the arbitrator must choose one. There are several variations of this form - for example, the parties may submit offers with respect to each issue in dispute, and the arbitrator chooses the most appropriate one for each issue.

GRIEVANCE ARBITRATION

This form of arbitration is often referred to as "rights arbitration". It is used to resolve disputes concerning employment rights provided in an existing collective agreement. Arbitration is usually the last step in the grievance process.

INTEREST ARBITRATION

Interest arbitration differs from grievance arbitration in that it is a process used to resolve disputes concerning terms in a proposed collective agreement.

COURT-ANNEXED ARBITRATION

This form of arbitration arises when a court orders the parties to arbitrate, and sets the parameters for the arbitral process. The parties present their dispute to an arbitrator approved or appointed by the court. In the case of binding court-annexed arbitration the process is more formal - the hearing before the arbitrator is a procedure of record. The parties are bound by the arbitrator's decision which is entered as a judgment of the court. In non-binding court-annexed arbitration the decision is also entered as a judgment of the court, unless it is disputed by either party, in which case the matter may proceed to trial. The party rejecting the award may be penalized with costs if the court does not offer a more favourable outcome than that attained through arbitration.

NON-BINDING ARBITRATION

Non-binding arbitration is a dispute settlement process that incorporates most of the characteristics of an arbitration with the exception
that the parties are not bound to accept the decision of the arbitrator as binding. This process is not normally used in commercial arbitrations and is not recommended. Non-binding arbitration is mainly used in labour. It is sometimes used by a court which refers the dispute to non-binding arbitration as a part of the judicial process involving a commercial dispute. The courts are also using this process as a mini-trial.

AD HOC ARBITRATION

"Ad hoc" means appointed for a specific purpose. Ad hoc is an arbitration in which the parties have voluntarily agreed that a specific dispute will be settled by arbitration. This is a form of arbitration in which the parties determine all procedural matters including the appointment of arbitrators. Ad hoc arbitrations are commonly used to resolve commercial disputes.

CONTRACTUAL ARBITRATION

These arbitrations are sometimes referred to as "private" arbitrations. A contractual arbitration is one which arises out of a contract which provides that all disputes will be settled by arbitration.

DOCUMENTS-ONLY ARBITRATION

This an arbitration in which the arbitrator makes the award based on a review of documents-only evidence presented by the parties. Each party is provided with the same evidence and is permitted to give a rebuttal to the arbitrator. No formal hearing is held.

FEES

$300.00 per hour plus H.S.T. for any Family Arbitration Matter. 

If your mediation requires additional time kindly contact us for a quote. 

For more information kindly contact us for a consultation with a Specialist Family Lawyer.