Dispute Resolution Guide

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Arbitration

Dispute Resolution Series

Practice Module 5

Produced by the Dispute Resolution Services

Department of Justice, Canada

I. What is Arbitration?

Arbitration is perhaps the most popular and widely known dispute resolution process. Like litigation, arbitration utilizes an adversarial approach that requires a neutral party to render a decision.

Historically, arbitration has been used most widely in commercial disputes as a private alternative to litigation. Arbitration developed as a binding, adjudicative process. While these features closely parallel those of traditional court proceedings, there are important distinctions between the two processes which will be discussed further in this document.

In Canada, arbitration is regulated by statute. Every province and territory has its own separate arbitration legislation [1]. At the federal level, commercial arbitration is governed by the Commercial Arbitration Act [2] (CAA), which came into force on August 10, 1986. The CAA is a short statute which serves principally to introduce the Commercial Arbitration Code ("the Code"), which is a Schedule to the CAA and which provides a basic procedural framework for commercial arbitration. The Code applies to all commercial arbitrations where at least one of the parties is a federal department or Crown corporation or in relation to admiralty or maritime law issues where the place of arbitration is Canada. [3] The Code is discussed in further detail throughout this module.

While arbitration was by its very nature developed as a binding process, it can also be non-binding. [4] It is generally voluntary [5] and parties normally can only be involved in an arbitration if they have agreed to be bound by that process [6]. Note, however, that once the federal crown has agreed to submit a dispute to arbitration, the CAA and the Code allow only binding arbitration and allow the parties to derogate from the procedural provisions of the Code only where expressly provided. [7]

Arbitration agreements can take many forms. The Code defines an arbitration agreement to include an arbitration clause in a contract or a separate agreement. It requires the agreement to be in writing [8].

Unlike litigation, arbitration generally allows the parties to design most aspects of the resolution process to suit their needs and the nature of the dispute. Further, the parties to an arbitration are able to choose the arbitrator, an option which is not available in the traditional court system. The Code is drafted in a way that offers a significant level of control to be maintained by the parties, for many of the procedural provisions contained in it are not mandatory, but rather are able to be displaced by agreement of the parties. Further, the Code provides only a framework for arbitration, lacking many of the procedural details that parties to an arbitration would want to clarify in an arbitration agreement.

II. Characteristics of Arbitration

Arbitration is:

Voluntary: Parties must expressly agree to arbitrate in writing, or fall within the ambit of legislation that mandates arbitration in a given situation. If the parties have agreed to arbitrate, the court, on the motion of one of the parties to the agreement, will generally require the parties to submit the dispute to arbitration, unless it is found that the arbitration agreement is null and void, inoperative or incapable of being performed. [9]

Controlled: The parties and their counsel are able to control procedural aspects of the process, including the choice of neutral, timing and location of the hearing, as well as who, other than the parties themselves, may be present.

Private: An arbitration is usually conducted in private.

Informal: Subject to the CAA, there are no prescribed procedural or evidentiary rules governing an arbitration. The rules of procedure are established by the adoption of existing rules [10], by a negotiated arbitration agreement between the parties, or by the parties and the arbitrator.

Adjudicative: As in litigation, once a case has been presented by each side, the arbitrator issues a decision. Article 31 of the Code requires that an arbitral award shall be in writing, and that reasons be provided unless the parties have agreed that no reasons are required.

Binding/Non-Binding/: All federal arbitration under the Commercial Arbitration Act is binding. Judicial review of an arbitral award is available only on limited grounds such as incapacity of a party; invalidity of an arbitration agreement; or that the award is in violation of law or public policy. [11]

Confidential: Arbitration is generally confidential, if the parties so elect. In the federal context, the restrictions on divulging information and the requirement to disclose information pursuant to the Privacy Act and the Access to Information Act must be complied with. For further information about the application of these Acts, see "Confidentiality: Access to Information Act and Privacy Act " in the Dispute Resolution Reference Guide.

Adversarial: While the arbitration process is based on the adversarial style of the litigation model, the demeanour and nature of the hearing are determined by the parties, their counsel and the arbitrator.

Flexible: The parties have discretion in choosing an arbitrator and the procedure to be followed in resolving the dispute.

III. Why use Arbitration?

The dispute resolution process that best suits a particular case can only be determined upon an analysis of the dispute itself and the needs and interests of the parties. What does arbitration provide that litigation and the other dispute resolution processes do not?

A. Speed

One of the main advantages of arbitration is its capacity to have disputes resolved quickly. Even though the majority of court actions settle before trial, this often occurs only after lengthy and expensive trial preparation, including examinations for discovery. Arbitration may provide the opportunity to side-step prescribed procedural requirements of litigation. The parties also determine the timeframe for the arbitration, allowing them to bypass delays inherent in litigation.

