Fast Track Alternative to Litigation for the Business Community
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Advantages of International Commercial Arbitration with BCICAC
Domestic Commercial Arbitration Mediation Model Clauses The Process Published Articles on Alternate Dispute Resolution |
Fast Track Alternative to Litigation for the Business Communityby Peter Grove*The business community needs a fast track alternative to litigation Business Week Magazine reported last year that ?Corporate executives think the high cost of civil justice is a drag on U.S. business and the economy. Fully 83% say their decisions are increasingly affected by the fear of lawsuits and a 62% majority say the legal system significantly hampers U.S. competitiveness....An overwhelming 97% favour much more use of alternative methods to resolve disputes??. In BC, there is currently up to a two year wait for a trial date, and it may take a full five to eight years to see a case through to the Court of Appeal. The business community has neither the time, patience nor resources to waste on long, drawn out disputes. Nor does it want its affairs published in the local press. The business section of each Monday?s issue of The Vancouver Sun lists the writs issued during the preceding week. The list represents a huge volume of unproductive energy and effort, let alone expense and frustration, of businesses and individuals in dispute. Such disputes represent, more often that not, the end of business relationships between the parties. Relationships are the core of a business. It is on its relationships that a business will succeed or fail. Good relationships with purchasers, suppliers, contractors, clients and others are essential. Damage to those relationships spells damage to the business. Options to litigation should be considered as part of a company?s policy. The evidence is great that arbitration and mediation alternatives to litigation make good business sense and that the inclusion of arbitration and mediation clauses in their contracts will help to ensure that disputes will be dealt with in a timely and cost effective way. Mediation provides parties with an opportunity to resolve their disputes through negotiation, with the assistance of a mediator. The process is voluntary, flexible, easy to commence and confidential. Most importantly, all discussions during the mediation are ?without prejudice? and cannot be used in court at a later date, should the mediation not succeed. The final product is the agreement of the parties, not a decision imposed by a third party. As a result, it is more likely to be a workable solution. The relationship between the parties is thereby better protected. It may even be enhanced as a result of the process. In an arbitration the parties put their case to a neutral arbitrator or arbitrators. The tribunal is typically made up of one or three people, as the parties may agree. An arbitration can be commenced in a short time frame. It is far more flexible than litigation, staying within the control of the parties. The process is confidential. The extent to which any publicity is granted is entirely within the control of the parties and the arbitrator. The parties are free to choose their own arbitrator . The arbitrator has general jurisdiction over the proceedings, and is not bound by the Rules of Court, to allow the parties to present with equity and fairness their position to the neutral. The arbitrator must decide the dispute in accordance with the law governing the dispute. The award of the arbitrator in British Columbia must be made no later than 60 days after the closure of the arbitration hearings thus avoiding delays. The award of the arbitrator is final and binding and may, under section 29 of the Act, be enforced as an order of the Court. This brings certainty to the proceedings, so often sought by the business community. There is no doubt that litigation is expensive. Not only must lawyers? fees and disbursements be taken into account, but also the demand on management time for prolonged discoveries and review of documents. The litigation process can be lengthy and debilitating from a business viewpoint, pending the final resolve of the dispute which could take, depending on the nature of the dispute, 5 to 8 years through the appeal process. There is generally no appeal from the arbitration decision except for the correction of errors which are referred back to the arbitrator. All of the above factors can aid and assist in the preservation of a healthy and continuing commercial relationship between the parties. The proceedings are normally not as adversarial as those found in court and, if counsel approaches the proceedings with the ?arbitral spirit? as well as the parties themselves, a continuing relationship is the likely outcome. Many in the commercial community are inserting mediation and/or arbitration clauses in their contracts in order to ensure a timely and efficient resolution to disputes. The Canadian Construction Documents Committee (CCDC) includes negotiation, mediation and arbitration in their stipulated price contracts. The stipulated price contract documents for The Province of British Columbia contain similar provisions, arbitrations to be pursuant the Rules of Procedure of the British Columbia International Commercial Arbitration Centre (BCICAC). The Vancouver Stock Exchange, together with the Investment Dealers Association of Canada, offer a mediation and arbitration programme to investor clients of participating brokerages who have a dispute with their broker. The programme is administered by the BCICAC and is available for all disputes of $100,000 or less. Parties with disputes in excess of this amount may still take advantage of the service, if they wish. Vancouver Shipyards Co. Ltd. together with Vancouver Drydock Co. and Victoria Shipyards all use arbitration clauses in their contracts as a matter of course. The Hongkong Bank of Canada, together with all other Canadian Chartered Banks, provides a dispute resolution process for its clients in the event that they are dissatisfied with the services provided. The process invites clients to contact senior executives with their concerns. If they do not receive the satisfaction they seek, a mediation alternative is offered. As a result of the widely publicized litigation in Mississippi, just a couple of years ago, the Loewen Group Inc. includes arbitration clauses in all its contracts, as a matter of course. The Insurance Corporation of British Columbia encourages clients to seek resolution of conflicts by way of mediation and arbitration. Some years ago Motorola, Inc. developed a sophisticated ADR policy. As a result of that policy it estimates that it has saved approximately 25% of its budgeted litigation costs which run in the tens of millions of dollars. The Vancouver Maritime Arbitration Association has recently designed an expedited arbitration process for insurers and insureds in the marine industry, for claims of up to $50,000. This programme is administered by the BCICAC. ADR clauses in their simplest form specify that, in the event of a dispute, the parties to the agreement will pursue mediation and/or arbitration in order to resolve their differences. However, in order to ensure the resolution process runs smoothly, it is recommended that a more substantive clause be included. Clauses are often restricted to mediation and/or arbitration. The following is a model for a clause which takes a three step approach namely negotiation, followed by mediation if the negotiation is unsuccessful and, finally, binding arbitration. ADR Model Clause Encompassing Negotiation, Mediation and Binding Arbitration Amicable Negotiation The parties agree that, both during and after the performance of their responsibilities under this Agreement, each of them shall make bona fide efforts to resolve any disputes arising between them by amicable negotiations and provide frank, candid and timely disclosure of all relevant facts, information and documents to facilitate those negotiations. Efficient Process The parties further agree to use their best efforts to conduct any dispute resolution procedures herein as efficiently and cost effectively as possible. Mediation The parties agree to attempt to resolve all disputes arising out of or in connection with this contract, or in respect of any legal relationship associated with it or from it, by mediated negotiation with the assistance of a neutral person appointed by the British Columbia International Commercial Arbitration Centre administered under its Commercial Mediation Rules. Arbitration If the dispute cannot be settled within 30 days after the mediator has been appointed, or such other period agreed to in writing by the parties, the dispute shall be referred to and finally resolved by arbitration administered by the British Columbia International Commercial Arbitration Centre, pursuant to its Rules. In the absence of any written agreement otherwise, the place of arbitration shall be Vancouver, British Columbia. It should be noted that the Commercial Arbitration Act specifies that unless the parties to an arbitration otherwise agree, the Rules of BCICAC will apply. The BCICAC administers the arbitration by providing:
* Peter Grove is a chartered accountant, certified mediator and Past Executive Director of the British Columbia International Commercial Arbitration Centre |