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Arbitration and Mediation

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Alexander
Posted by Mr. Alexander G. on Jan 31st, 2016 11:26am

There is a growing trend to combine mediation and arbitration (Med-Arb) in a dispute resolution process, especially within the context of family law.  There are, however, implications to this choice of process that have to be carefully considered by counsel.  The cracks of this combined process are often ignored and have yet to be felt by members of the bar.    

The Med-Arb process puts the arbitrator/mediator in a contradictory position.  The arbitrator is asked to issue a final binding award, while the mediator is asked to be neutral and not pronounce himself/herself on the possible outcome.  To the extent that a compromise is possible, it is promoted by the mediator, regardless of whether it the “right” result.  The problem is that parties cannot ignore that if the mediation process does not bear fruit, counsel will be asked to advocate for the clients before the very same person who now wears an arbitration hat.   This dynamic has a tempering effect on both the parties and the mediator, both of which may be reticent to provide opinions on issues that may be subject to arbitration.  Having said that, while we may be critical of the Med-Arb process, the fact remains that it has proven successful in a number of European countries, including Switzerland and Germany.  However, this can be explained away by a number of factors, including the fact that the mediations are often performed by third parties, who are on stand-by to engage the parties to an arbitration in a discussion.   This very process is used by a number of provincial and federal boards and commissions, including the Canadian Human Rights Commission and the Public Service Labour Relations Board.  We therefore need to be careful in overstating the positive experiences of these countries.

In Ontario, and in other provinces that have adopted the Uniform Arbitration Act, section 35 of the Act discourages the Med-Arb process.  It states that unless provided for in the arbitration agreement, the arbitrator may not sit as both arbitrator and mediator.  The Act recognizes the perils of assuming this dual role.   Within the context of family law in Ontario, this provision is ignored and a mediation process is often built into the arbitration agreement.  The suggestion for those using the Med-Arb process is to allow a third party, other than the arbitrator, to act a mediator.   In the case of parties that have not provided for mediation in an arbitration agreement, the case law provides that the parties may, during the course of an arbitration, agree to conduct a mediation and opt out of section 35 of the Act.   After the fact consent is enough to get around section 35:  Pinder v Woodrow, 2015 ABQB 750 (CanLII). 

Allowing the arbitrator to step into the role of mediator is an exceedingly dangerous proposition that opens the door to allegations of bias and that must be carefully managed by counsel. 

 


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