B. Choice of the neutral

Arbitration provides the disputants with the opportunity to choose the individual(s) [12] who will decide the issues in question. This freedom allows the parties to customize the resolution process to suit these issues by, for example, choosing a neutral with expertise in the subject matter of the dispute.

C. Technical issues

Many of the disputes involving the federal government are technical in nature. Resolution of these disputes is often best served by special knowledge or expertise on the part of the decision maker. Very often, judges do not have such expertise, and they must rely on expert witness evidence. Arbitration gives the parties an opportunity to secure the services of an individual experienced in a technical area, or one who has knowledge of the commercial norms relevant to a particular business field. It is for this reason that disputes in the construction industry and maritime law are often resolved through arbitration.

D. Confidentiality

There are cases which, by their very nature, require a confidential outcome. This may occur because the dispute involves privileged information or issues of particular sensitivity. In these cases, subject to the Access to Information Act and the Privacy Act, inclusion of a confidentiality provision in an arbitration agreement may provide the required protection. [13] With respect to sensitive government information, article 27 of the Code read in conjunction with sections 36 to 39 Canada Evidence Act [14] may provide protection against disclosure. For further discussion on this subject, please refer to the Department of Justice Civil Litigation Deskbook.

IV. Advantages of Arbitration

• the parties can select the arbitrator(s);
• arbitrator(s) can be selected on the basis of experience relevant to the issues;
• the proceedings can be held in private and confidentiality may be preserved, subject to the Access to Information Act and Privacy Act;
• the rules of procedure can be as formal or informal as the parties and their counsel determine, subject to any statutory requirements, such as those imposed by the CAA;
• the cost of the proceedings can often be more easily contained;
• due to increased control of the process there can be a greater opportunity for settlement; and
• arbitral awards are binding under the Commercial Arbitration Act.

V. Disadvantages of Arbitration

• the success of arbitration is largely dependent on the experience of the arbitrator(s);
• arbitral awards are not of legal precedential value;
• recourse against an award is very limited;
• may not suit disputes involving matters of public law, such as constitutional issues;
• time and cost can be significantly affected by a lack of co-operation of the parties or poor process design, or by lack of availability of an arbitrator(s)

VI. The Application of Arbitration in a Federal Government Context

As stated above, the CAA applies the Code to commercial arbitration involving the federal government. The Code is based on the United Nations Commission on International Trade Law (UNCITRAL) Model Law which was adopted by the UN in 1985. It has now been adopted by over 60 countries around the world. The provisions of the Code apply to commercial arbitration proceedings which take place in Canada where at least one of the parties to the arbitration is a department or Crown corporation, or in relation to maritime or admiralty matters.

The Code applies to "commercial" arbitration. While that term is not defined in either the CAA or the Code, the Report of the 18th Session of United Nations Commission on International Trade Law, which is expressly referred to in the CAA as one of the documents to which recourse may be had in interpreting the Code, [15] provides that the term "commercial" should be given "a wide interpretation so as to cover matters arising from all relationships of a commercial nature." Examples provided include any trade transaction for the supply or exchange of goods; distribution agreement; leasing; construction of works; consulting; engineering; licensing; and carriage of goods or passengers. In non-commercial situations, the Code will not automatically apply but can be adopted by reference, in whole or in part. This allows the parties to avoid the often time-consuming task of having to negotiate all the details of an arbitration agreement that are already contained in the Code.

As stated above, most of the Code's procedural provisions apply unless the parties otherwise agree. In all cases, counsel should carefully review the CAA and the Code to determine which of its provisions will apply in the absence of agreement among the parties to an arbitration agreement and to further determine those matters of procedure that the Code does not address and which the parties want to include in an arbitration agreement.

There are also federal government arbitration policies with which counsel must be familiar. Treasury Board policy dated January 28, 1993, explicitly contemplates the use of ADR in federal contract disputes. The policy now allows all questions of fact, and certain questions of law, to be submitted to arbitration. Questions of public law cannot be submitted to arbitration without the formal concurrence of the Assistant Deputy Minister, Business and Regulatory Law Portfolio. This and other Treasury Board policies can be found in a separate section of the DR Reference Guide.

VII. Some Questions and Concerns About the use of Arbitration

A. Should arbitration clauses be incorporated into government contracts?

The resolution process that will likely be the most effective for a particular dispute will be determined through the analysis of many factors, including: the nature of the issues, willingness of the parties to settle, precedential value of a final disposition and public interest concerns. It is therefore difficult to properly predetermine whether an arbitration clause should be included in a given contract. Each case must be assessed on its merits.

The preferred approach is to build flexibility into contracts. To accomplish this, the multi-step approach is one approach that has been developed [16]. This approach requires the disputants to try several consensual, collaborative processes (such as negotiation and mediation) before arbitration.

B. What is the role of counsel in an arbitration?

The possible loss of control of the process is always an issue for counsel when considering the use of any dispute resolution process. The litigation process and the rules governing it are familiar to counsel. The same cannot generally be said for arbitration since fewer counsel have had arbitration experience.

