The Arbitration Act (1995) (Canada) (the “Act”) governs arbitration law in Canada. In general, arbitration refers to negotiation of a dispute between two parties without going to court. Arbitration is a more amicable, less time consuming and cheaper manner of settling disputes, but it is no less complex. Nevertheless, arbitration allows the two parties to have the benefit of a professional to review their submission and make a decision for them. Arbitration often is the preferred method of dispute resolution in such fields as construction, real estate, business, and marketing.
This article provides an explanation of arbitration, the process of arbitration, and other details that need to be considered.
Arbitration is one of several kinds of Alternative Dispute Resolution. Arbitration refers to the submission of a dispute to an unbiased third person designated by the disputing parties, who agree in advance to comply with the decision to be issued after a hearing at which both parties have an opportunity to be heard.
Benefits of Arbitration
The benefits of arbitration as opposed to court hearing include:
- more focus on the issue and less on the disputing parties;
- arbitration hearings are less time-consuming;
- the proceedings and the decisions are private;
- the cost of arbitration is less then that of litigation; and
- the parties jointly select an arbitrator to hear the dispute.
The Arbitration Agreement
The arbitration agreements is one by which two or more disputing parties agree to submit to arbitration a dispute that has arisen or may arise between them. In case any dispute arises between the parties, they should resolve the disputes according to the arbitration agreement.
How to Determine Who Should Be the Arbitrator?
If the arbitration agreement does not specify the number of arbitrators, then there will be only one arbitrator. Being able to choose an arbitrator is one of the advantages of the process, in comparison with litigation. When choosing an arbitrator the disputing parties should agree on who will be the most suitable arbitrator for their dispute. Furthermore, choosing an arbitrator will depend on the subject matter of the dispute (ex. construction may be different from real estate). Potential arbitrators are usually interviewed by both parties in order to assess the suitability of a particular arbitrator. Many arbitrators are qualified as lawyers; however, it is not necessary to have a legal qualification to be a successful arbitrator.
The disputing parties must agree on the venue for the arbitration hearing. During the arbitration hearing each party should be treated fairly and be given the opportunity to present their case and respond to the other party’s case. During the arbitration hearing all the evidence is presented together with other necessary documents. Once a hearing is held on the issue, a written decision with explanations is given within the time agreed by the parties and the arbitrator.
Importantly, the arbitrator can only arbitrate regarding the issues outlined in the Arbitration Agreement.
Can You Appeal an Arbitrator’s Decision?
The arbitrator’s decision may be appealed. However, arbitration appeals are usually based on a question of law or procedure, and not the arbitration decision itself.
Arbitrators work in the private sector and set their own fees. Arbitration fees are usually agreed on by the disputing parties before the process begins. Often times the cost of arbitration is divided between the disputants. Besides the arbitrator’s fees, the parties may also pay for renting a venue for the arbitration hearing.
One of the benefits of arbitration is that the process is significantly cheaper than a court hearing.
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