Arbitration Is Coming

Bill 38, the new Condominium Act, requires that most disputes be submitted to mediation. Failing settlement, the disagreement must be submitted to binding arbitration.

Essentially, mediation is facilitated negotiation. It is a process in which a neutral person tries to help the parties reach a mutually acceptable resolution. There are different styles of mediation: in the pure facilitative style, the mediator structures the negotiation, maintains the channels of communication, asks open-ended questions, encourages disputants to do the talking, assists parties in drawing out their strengths and recognizing their weaknesses, and helps them identify interests which might be motivating factors underlying the conflict (e.g. emotional issues). Another approach is the evaluative one in which the mediator may offer an opinion about the potential outcome of the case - and to a greater or lesser extent press the parties towards a settlement along those lines. But the decision-making power remains in the control of the disputants; no agreement can be reached without their consent.

The arbitration process is one in which the matter in dispute is referred to a neutral third party who renders a decision on the basis of evidence presented by the parties. The question that immediately comes to mind is whether formal court procedures must be followed: statement of claim and, statement of defence, affidavits of documents, examinations for discovery, pre-trial motions/hearings/conferences - followed by a trial in which all parties and witnesses testify and are subject to cross-examination.

The answer is: absolutely not! The Arbitration Act of Ontario lays down only two requirements: the arbitrator must be impartial; and each party must have a full and fair opportunity to present his or her case. Subject to those requirements, the parties may agree that the procedures and presentation of evidence will take place on an informal basis with minimal technical rules. An agreement between the parties that there will be no appeal to the courts from the decision of the arbitrator can be disregarded only if a party can argue that there was a reasonable apprehension or bias, or that the arbitrator did not have the qualifications agreed to. And the courts can and do enforce decision of an arbitrator.

It has been said that fifty years ago a typical arbitration consisted of nothing more than an expert chosen by the parties who reviewed the dispute and made a quick decision without the need of lengthy submissions and witnesses. Today, the practice has tended unnecessarily to become very legalized, incorporating all the evidential formality and procedural technicalities of court proceedings.

Setting up the arbitration typically involves a preliminary meeting between the parties and their lawyers; decisions are made on the following types of matters: who will be the arbitrator(s); what are the issues in dispute; what evidence will be submitted; what documents, opinions, affidavits, photographs, legal submissions will be accepted without formal proof, (without the author appearing before the arbitrator and being sworn in); will the hearing be private and confidential; who will be the "live" witnesses; will technical experts be required to testify and be cross-examined or can agreement be reached that they provide opinions in writing; should the arbitrator have the authority to appoint experts or special legal counsel; what will be the place, date and length of the hearing, how will the costs be borne. If requested by the parties, the arbitrator may base his or her decision on principles of equity and fairness instead of being bound to adhere to relevant legal principles. Matters on which agreement cannot be reached will be left for the arbitrator to determine.

Following communications with the arbitrator and exchange of documents, the hearing will take place. A day or two may be scheduled; perhaps only a half a day. The parties may even agree that there need not even be a hearing, that the arbitrator can make the decision based on documents submitted! And although it is likely that lawyers will be involved in advising clients, in participating in the planning process, and perhaps in preparation of legal submissions, if the issue in dispute is clear-cut and the hearing not unduly complicated, there may not be any need for the lawyers to attend the hearing.

There are two other dimensions which are worth bearing in mind. The first is that if there are several issues in dispute, some of them may be resolved through the mediation process, leaving only one or two issues to go to arbitration. Secondly, an arbitration hearing can be adjourned in the middle of the hearing if the parties feel that they have reached a point where either through negotiation or a return to mediation, agreement can be reached on the outstanding issues.

Finally, it should be noted that the Act only requires mediation and arbitration in disputes between condo corporation and any of the following four parties: a condo owner; another condo (sharing of services, common elements); a property manager; and the developer. But that does not mean that other disputes not mandated by the statute (for example, disputes with suppliers, contractors, arguments between condo owners) cannot be effectively dealt with through these types of alternative dispute resolution processes.

In summary, the arbitration process can provide informality and efficiency as well as greater potential flexibility. It can be as simplified and expeditious as the parties decide. Undoubtedly the Rules and Regulations to be released as part of the new Condo Act will give some guidelines in some of these areas. But I have no doubt that as with mediation, arbitration procedures will result in significant savings in time and money, and will minimize damage to the continuing relationships between the disputants, relationships which are an integral part of the effective functioning of the condo community. David F. Alexandor Q.C.