In practice, these concerns may be effectively addressed through the selection of arbitrators and counsel who are trained, experienced and knowledgeable about the types of issues and procedures in question. Counsel can represent his/her client during the arbitration proceedings should the client so instruct. Counsel also have an important role to play in providing advice in respect of any legal issues that arise during the course of or following an arbitration, including the drafting or review of a settlement agreement.

Another critical issue is process design. Only through the careful design of the process, can both counsel and their client ensure that the necessary procedural safeguards are included in a particular arbitration which will serve the interests of all parties.

VIII. The Arbitration Process

Arbitration occurs in one of three situations: where an arbitration agreement exists in a contract out of which a particular dispute arises; where disputing parties agree to arbitrate a dispute even though no prior arbitration agreement exists; and where a statute imposes an obligation to arbitrate.

There are currently no standard-form contract agreements which require the federal government to submit to arbitration. Increasingly, however, the federal government is entering into agreements which oblige it to submit to arbitration. Examples include the various settlement agreements [17] that have been executed by the federal government and First Nations. These agreements generally contain resolution process options. Arbitration is often one of them.

Arbitration clauses found in contracts often lack sufficient procedural detail. This is due to the practical reality that arbitration agreements are very often negotiated as an "add on" at the conclusion of contract negotiations, and further because it is often impossible to foresee the necessary procedural details required for a particular arbitration until the dispute arises. Once it has been decided that the parties will be proceeding by arbitration and a notice of intent to arbitrate has been served [18], it may be necessary for counsel to attempt to negotiate additional terms to supplement any original arbitration agreement. The amendments should normally cover the basic procedural steps while leaving the parties sufficient flexibility to make the process work for them. To assist in this endeavour, reference should be made to the checklist and draft arbitration agreement attached to this module as Schedules.

There are essentially two strategies available when setting up an arbitration. The first involves the negotiation of an agreement at the time of contracting that includes most of the procedural detail required for the arbitration. The second leaves much of the procedural detail to the discretion of the arbitrator and the parties once the dispute has arisen. [19]

A. Selecting an Arbitrator or Arbitral Panel

The first actual step in the arbitration process is choosing an arbitrator(s), one of the most important aspects of the arbitration process. Serious thought and effort must be put into this exercise to ensure that the arbitrator is neutral and unbiased. The choice will depend on a number of factors, including: the legal and factual basis of the dispute; the technical expertise required; the location of the parties; the experience of the arbitrator(s). Decisions based on these factors can only be made by the parties and their counsel on a case-by-case basis.

Article 11 of the Code provides that the parties are free to agree on a procedure of appointing an arbitrator(s). Failing such agreement, in an arbitration with three arbitrators, each party shall appoint one arbitrator and the two arbitrators shall appoint the third, failing which a court appointment made be requested. In an arbitration with a single arbitrator, if the parties cannot agree on a choice, the appointment will be made by a court upon the request of a party. Parties may also agree to place the choice of arbitrator(s) in the hands of a designated third party.

The active use of arbitration is a relatively recent phenomenon in Canada [20]. The ADR Institute in Toronto, the British Columbia International Commercial Arbitration Centre in Vancouver and the Quebec National and International Commercial Arbitration Centre, maintain rosters of arbitrators with qualifications [21] for domestic and international arbitrations. The Arbitration and Mediation Institute of Canada Inc. and its provincial affiliates [22] maintain a list of member arbitrators who have attained the requisite qualification standards prescribed by the organization. [23] Rosters are also maintained by various private arbitration organizations and are generally available for a fee. The standards for inclusion in the roster differ with each organization.

There are currently no uniform national arbitration qualification standards in Canada. Before choosing an arbitrator, counsel should, along with their clients, personally investigate the expertise and competency of likely candidates before their names are put forward for appointment. A few attributes desirable in an arbitrator are as follows:

• understands the subject matter of the dispute;
• thorough knowledge of the arbitration process;
• impartial, fair and free from bias;
• able to put the disputants at ease;
• able to communicate effectively, both verbally and in writing. [24]

B. Preparatory Conference

Once the arbitrator has been chosen, the parties to the arbitration and the arbitrator normally agree to hold a preparatory conference. This meeting provides the participants with an opportunity to address and negotiate procedural details which may remain outstanding. It is at this stage that most decisions are made regarding the mechanics of the process itself [25]. Such conferences need not be conducted in person and are often conducted by telephone. Reference may be made to the Guidelines for Preparatory Conferences in Arbitral Proceedings, which has recently been ratified by UNCITRAL. Preparatory conferences are also important as they provide the parties with a valuable opportunity to discuss settlement of the dispute.

