An arbitration is a private and confidential dispute resolution process where a neutral decision maker, called an arbitrator, makes a binding decision regarding your dispute. A mediation is a voluntary and confidential process with a neutral third-party called a mediator.
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Arbitration and Mediation
Cunningham & Co. assists entrepreneurs and small businesses by representing your interests in a mediation or an arbitration. We can also represent your interests by initiating an arbitration for a dispute.
What is an Arbitration or Mediation Clause?
In consumer contracts and commercial contracts, arbitration and mediation clauses are becoming more and more common.
On one hand, you may be drafting a contract for your business and wondering if including an arbitration or mediation clause will be beneficial. On the other hand, you may have reviewed a contract that you signed and in which the other party breached, and found out there was an arbitration or mediation clause.
An arbitration clause is a contract term which requires the parties to resolve dispute through arbitration rather than the court system. You may see a term in your contract with the following language:
- “Any dispute, controversy, or claim arising out of or relating to this Agreement, including the breach, termination, or validity thereof, shall be resolved by binding arbitration…”
- “You agree that any disputes or claims arising out of or relating to your use of the Service be resolved exclusively through final and binding arbitration, rather than in court…”
- “The parties agree that any dispute or disagreement arising from this Agreement shall be resolved by final and binding arbitration…”
An arbitration clause is often binding, which means you may be prevented from filing a claim in the courts. However, you may want to speak to a lawyer to determine if the arbitration clause can be avoided or not.
A mediation clause is similar. It is a contract term which may require the parties to resolve the dispute through mediation first, before going to the courts, or before going to arbitration.
What is an Arbitration?
An arbitration is a private and confidential dispute resolution process where a neutral decision maker, called an arbitrator, makes a binding decision regarding your dispute. Binding means legally enforceable. An example of a binding decision is a damages award which entitles Party A to $300,000 in damages for a contract breach.
What is a Mediation?
A mediation is a voluntary and confidential process with a neutral third-party called a mediator. A mediator does not act for either side but tries to facilitate negotiations between the disputing parties. If a mediation fails, the parties can pursue arbitration or court proceedings, depending on the underlying contract.
What to do if your contract has an arbitration clause or mediation clause when a dispute arises
If you find yourself involved in a dispute with the party you entered into a contract with, it is important to:
Review the Contract
Review the contract and determine if there is an arbitration or mediation clause. Depending on how it is drafted, you may not be able to file in the courts.
Determine how to proceed with initiating an arbitration or mediation
Again, depending on how arbitration or mediation term was drafted, you may have to follow specific mandatory procedures to begin an arbitration or mediation promptly.
Review and mark down timelines
Disputes are subject to limitation periods, which means there is an expiry date to when you can sue. Under the Limitation Act, SBC 2012, c. 13, the basic limitation period must not be commenced more than 2 years after the day on which the claim is discovered. You may want to discuss with a lawyer if the limitation period for your matter has expired, as the period is calculated depending on the exact circumstances of your case.
Seek legal advice early
A lawyer can assess your position, outline your legal options, and help you avoid missteps that might weaken your case, including in communication with the other side.
Remedies Available in Mediation or Arbitration
Once you have determined that there is an arbitration or mediation clause in your contract, you will want to follow any of the mandatory procedures required by the clause.
A mediation can result in a binding settlement – which means the parties have negotiated and mutually agreed to a set of terms to resolve the dispute entirely. An arbitration can result in a binding award, which will entitle one party to monetary damages from the other side. A binding award is similar to a court judgment.
At the end of the day, arbitration or mediation may be a more expedient option than court proceedings, which can sometimes continue for several years. It is important to discuss your specific situation with a lawyer who can help you determine the appropriate strategy.
When to Hire a Lawyer
You may want to hire a lawyer to represent your interests in a mediation or an arbitration. Likewise, a lawyer can represent your interests in initiating an arbitration for a dispute or defending a claim. Rules governing an arbitration can sometimes be confusing, and a legal expert can help you navigate the arbitration process.
If you are drafting a contract, you may want a lawyer to review your terms and conditions to ensure they are legally enforceable.
At Cunningham & Co., we assist clients with assessing the parameters of your contract, improving the enforceability of your contract, and advising you on appropriate terms and conditions to include. If you are facing a dispute, we can help you determine the appropriate next steps, evaluate potential risks to your legal entitlements, and advocate or defend on your behalf. We help negotiate a possible settlement, draft or respond to arbitration commencement notices and represent clients in a mediation or arbitration.
