Arbitration Explained

Arbitration “is a process for resolving disputes [and] it performs the functions of a court system but under private contract or other agreement…. Parties—which might be individuals, corporations, and even countries—agree to arbitration when they need skilled individuals to settle a present or future dispute and, for one reason or another, they do not wish to go to court” (Schulz & Grant, 2021, Preface). In Canada, each province and territory is governed by legislation which outlines the arbitrator’s responsibilities and the processes to follow; in British Columbia, it is the BC Arbitration Act.

Arbitration and mediation are similar but not identical. Two essential differences between arbitration and mediation are: (1) the decision made by the arbitrator is binding  on the parties (i.e., makes the decision for the parties) whereas with a mediator, the decision is not binding (i.e., the mediator assists the parties in reaching a decision that will resolve the dispute); and, (2) an arbitrator is bound and governed by legislation (e.g., The Arbitration Act) whereas the mediator is not bound by legislation and is not subject to the same procedural constraints as is the arbitrator. As a minor difference, the mediator procedures involve caucusing with parties (i.e., meeting with each party separately) and the arbitrator does not follow this procedure.

Including the general duties of an arbitrator spelled out in section 21 of the Arbitration Act, five duties of an arbitrator are:

Treat each party fairly such that all parties, including the Arbitrator, treat each other in a fair manner with the caveat that it is not clear whether a breach of this duty would imperil the award (section 21[a]);

Give each party a reasonable opportunity to present its case and to answer any case presented against it (section 21[b]) which is one of the main tenets of the common law “rules of natural justice” which have always been binding on an arbitrator and any breach will expose any award to the risk of being overturned by a court (section 58[1][h] of the Arbitration Act);

Strive to achieve a just, speedy and economical determination of the proceeding on its merits (section 21[c]) which is the central objective of arbitration with the caveat that unexpected health concerns (e.g., COVID; cancer) could markedly affect the timelines;

Independence and Impartiality such that the arbitrator has no connection between him or her and a party that it would allow the party to exert undue influence over the arbitrator in dealing with the matter at hand (Independence (section 16[1] and [2]); Impartiality (section 16[3] and [4] of the Arbitration Act) such that the “approached” arbitrator must, “without delay, disclose any circumstances likely to give rise to justifiable doubts[1] as to the person’s independence or impartiality” and must maintain the duty of disclosing circumstances from the beginning to end of the arbitration process;

Confidentiality (section 63[1] and [2] of the Arbitration Act) such that, unless otherwise agreed by parties, the Arbitrator ensures that all hearings and meetings in arbitral proceedings must be held in private (S63[1] and all parties agree to maintain confidentiality by not disclosing “proceedings, evidence, documents and information in connection with the arbitration that are not otherwise in public domain [nor] the arbitral award” (S63[2]a and b); N.B.: Subsection (2) does not apply if the disclosure (1) is required by law, (2) is required to pursue or protect a legal right, and (3) is authorized by a competent court.

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[1] “a real danger of bias on the part of the of the arbitrator in conducting the arbitration” (S 58[3], AA).

Arbitration services (outside ICBC claims) are billed at 375.00 + GST per hour