C. Exchange of Exhibits and Statements of Position

The efficient exchange of information is essential to all dispute resolution processes and inefficiency in this regard is responsible for much of the delay that occurs in any resolution process. Arbitration provides the opportunity for the parties to limit the potentially obstructive aspects of the litigation process. This can be accomplished through, for example, the imposition of mutually acceptable time limits for the appropriate exchange of information. The Code is silent with respect to time limits in this regard.

D. Conduct of the Arbitration Hearing

Articles 18 to 27 of the Code give some guidance to counsel as to how an arbitration hearing is to be conducted. Article 18 establishes the tenor of the hearings by stating that each party "shall be treated with equality and each party shall be given a full opportunity of presenting his case".

When negotiating the terms of the arbitration agreement, the parties will normally have determined whether or not they wish to have oral hearings. Failing consensus, the Code provides that the arbitrator will decide [26]. The conduct of the hearings is to be completely accessible to all parties to the arbitration and each participant is to be given sufficient notice of any meeting of the tribunal to inspect items that are to be submitted as evidence [27].

Failure to file a statement of claim in accordance with Article 23(1) can result, unless the parties agree otherwise, in the termination of the proceedings [28]. Unless the parties agree otherwise, should a respondent not transmit a statement of defence in accordance with Article 23(1), the proceedings will continue without the failure amounting to an admission of the facts set out in the statement of claim; should a party not appear or produce evidence, the tribunal has the power to continue with the proceedings and make an award on the basis of the evidence before it [29].

E. Awards

The Code provides that an award of an arbitral panel shall be in writing and shall be signed by the arbitrator or arbitrators [30]. The law that governs the dispute is the law chosen by the parties in the arbitration agreement [31]. The award shall provide written reasons, unless the parties agree otherwise [32]. The arbitrator can, once an award has been given, correct a typographical, clerical or computation error on its own initiative, or if so requested by a party, within 30 days of the award [33].

The federal government [34] and all provinces and territories each have implemented the 1985 United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards. Arbitral awards made in any state [35] which has adopted the Convention will be recognized as binding and enforceable in another adopting state upon appropriate application to a court of competent jurisdiction [36].

Article 35 of the Commercial Arbitration Code provides that:

An arbitral award, irrespective of the country in which it was made, shall be recognized as binding and, upon application in writing to the competent court, shall be enforced subject to the provisions of this article and of article 36."

Article 36 provides standard grounds for refusal to enforce based on incapacity of a party, excess of jurisdiction, insufficient notice to an affected party, a subject not capable of settlement by arbitration under the laws of Canada, or a subject contrary to public policy.

F. Setting aside an award

Recourse against an arbitral award is expressly provided in the Commercial Arbitration Act. The Act provides in Article 5 that,

"In matters governed by this Code, no court shall intervene except where so provided in this Code."

Article 34 provides for recourse on specified grounds. The language of this Article is restrictive in providing that, "Recourse to a court against an arbitral award may be made only by an application for setting aside in accordance with paragraphs (2) and (3) of this article." Paragraph (2) allows a court to set aside an award where:

i) a party to the arbitration agreement is under some incapacity;

ii) the agreement is invalid under the applicable law;

iii) the party making application was not given proper notice or otherwise was not able to present its case;

iv) the award deals with a dispute not contemplated by or beyond the scope of the submission to arbitration ;

v) the composition of the tribunal or the procedure was not in accordance with the agreement of the parties unless such an agreement was in conflict with a provision of the C.A.C.;

vi) the subject matter of the dispute cannot be settled by arbitration under the law of Canada; and

vii) the award is in conflict with the public policy of Canada.

Paragraph (3) requires that any application for recourse be made within three months of the date of receiving the award.

Articles 5 and 34 are, in effect, privative clauses. While it may appear that the restrictive language of these articles limits judicial review to the grounds identified, it is arguable whether this language precludes the Federal Court from exercising its supervisory jurisdiction under s.18.1 of the Federal Court Act. For example, in the event of an arbitral decision containing a material error of fact or law not supported by the evidence, an application for judicial review could be made and the court could find that intervention under s. 18.1 was warranted.

However, keep in mind that the court will strive to respect the intent of Parliament, as expressed in the Act and the Code, to preclude recourse against an award other than as expressly provided and may therefore be reluctant to intervene.

Appendix A: Checklist

1. Choice of Arbitrators

a) how many arbitrators are required [37]?

b) what is the technical expertise and experience desired?

c) what is the individual's reputation for impartiality, fairness and soundness of decisions? what are the fee structures?

d) how will the arbitrator(s) be chosen?

e) what specific skills are required by the arbitrator?

2. Date and Place of Hearing

a) where will the arbitration be held? The location should be neutral, accessible and convenient.

b) what type of formality is required?

c) what are the costs of facilities?

d) would it be advisable to use the expertise of established service providers [38]? is the hearing date timely and flexible?

3. Issues to be Submitted to Arbitration

a) are the issues defined in writing and agreed to by all parties?

