Page 39 - CCCA63_2009

CCCA_V3No3_Col-McCarthys-FIN.qxd:CCCA_V1No2_Col-Litigat-V1.qxd 9/16/09 9:49 PM Page 39 Arbitration Clauses: Legal Update – McCarthy Tétrault LLP The Devil can be in the Details rbitration clauses are now relatively costs of the arbitrators are usually shared result. The Rules of Civil Procedure, for Acommon features in commercial equally by the parties. The costs of the instance,define the scope and nature of doc- agreements.The perceived benefits of arbi- facilities and of the court reporters are also umentary production as well as oral discov- tration include the speed with which mat- borne by the parties, which is not the case ery rights, which can be important tools to ters can be resolved, reduced legal costs with traditional litigation.All of these costs assess your case and your opponent’s case. (usually because the matter is completed should be considered in assessing whether The arbitration clause should address these quickly), and confidentiality of the process. arbitration would actually be less costly issues expressly or by incorporating rules However, the arbitration clause can be as than traditional litigation. that address appropriate procedural steps to simple as: “Any disputes between the par- avoid the necessity of agreeing on these ties shall be resolved by final arbitration.” Interlocutory Relief issues after a dispute arises. Such a clause can undermine the potential There is still considerable dispute as to the Another difficult procedural issue that benefits of arbitration. precise scope of an arbitrator’s ability to cannot be easily addressed by an arbitration Instead, if arbitration is contemplated, order interlocutory relief if it is not stipulat- clause is where there are claims against mul- the arbitration clause should be sufficiently ed in the arbitration clause. For instance, tiple parties arising from the same facts, robust to ensure that arbitration does pro- unless the arbitration clause specifically con- some of whom are parties to a contract vide benefits without depriving the parties templates it, an arbitrator apparently does containing an arbitration clause and some of important procedural and substantive not have jurisdiction to order security for of whom are not (either because the con- rights.Some of the issues worthy of consid- costs. Security for costs can be an important tract is silent or because the claim arises in eration are: strategic tool when dealing with an impecu- tort). Having two proceedings would be nious or small company or individual. See expensive and inefficient. However, the Value of Claim Inforica Inc. v. CGI Information Systems and party not bound by an arbitration clause As of January 2010, the monetary jurisdic- Management Consultants Inc., 2008 CanLII cannot be forced to arbitration, and the tions for small claims and simplified rules 60706 (Ont. S.C.J.), currently under appeal. party who is bound could object to a tradi- cases in Ontario are being increased to Similarly, an arbitration clause might render tional claim.Therefore,it may be prudent to $25,000 and $100,000 respectively. In this it difficult to obtain emergency interlocuto- provide that in the event other parties are context, it may be more efficient and cost- ry relief if there is no arbitrator appointed at necessary for an action, the arbitration effective to proceed with a small claims the time the relief is requested, although the clause will not apply. action (a lawyer is not necessary, costs court does retain jurisdiction to do so. See awards are limited, no discovery rights) or Siemens VDO Automotive Inc. v. Rhodia Conclusion simplified rules action (no discovery rights, Canada Inc., 2005 CanLII 63769 (ON S.C.) There is no “one-size-fits-all” arbitration summary trial process available) than an Finally,unless the clause specifically contem- clause. Careful consideration should be arbitration. An arbitration clause could plates summary judgment, an arbitrator may given to all of these issues to ensure an provide that the clause will apply only in not have jurisdiction to dismiss an unmeri- arbitration clause makes sense and ade- the event the claim is for an amount greater torious claim on a summary basis. quately addresses these issues to preserve than the simplified rules jurisdiction. the potential benefits of speed, cost-effec- Arbitrations can be conducted by one- Procedural Issues tiveness and confidentiality. or three-member panels (or more). Before The procedural process leading up to a trial including an arbitration clause providing occupies a large portion of traditional litiga- Erica J. Baron is a partner in McCarthy for three arbitrators, it is worth considering tion. While it may be viewed as costly, fail- Tétrault's litigation group inToronto. She focus- whether the likely value of the claim war- ing to provide for important procedural es on medical malpractice defence,commercial real rants a panel rather than a single arbitrator steps in an arbitration clause may actual estate disputes and estates and trusts litigation. — particularly in view of the fact that the derail the process and impede a proper (ebaron@mccarthy.ca) AUTOMNE 2009 CCCA Canadian Corporate Counsel Association 39