Conflict in commercial relationships happen, and the mechanisms chosen to handle these disputes should be given a sufficient amount of thought and planning. All too often, parties turn to litigation to resolve their legal disputes before considering other dispute resolution processes. One process that has become increasingly visible and relied upon as an effective alternative to pursuing litigation is arbitration.
What is Arbitration?
Put simply, arbitration is a forum where two or more parties voluntarily elect to have all present and future disputes resolved by an unbiased third-party (the arbitrator) outside the confines of the courtroom. The commercial arbitration agreement may contain particularities on the choice of arbitrator (typically specialized in the field of the dispute), the choice of process, and the forum in which the arbitration will be carried out.
Currently, British Columbia has two statutes relating to arbitral proceedings:
- the Arbitration Act, R.S.B.C. 1996, c. 55 (formerly the Commercial Arbitration Act)
- the International Commercial Arbitration Act, R.S.B.C. 1996, c. 233 (ICAA).
For domestic proceedings, the Arbitration Act is the governing statute for arbitrations in British Columbia. The Arbitration Act applies where parties agree to arbitration by means of a written or verbal agreement or where a statute refers to arbitration. This applies not only to contracts containing arbitration clauses, but also situations where parties voluntarily agree to submit to arbitration.
Is Arbitration Right for Your Commercial Agreement?
The dispute resolution process that best suits a particular case can only be determined following a detailed analysis of the parties interests and the dispute itself. There are, however, advantages that arbitration offers that litigation and other dispute resolution processes do not.
Some of these advantages to arbitration include:
Time is of the essence when it comes to resolving commercial disputes and arbitration provides the parties the necessary control to determine the timeframe, allowing them to bypass delays inherent in litigation.
The cost of arbitration has risen as it has gained notoriety, however, resolving a commercial legal dispute through arbitration is often still less costly than proceeding through litigation.
Unlike litigation, arbitration proceedings are generally held in private settings and the terms of the final resolution are held confidential.
- Flexibility and Control
Arbitration offers the parties an opportunity to avoid some of the rigours of the adversarial process of litigation by granting the parties the flexibility to customise their own resolution process that caters to their needs and schedules.
Being aware of the potential drawbacks of arbitration for your dispute will help you make an informed decision about whether to enter or remain in a consumer transaction that mandates it or whether to choose it as a resolution technique if a dispute arises. The lawyers at Sodagar & Co., will use their extensive experience and knowledge to assist you in determining whether choosing arbitration as your dispute resolution process will help achieve your desired results.
* On March 5, 2020, the B.C. legislature passed Bill 7 into law. The bill replaces the Arbitration Act, RSBC 1996, c 55 (the “Old Act”) with a new Arbitration Act (the “New Act”). The New Act has yet to be brought into force. A comprehensive overview of changes made by the New Act will be provided shortly.