4. Pre-hearing Disclosure

a) what formal rules of evidence will govern pre-hearing disclosure?

b) what documents are to be exchanged (financial statements, business records, contracts, reports from experts..)?

c) set forth in writing the names and statements of all witnesses.

d) exchange expert witness reports.

e) what are the time frames for disclosure and penalties for default/ what is the power of the arbitrator to deal with any default.

5. Conduct of Hearing

a) is the arbitration to be conducted entirely on the basis of an exchange of documents?...affidavits?

b) will there be submissions only on the documentary evidence (written or verbal)?

c) if there will be viva voce evidence, who will give it?

d) will a transcript of the proceedings be required (Note that the Code is silent on this issue)?

e) what is the sequence for the presentation of evidence?

f) will the rules of evidence be formal or relaxed? If the latter, under what circumstances?

g) will copies of documents be accepted?

h) will the proceedings be recorded; if so how?

i) will institutional rules be adopted?

j) what will be the powers of the arbitrator?

- should they be allowed to order interim measures [39]

- should they be allowed to appoint an expert [40]

- should the arbitrator act as amiable compositeur, etc. [41]

6. The award

a) does the arbitrator have the power to award costs/pre-judgment interest/ post-judgment interest?

b) what is the time for delivery of the award?

c) are there sanctions for failure to deliver the award in a timely fashion?.

d) are written reasons required?

Appendix B: Sample arbitration agreement

Article 1 Disputes

1.1 By informal discussion and good faith negotiation, each of the parties shall make all reasonable efforts to resolve any dispute, controversy or claim arising out of or in any way connected with this contract.

1.2 In the event that either party considers that the reasonable efforts of the parties have failed to reach a settlement of any such dispute, controversy or claim then the following terms shall apply.

1.3 Before either party serves a notice under this Article the party wishing to serve the notice shall first notify the other party of its intention to serve a notice, and if so requested by either party both parties shall meet to attempt to resolve the matter.

1.4 Any such unsettled dispute, controversy or claim (a "Dispute") shall be subject to resolution pursuant to this Article whether or not such resolution requires the determination of a question of law if such question of law is an Arbitral Question of Law as defined in Article 1.5.

1.5 For the purposes of this contract, "Arbitral Question of Law" means a question of law:

(a) capable of determination by arbitration under the laws of Canada; and

(b) not involving the interpretation or application of the public law of Canada, including without limitation, any matter of constitutional, administrative, criminal or tax law; and

(c) concerning:

(i) the formation, validity, interpretation application or enforceability of the contract;

(ii) the performance, breach, termination or other discharge of the contract;

(iii) the rights, duties, obligations or remedies of the parties created by or pursuant to the contract; or

(iv) any other issue of private law that may arise between the parties relative to the performance of the contract.

1.6 In the first instance the party requiring resolution of a Dispute shall give Notice of it to the other party.

1.7 During the period of thirty (30) days following such Notice the parties shall continue to seek a resolution of the Dispute but failing such resolution the Dispute shall be resolved as follows:

(a)

(i) in respect of issues involving issues of fact or issues of Arbitral Questions of Law or issues of mixed fact and Arbitral Questions of Law, by arbitration in accordance with the Commercial Arbitration Act, R.S.C. 1985, 2nd Supp. c.17, as amended by S.C. 1986, c.22, the Code referred to therein and the rules set out in Schedule A;

(ii) unless the parties agree otherwise in writing, where there is any inconsistency between the Rules and the Code, the Rules shall prevail to the extent of any such inconsistency,

(b) in respect of issues involving question of law other than Arbitral Questions of Law, whether or not issues of fact are involved, by proceedings commenced in a court of competent jurisdiction.

(c) if either party has submitted to a court a dispute that could properly have been submitted for resolution by arbitration, the other party may, within 15 days of service of the originating process in the court proceeding, by written notice require that the dispute be submitted instead to arbitration.

1.8 In respect of any Dispute to be resolved by arbitration pursuant to Article 1.7a, the following conditions shall apply:

(a) the location for any such arbitration shall be in the city of Ottawa in a facility agreed to by the parties;

(b) the language of the arbitration proceedings and the language of the arbitral decision and award shall be ;

(c) Unless otherwise agreed by the parties, and except as provided in the Rules, the arbitration tribunal shall consist of one (1) arbitrator ("the Tribunal") who shall be appointed in accordance with the provisions of the Rules.

1.9 The Tribunal shall decide any dispute in accordance with the laws in force in the Province of and shall not decide the dispute exaequo et bono or as amiable compositeur.

1.10 Subject only to the provisions of the Commercial Arbitration Act, the parties agree that the determination and award of the Tribunal shall be final and binding on both parties.

1.11 The scope of the arbitration proceeding shall be limited to the resolution of the Dispute submitted to arbitration;

1.12 Subject only to the provisions of Chapter VII of the Code, the parties agree that the award and determination of the Tribunal shall be final and binding on both parties.

