Get Control Of The Dispute With Arbitration

When drafting an agreement, parties ought to consider how any resulting disputes are to be resolved. In a previous post, we identified that parties can refer matters to an expert for determination as a form of alternative dispute resolution. In that situation we briefly examined a recent decision rendered by Alberta's Court of Queen's Bench, Applied Industrial Technologies, LP v Sirois, 2018 ABQB 818 to learn how a provision in an agreement allowed for an agreed-upon expert to resolve disputes. Alternatively, parties may prefer to have disputes resolved via arbitration and if they agree to a clause that mandates arbitral proceedings, the Court tends to let that process govern.

There are multiple benefits provided to the parties of an agreement who insert a clause that requires a dispute be resolved by arbitration. By way of example, the parties will ensure that the dispute is resolved by a neutral third party, on issues selected by the parties, using a procedure selected by the parties. Essentially employing arbitral proceedings as a means of resolving a dispute provides more "control" to those parties involved.

In as much as it is valuable for the parties to decide that arbitration is the preferred choice for resolving a potential dispute, it is equally important for the parties to think critically of what process they wish to use for any arbitral proceeding. A clause that simply directs that a dispute shall be resolved by arbitration without more can create challenges when the dispute finally arises and parties have already developed different motivations on what arbitration process would best suit their own interests. Crafting a substantive arbitration clause or even a preliminary arbitration agreement as part of the underlying agreement between the parties, will not only secure control of who will hear the dispute but it will give the process structure, provide greater certainty on how the resolution will be achieved and likely reduce costs and time spent resolving the dispute.

Alberta's Arbitration Act, RSA 2000, c A-43, defines an "arbitration agreement" as "an agreement or part of an agreement by which 2 or more persons agree to submit a matter in dispute to arbitration." The Arbitration Act sets out a default framework within which disputes referred to arbitration may be resolved. While the Arbitration Act provides certain protections cannot be excluded or varied, parties are otherwise afforded great autonomy and ought to capitalize...