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Under applicable provincial or federal law, the parties to an arbitration agreement usually have some latitude as to the rules, procedures and protocol that will govern the arbitration. In Ontario, arbitration is governed by the Arbitration Act, 1991, and in the case of federal corporations, by the Commercial Arbitration Act.
In many instances, the provisions of a provincial arbitration statute can be changed or excluded if the parties agree. However, if there is no agreement varying or excluding the provincial statute then the provincial law will apply.
For example, if the parties agree, among other things, they have the option of:
Introducing elements of informality;
Simplifying the procedure so that it is far removed from the requirements of the courtroom setting;
Permitting the matter to be presented through written arguments and documents without the attendance of witnesses; and
Ensuring that the arbitrator’s award or decision is final and that there is no right to appeal to the courts in any circumstances.
Alternatively, the parties may, for example, agree that:
The arbitration procedure will be more stringent than that found in the public court system;
A panel of arbitrators and not just a single arbitrator will hear the case at first instance and render a decision; and
Either party, as of right, may appeal the arbitrator’s or panel’s award on any issue of fact or law or mix.
Conduct of the arbitrator
Under Ontario’s Arbitration Act, 1991, arbitration must have the elements of equality and fairness. The parties cannot agree to avoid the statutory requirement that they be treated equally and fairly and that each party be given an opportunity to present a case and to respond to the other party’s case.
The Arbitration Act permits the arbitral tribunal, which is the arbitrator, to determine the procedure to be followed. For example, unless previously agreed to by the parties, the arbitral tribunal may place a time limit on the testimony of witnesses or limit the number of witnesses for each side.
The arbitration process
Although every arbitration is different, there are general steps and procedures that are followed:
1. Starting the arbitration
Both Parties must agree to participate in the arbitration process and sign an arbitration agreement to begin the process.
Any party to an agreement can start an arbitration (usually called the claimant). The claimant will typically send a notice of arbitration (sometimes called a Notice to Request to Arbitrate, or Arbitration Application) to the other party involved in the dispute. Where and how notice is to be given is often covered under the notice terms of the agreement that is being arbitrated.
This notice should contain information such as:
the name and address of both parties,
a description of the dispute, and
what result the person starting the arbitration hopes to obtain.
The person receiving the notice must respond within a certain time period, and must either confirm the accuracy of the information in the notice, or make corrections to it. If an arbitrator has already been agreed upon, the notice must also be sent to the arbitrator.
2. Choosing the arbitrator
An arbitrator must be chosen and agreed upon by all parties. Often, the process for selecting an arbitrator, and the number of arbitrators that will be required, is set out in the arbitration agreement or the document under dispute. If there is no written agreement, the parties can agree on an arbitrator and decide if more than one arbitrator is necessary. If the parties cannot agree upon an arbitrator, the court may appoint one.
3. First meeting
Once an arbitrator is chosen, all parties and the arbitrator usually hold a first meeting. The parties may also retain legal counsel to attend at the arbitration and represent them. The initial meeting, sometimes called a pre-hearing examination, gives the participants a chance to discuss and clarify any outstanding issues regarding the arbitration process, such as:
the scheduling of all events, including the date and place of the arbitration hearing, and
This meeting may be held in person, by telephone, or by video-conference.
4. Arbitration full hearing or written hearing
If it is determined that the arbitration will be in writing, the arbitrator will examine documents and render a decision. The arbitrator may ask for further documents or explanations with regard to the documents being examined.
Full Arbitration Hearing
Often, the parties will request a full arbitration hearing. At the hearing, each party presents their case, evidence is given, and witnesses may be examined. Depending on the complexity of the case and the monetary value at stake, the parties may choose to hire lawyers to represent them at the arbitration.
5. Decision of arbitrator
Once the arbitration Hearing has taken place, the arbitrator or panel will make its decision, which is usually final and binding. The decision will either be made on the same day or at a later date depending on the complexity of the case. The decision must be in writing and provided to all parties. The decision must include an explanation of why the decision was made. Among other things, the decision may involve:
ordering specific action to be taken, such as having one party make a payment to the other, child custody,
spousal support payments, child support payments, ordering an injunction against specific actions, such as refraining from selling a product and/or monetary awards (which may include one party paying the other party’s costs of arbitration, plus interest).
Subject to applicable legislation and any arbitration agreement that may exist between the parties, the decision of an arbitrator may be appealed to a court of law.
6. Fees and costs of arbitration
There are costs to both parties in preparing and participating in an arbitration. The costs include such things as the arbitrator’s fees, the cost of expert witnesses, disbursements and so on. The costs can vary depending on several factors, such as:
whether there was an oral hearing requiring the attendance of the arbitrator and fees for the hearing facility, or if the arbitration required only written submissions,
if expert witnesses were called,
how long the arbitration lasted, and
if the arbitrator awarded costs of the arbitration to be paid by only one of the parties.
Generally, fees or a deposit must be paid when a copy of the notice of arbitration and response is sent to the arbitrator.
Is it important to note that there are time frames that exist for all steps in an arbitration, either as set in the Arbitration Act, or as agreed upon by the parties and the arbitrator.
For legal advice with respect to an arbitration, you should consult a lawyer.