1.13 The costs of the Tribunals fee and expenses shall be shared equally by the Contractor and Her Majesty; each party shall bear its own costs.

Schedule "A": Rules

Initiation of Arbitration Proceedings

1

(a) Either party may refer a dispute to arbitration by serving upon the other party a written submission specifying the particulars of the matter or matters in dispute. Within 15 days of such service, the parties shall meet and endeavour to select and agree upon the single arbitrator for the arbitration (the "Tribunal").

(b) In the event the parties are unable to agree upon the Tribunal within such 15 day time period, or such longer period as the parties may agree, then each party shall forthwith appoint an impartial nominee and the nominees shall, within 30 days of their appointment, exchange the names of possible candidates and endeavour to select a mutually acceptable Tribunal. In the event the nominees are unable to do so, they shall give written notice of their failure to select a Tribunal to the parties. The notice shall be dated and signed by both nominees.

(c) In the event that neither the parties nor their nominees are able to agree upon a single person to constitute the Tribunal, the Tribunal shall consist of three (3) arbitrators, 1 appointed by each of the parties and the third appointed by the two (2) arbitrators.

(d) The Tribunal shall in any event be composed of a person or persons who have experience in the subject matter of the dispute and who are independent of either party. Without limiting the generality of the foregoing, the Tribunal shall be at arm's length from both parties and shall not be composed of members of any company, firm or agency who advise either party, nor shall the Tribunal be composed of a person or persons who are otherwise regularly retained by such parties.

Preliminary Meeting

2. Unless the parties to the arbitration and the Tribunal otherwise agree, the parties shall meet with the Tribunal within two weeks of its appointment:

(a) to settle the location of the premises for the proceedings and the responsibilities for the arrangement;

(b) to present to the Tribunal the issues to be resolved by means of the arbitration;

(c) to estimate the length of time the hearing might take and the number of witnesses likely to be produced;

(d) to reach an understanding of the basis upon which the Tribunal will set its fee and whether payments are to be made on account or secured in advance of the hearing;

(e) to determine if, in the circumstances of the hearing, a stenographic record or any other type of recording of the proceedings should be kept, or if any particular services, such as interpreters, translations or security measures, should be provided; and

(f) to determine any other matters pertinent to the conduct of the arbitration, including those described in sections 9, 14(b), 15(c).

Communications between the Tribunal and Parties

3. Except as provided in subsection (4) below, the Tribunal shall not communicate with any party to the dispute except in the presence of other party.

4. As an exception to section (3), the Tribunal may communicate with the parties separately for the purpose of establishing the procedure to be followed or setting the time of a meeting; other exceptions to the general rule shall only be made with the consent in writing of all parties.

5. If a communication by a Tribunal to one party is in writing, a copy shall be sent to the other party.

6.

(a) Where either party sends any written communication to the Tribunal, that party shall deliver or mail a copy of such communication to the other party.

(b) Any communication that is required or permitted to be given to the Tribunal or either party shall be in writing and may be given by delivering the same, by facsimile, or by mailing the same postage prepaid addressed, in the case of the Tribunal, to:

in the case of the Minister to:

and in the case of the Contractor to:

or to such other address as the Tribunal or either of the parties, as to itself, may from time to time designate in writing to the other.

Any such communication if delivered shall be deemed to have been given on the date on which it was delivered, if sent by facsimile on the date of transmittal with acknowledgment of receipt or if mailed by registered mail with return receipt shall be deemed to have been given on the day on which it was received as evidenced by the receipt.

Representation and Assistance

7. The parties may be represented or assisted by any person during the arbitral proceedings.

General

8.

(a) The parties shall be treated with equality by the Tribunal and each party shall be given a full opportunity to present its case.

(b) Subject to these Rules, the Tribunal may conduct the arbitration in the manner it considers appropriate.

(c) The power of the Tribunal under paragraph (b) includes the power to determine the admissibility, relevance, materiality and weight of any evidence.

9. The Tribunal may meet at any place it considers appropriate for hearing witnesses, experts or the parties, or for inspection of documents, goods or other property. The Tribunal will conduct on-site inspections at the request of either party. Any on-site inspections shall be made in the presence of both parties and their representatives. The proceedings of any on-site inspections shall be recorded as part of the hearing itself.

Time Limits

10.

(a) The Tribunal may extend or abridge a period of time required in these rules of procedure or fixed or determined by itself where it considers it to be reasonable and appropriate in all the circumstances.

(b) Where any proceeding is terminated pursuant to paragraph 25(a) or 32(a) of the Code, unless the respondent agrees otherwise in writing, such termination is deemed to be a final award dismissing the claim of the claimant.

Statement of Claim and Defence

11.

