BCICAC :: Writing A Contract? If So, You Should...

A dispute is the last thing you want to think about when you enter into a legally binding contract for any commercial purpose. But you can save yourself a lot of expense, time and grief if you do think about it at the time you negotiate that contract.

Of course you do not plan to have disputes. But you know they can happen. Parties may find they have different ideas of what the contract means. One party may not perform. It makes sense to plan how to deal with a dispute in advance.

You can always go to court. A trial date can be obtained usually one to two years from the date of filing. The court time does not cost a lot of money. But the lawyers necessary to prepare your case do. And the procedures are complicated so you need the lawyers and it takes time. If you win, you only recover some of your costs. And, the judgment is subject to appeal so you might need your lawyers to fight the same case again in the Court of Appeal. Even if your dispute is small enough for Small Claims Court ($10,000 maximum recovery now, soon to be $25,000), you have to follow the Court's procedures, accept the judge assigned and air your dispute in a public forum.

ADR (mediation and arbitration) provide effective alternatives. If you put the right clauses into your contract you can make sure that the dispute is dealt with effectively, in a way over which you have control. You can include enforceable agreements to arbitrate disputes (or mediate first and arbitrate only if necessary).

Consider the advantages:

flexibility: the procedures may be designed to suit the dispute, rather than follow the "one size fits all" Rules of Court. A mediator assists the parties to negotiate their own solution. An arbitrator is not bound by the Rules of Court, but must allow the parties an equal and fair opportunity to present their cases, and make a decision in accordance with the law governing the dispute.

less expense: a streamlined procedure means lower legal costs. You may agree not to use lawyers.

speed and finality: a streamlined procedure saves time. Unless the parties agree to preserve the option, an arbitrator's award is much less likely to be appealed.

confidentiality: the process is not open to the media or any other third parties for that matter, except by agreement.

choice of decision maker: the parties choose their mediator or arbitrator. It generally makes sense to appoint someone who knows the business or has other relevant expertise. The parties can have an experienced professional appointed by the Centre.

certainty and enforceability: an arbitral award is final and binding, and enforceable as an Order of the Court. Ironically, an award is easier to enforce in another country than a Court Judgment.

relationship: for all of these reasons, mediation and arbitration are less damaging to business relationships than litigation in the Courts. The procedures are less adversarial, and more supportive of a continuing relationship. Because it is quicker the dispute is finished sooner, allowing the parties to get on with business.