What is arbitration?
Arbitration is a form of alternative dispute resolution (ADR). The parties involved in a dispute voluntarily or obligatorily refer it to one or more persons for a decision, to which the parties agree to be bound.
Legal requirements
In Ontario, arbitration, other than international commercial arbitration, is governed by the Arbitration Act, 1991. It applies to arbitration conducted pursuant to “an agreement by which two or more persons agree to submit to arbitration a dispute that has arisen or may arise between them.”*
Further to the statutory requirements as set out in the Arbitration Act, the common law has developed two concepts which it regards as characteristic of arbitration: (1) the existence of a dispute and (2) the duty (generally under contract) or intent of the parties to submit that dispute to arbitration.#
If the common law requirements above are not met, the proceeding cannot be regarded as arbitration and the Arbitration Act does not apply.
For example, disciplinary process as set out in a union constitution is not considered as arbitration.++ If one party to the dispute does not agree to proceed to arbitration, then the proceeding cannot be regarded as such, either.**
Arbitration clauses are often found in commercial transactions (particularly international ones) and labour and employment agreements.
What are the benefits of arbitration?
- The arbitration process is often less formal and more expedient. As such, the costs will generally be lower than litigation in courts.
- The parties may choose the arbitrator who hears the dispute. This is particularly useful when the matter is highly technical and a degree of expertise is required.
- At the international level, arbitration awards are more easily to be enforced under private international law.^
- Arbitration proceedings may be conducted in private, whereas documents used in litigation become public record.
If you require assistance or representation regarding arbitration, please contact my office at 416-433-5531.
* S.O. 1991, c. 17, s. 1
# Sport Maska Inc. v. Zitter, [1998] 1 S.C.R. 564 at 585.
++ Downey v. Leitner, [2004] O.J. No. 4466, 2004 CanLII 34927 (S.C.J.)
** Universal Workers Union, LIUNA, Local 183 v. Ferreira (2009), 95 O.R. (3d) 118
^ see e.g. International Commercial Arbitration Act, R.S.O. 1990, c. I.9