(a) Within 15 days after the Tribunal has been constituted, the claimant shall state, in writing, the facts supporting its claim, the points at issue and the relief or remedy sought and shall submit the statement to the respondent and the Tribunal.

(b) Within 15 days after receipt of the statement of claim, the respondent shall state, in writing, its defence in respect of these particulars and shall submit the statement to the claimant and the Tribunal.

(c) Within 7 days after receipt of the statement of defence, the claimant may state, in writing, its response to the defence and shall submit the statement to the respondent and the Tribunal.

(d) A party may amend or supplement its statements during the course of the arbitral proceedings, unless the Tribunal considers it inappropriate to allow such amendment or supplement having regard to all the circumstances including the delay in making the amendment or supplement.

(e) A statement may not be amended if the amended statement would fall outside the scope of the arbitration agreement.

Further Written Statements

12. The Tribunal may require or permit the presentation of further written statements from the parties and shall fix the periods of time for submitting those statements.

Agreed Statement of Facts

13.

(a) The parties shall, within one month after the receipt by the respondent of the claimant's response, prepare and file the Tribunal an agreed statement of facts, including but not limited to a chronology of the project, schedules, quantities and progress payments. The Tribunal shall make itself available, upon reasonable notice, to assist the parties to arrive at agreement on as many facts as possible under the circumstances.

(b) The parties shall, within 15 days after the receipt by the respondent of the claimant's response, prepare and file with the Tribunal a common book of documents including all documents referred to in the agreed statement of facts and in the statements of claim, defence and any response, but excepting any evidentiary material subject to section 14(a).

Evidence

14.

(a) Each party shall prove the facts relied upon to support its claim or defence.

(b) Each party shall deliver to the Tribunal and to the other party, within such period of time that the Tribunal determines, a copy of the documents and summary of the other evidence which that party intends to present in support of the facts in issue set out in its statement of claim, defence or response.

(c) The Tribunal may, from time to time, require the parties to produce, within such period of time that the Tribunal determines, documents, exhibits and other evidence.

Hearings

15.

(a) All statements, documents or other information supplied to, or applications made to, the Tribunal by one party shall be communicated to the other party, and any expert report or evidentiary document on which the Tribunal may rely in making its decision shall be communicated to the parties at least 10 days prior to its entry in evidence.

(b) The parties shall be given reasonably sufficient advance notice of:

(i) any meeting of the Tribunal for the purpose of inspection of documents, goods or other property, and

(ii) any hearing of the Tribunal.

(c) If a party intends to give evidence through a witness, the party shall, within such period of time that the Tribunal determines, communicate to the Tribunal and to the other party,

(i) the names, addresses and the curriculum vitae of each of the witnesses it intends to present, and

(ii) the subject upon which those witnesses will give their testimony.

(d) All oral hearings and meetings in arbitral proceedings shall be held in camera.

Witnesses

16. Each party shall have the right to examine, cross-examine and re-examine all of the witnesses, as reasonably appropriate.

Default of a Party

17.

(a) Where, without showing sufficient cause, the claimant fails to communicate its statement of claim in accordance with sub-paragraph 10(a) or within such further period of time permitted by the Tribunal under subsection 9, the Tribunal shall issue an order terminating the arbitral proceedings with respect to that claim.

(b) An order made under subsection (1) does not affect a counter-claim made in respect of those arbitral proceedings.

(c) Where, without showing sufficient cause, the respondent fails to communicate his statement of defence in accordance with subparagraph 10(a) or within such further period of time permitted by the Tribunal under subsection 9, the Tribunal shall continue the arbitral proceedings without treating that failure in itself as an admission of the claimant's allegations.

(d) Where, without showing sufficient cause, a party fails to appear at an oral hearing or to produce documentary evidence, the arbitral tribunal may continue the arbitral proceedings and make the arbitral award on the evidence before it.

Arbitral Decision

18. Unless otherwise agreed to by the parties, the arbitral tribunal shall make its award no later than 30 days after completion of the arbitration hearing unless that time period is extended for an express period by the Tribunal on written notice to each party, due to illness or other cause beyond the control of the Tribunal.

Commercial Arbitration Act, R.S. / 1985, ch.17, 2nd Supp., as am.
Commercial Arbitration Code, R.S. / 1985, ch.17, 2nd Supp., Schedule 2.

Commercial Arbitration

R.S., 1985, c. 17 (2nd Supp.)

[C-34.6]

An Act relating to commercial arbitration

[1986, c. 22, assented to17th June, 1986]

SHORT TITLE

Short title

1. This Act may be cited as the Commercial Arbitration Act.

INTERPRETATION

Definitions

2. In this Act,

"Code" «Code»

"Code" means the Commercial Arbitration Code, based on the model law adopted by the United Nations Commission on International Trade Law on June 21, 1985, as set out in the schedule;

"Crown corporation" «société d'État»

"Crown corporation" means a Crown corporation as defined in section 83 of the Financial Administration Act;

"department" [Repealed, R.S., 1985, c. 1 (4th Supp.), s. 8]

"departmental corporation" «établissement public»

"departmental corporation" means a departmental corporation as defined in section 2 of the Financial Administration Act.

