ARBITRATION and MEDIATION
An innovative way to resolve disputes...
None of us likes the idea of a dispute over an investment. The fact is, however, that occasionally disputes do arise. Resolving disputes is a priority for both brokers and investors.
Business is about relationships. The relationships developed between brokers and clients are essential to the successful provision of investment advice. When disputes occur, as they will from time to time, it is important that they be dealt with effectively and in a manner which will maintain good relationships, if at all possible. We believe that the options provided under this program allow disputes to be resolved in such a manner to the benefit of all involved.
For disputes that cannot be resolved through regular administrative channels, the Canadian securities industry has launched an innovative program to provide ways of resolving these disputes through either arbitration or mediation. The program is available to all clients of participating securities firms in British Columbia.
If there is a dispute...
The best time to resolve any dispute is at the earliest possible moment. Talk to your broker if there is anything you do not understand about the way in which your account is handled. If the person you normally deal with cannot provide a satisfactory answer to your questions, then raise the matter with a more senior person in the organization, such as the branch or sales manager and put your concern in writing. Additionally, every firm has a compliance officer who may also be of assistance.
If you still disagree?
If you are unsatisfied with the outcome of your communications with the firm, you now have the option of using two other ways to resolve the matter. These are mediation and arbitration.
Under this program, you can proceed to arbitration if the dispute is for a sum of less than $100,000. Participating brokerage firms have agreed with industry regulators that they will, at your choice, submit disputes at this level to arbitration. Alternatively you may propose mediation.
What is mediation?
Mediation offers a business solution, not necessarily a legal solution. It is an entirely voluntary, no-risk process in which a neutral person helps the parties involved in a dispute negotiate their own settlement. The mediator does not make a judgment, but helps parties to understand and identify problems and areas of disagreement which can lead to solutions. Mediation is fast, flexible, inexpensive and above all effective. Mediation is useful when communication and negotiations between parties have broken down. It is completely confidential and far less confrontational than formal legal cases.
What is arbitration?
Arbitration is a confidential method of resolving a dispute by an impartial person who either has relevant legal qualifications or experience or who is knowledgeable about the issues under dispute. This person, known as an "arbitrator," is always independent. Disputes between an investor and a brokerage firm may involve complex issues which, in the interest of fairness, require a prompt resolution. Arbitration is an inexpensive alternative to pursuing the matter in court.
Arbitration has its own set of straightforward rules. Most important, perhaps, is that an arbitrator"s decision is binding, and both parties sign an agreement to that effect at the start of the process.
It should be understood, too, that in choosing arbitration, an individual generally gives up the right to pursue the matter further through the courts. Arbitrations are administered by the British Columbia International Commercial Arbitration Centre (BCICAC), a neutral agency which provides administrative services-including the selection and appointment of qualified arbitrators-to local and international arbitration cases. The Centre will ensure that all arbitrators appointed under the program are independent of either Investment Dealers Association of Canada or Vancouver Stock Exchange Member Firms.
How does the process work?
If you wish to enter into either mediation or arbitration, your dispute must meet the following requirements:
- For mediation, the dispute may be for any amount, but both parties must agree to mediate.
- For arbitration the claim will not normally exceed $100,000 (excluding costs) except with the agreement of both parties.
- Attempts must have been made to resolve the dispute with the brokerage firm. If your dispute meets these criteria, here is how you proceed:
- Prepare a summary of the dispute, including the amount in question and details of your attempt to resolve the matter with the broker.
- Send the material to:
British Columbia International
Commercial Arbitration Centre
500-1311 Howe Street
Vancouver, B.C. V6E 2P3
Tel: 684-2821 Fax:736-9233 What happens next?
The Arbitration Centre reviews your documentation and determines if your claim warrants arbitration or is appropriate for mediation.
Mediation
The objective is to hold the first meeting within 30 days of the parties agreeing to mediate. At the hearing each party makes a brief presentation in support of their position. A party may be represented by counsel. The mediator will work with the parties to develop an agreement between the two, which then can be reduced to a signed, written document. The mediator does not make a decision but may make a recommendation if so requested by both parties. If the mediation does not result in an agreement, the client may request an arbitration, as described below. Unless requested by both parties, the arbitrator will not be the same person as the mediator.
Arbitration
When you apply for arbitration, an arbitrator is usually appointed within three weeks of the centre receiving your statement and documentation. The objective is to hold a hearing within 30 days of the arbitrator"s appointment.
At the arbitration hearing, both parties present their positions and evidence. Many individuals find it helpful to consult with a lawyer and you may choose to be represented at the hearing. Following the hearing, the arbitrator will deliver a decision in writing within 30 days. In addition to other awards, the arbitrator may award costs of the process to one of the parties.
Remember, the arbitrator"s decisions can not normally be appealed.
How much does this cost?
The administrative fee for each process is $350 or $450 (depending on province). Other costs will be the fees of the mediator/arbitrator (charged hourly) and any legal costs you may incur.
Can this process be varied?
A broker and client may agree to different conditions than the ones outlined here. For example, claims greater than $100,000 may qualify for arbitration if both parties agree the procedure is an appropriate way to resolve the dispute.
If you have questions...
If you would like further information on the arbitration or mediation options, contact the manager at your broker"s office or the BCICAC in Vancouver at (604) 684-2821. More importantly, the best approach is to avoid disputes. Contact your broker immediately if you have questions or concerns about your account.
Please note that the BCICAC is not able to provide legal advice or information on regulation of the securities industry. For regulatory information you may wish to contact the Investment Dealers Association or the Securities Commission in your province.
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