CASUAL LEGAL: To Arbitrate or Not to Arbitrate, that is an Important Question

To Arbitrate or Not to Arbitrate, that is an Important Question

By Mikkel Arnston

Reynolds Mirth Richards Farmer LLP

AMSC Casual Legal Service Provider

There are practical reasons one may elect to pursue Alternative Dispute Resolution (ADR) such as arbitration. These may include time, privacy, control over the process and cost.  In some circumstances, there is an even more important consideration.

Mandatory arbitration clauses or a mandatory dispute resolution process is not uncommon in municipal contracts. Predetermining how disputes will be resolved between parties to a contract can be an important part of any contract but to get the full benefit and utility of this approach, one must be aware of the contractual terms in play. 

A truly mandatory arbitration clause can be used to foreclose recourse to the courts, unless both parties agree otherwise. This can be particularly important where a party to such a contract proceeds with litigation. When this happens, the other party can decide to move forward with the court process instead of arbitration, or to ask the court to force the matter to arbitration as required by the contract.

Mandatory arbitration clauses can set out timelines for steps leading up to the arbitration itself. These contractual deadlines are important for each party. They provide certainty in the process and a mechanism for the parties to follow to resolve differences. Missing these timelines can have serious consequences including, in some situations, not being able to bring the claim in the future. These preceding steps can include giving notices, responding to notices, participating in mediation, and submitting candidates for the arbiter.

In addition to the contractual deadlines, there are also statutory deadlines for arbitration. Just like filing a lawsuit, commencing arbitration must be done within the limitation period applicable to the claim being made. Even if a party files a lawsuit, if the contract requires arbitration, arbitration must be commenced within the limitation period.

Choosing whether or not to arbitrate can have very practical impacts on the process involved in resolving the dispute. This choice can be made in advance by agreeing in a contract that all disputes will be resolved by arbitration. When a contract mandates a dispute resolution process like arbitration it may mean that no other options are available.  Reviewing the contract and understanding its terms, including any mandatory arbitration provision, is important to successful completion of a contract but also being prepared for any disputes that may arise.

To access AMSC’s Casual Legal Helpline, AUMA members can call toll-free to 1-800-661-7673 or email casuallegal [at] amsc.ca (casuallegal[at]amsc[dot]ca) and reach the municipal legal experts at Reynolds Mirth Richards and Farmer LLP.  For more information on the Casual Legal Service, please contact Will Burtenshaw, Senior Director, Risk & Claims, at 780-431-4525, or toll-free at 310-AUMA (2862) or via email at wburtenshaw [at] auma.ca (wburtenshaw[at]auma[dot]ca).  Any Regular or Associate member of the AUMA can access the Casual Legal Service.

DISCLAIMER: This article is meant to provide information only and is not intended to provide legal advice. You should seek the advice of legal counsel to address your specific set of circumstances. Although every effort has been made to provide current and accurate information, changes to the law may cause the information in this article to be outdated.