R.S., 1985, c. 17 (2nd Supp.), s. 2, c. 1 (4th Supp.), s. 8.

Other words and expressions

3. Words and expressions used in this Act have the meaning assigned to them by the Code.

Ordinary meaning

4. (1) This Act shall be interpreted in good faith in accordance with the ordinary meaning to be given to its terms in their context and in the light of its object and purpose.

Recourse to certain documents

(2) In interpreting the Code, recourse may be had to

(a) the Report of the United Nations Commission on International Trade Law on the work of its eighteenth session, held from June 3 to 21, 1985; and

(b) the Analytical Commentary contained in the Report of the Secretary General to the eighteenth session of the United Nations Commission on International Trade Law.

APPLICATION

Law in force

5. (1) Subject to this section, the Code has the force of law in Canada.

Limitation to certain federal activities

(2) The Code applies only in relation to matters where at least one of the parties to the arbitration is Her Majesty in right of Canada, a departmental corporation or a Crown corporation or in relation to maritime or admiralty matters.

When applicable

(3) The Code applies to arbitral awards and arbitration agreements whether made before or after the coming into force of this Act.

Meaning of "commercial arbitration"

(4) For greater certainty, the phrase "commercial arbitration" in Article 1(1) of the Code includes a claim under Article 1116 or 1117 of the Agreement, as defined in subsection 2(1) of the North American Free Trade Agreement Implementation Act.

R.S., 1985, c. 17 (2nd Supp.), s. 5, c. 1 (4th Supp.), s. 9; 1993, c. 44, s. 50.

COURTS

Definition of "court" or "competent court"

6. In the Code, "court" or "competent court" means the Federal Court or any superior, county or district court, except where the context otherwise requires.

PUBLICATION

Publication

7. The Minister of Justice shall cause to be published in the Canada Gazette the documents referred to in paragraphs 4(2)(a) and (b) forthwith on the coming into force of this Act.

REGULATIONS

Terms and conditions for arbitration agreements

8. The Governor in Council, on the recommendation of the Minister of Justice, may make regulations prescribing the terms and conditions on which Her Majesty in right of Canada, a departmental corporation or a Crown corporation may enter into an arbitration agreement.

R.S., 1985, c. 17 (2nd Supp.), s. 8, c. 1 (4th Supp.), s. 10.

General

9. The Minister of Justice may make such regulations as are necessary for the purpose of carrying out this Act or for giving effect to any of the provisions thereof.

HER MAJESTY IS BOUND

Binding on Her Majesty

10. This Act is binding on Her Majesty in right of Canada.

COMING INTO FORCE

Coming into force

*11. This Act shall come into force on a day to be fixed by proclamation.

*[Note: Act in force August 10, 1986, see SI/86-155.]

SCHEDULE

(Section 2)

COMMERCIAL ARBITRATION CODE

(Based on the Model Law on International Commercial Arbitration as adopted by the United Nations Commission on International Trade Law on June 21, 1985)

Note: The word "international", which appears in paragraph (1) of article 1 of the Model Law, has been deleted from paragraph (1) of article 1 below. Paragraphs (3) and (4) of article 1, which contain a description of when arbitration is international, are deleted. Paragraph (5) appears as paragraph (3).

Any additions or substitutions to the Model Law are indicated by the use of italics.

Except as otherwise indicated, the material that follows reproduces exactly the Model Law.

CHAPTER I. GENERAL PROVISIONS

Article 1

Scope of Application

(1) This Code applies to commercial arbitration, subject to any agreement in force between Canada and any other State or States.

(2) The provisions of this Code, except articles 8, 9, 35 and 36, apply only if the place of arbitration is in Canada.

(3) This Code shall not affect any other law of Parliament by virtue of which certain disputes may not be submitted to arbitration or may be submitted to arbitration only according to provisions other than those of this Code.

Article 2

Definitions and Rules of Interpretation

For the purposes of this Code:

(a) "arbitration" means any arbitration whether or not administered by a permanent arbitral institution;

(b) "arbitral tribunal" means a sole arbitrator or a panel of arbitrators;

(c) "court" means a body or organ of the judicial system of a State;

(d) where a provision of this Code, except article 28, leaves the parties free to determine a certain issue, such freedom includes the right of the parties to authorize a third party, including an institution, to make that determination;

(e) where a provision of this Code refers to the fact that the parties have agreed or that they may agree or in any other way refers to an agreement of the parties, such agreement includes any arbitration rules referred to in that agreement;

(f) where a provision of this Code, other than in articles 25(a) and 32(2)(a), refers to a claim, it also applies to a counter-claim, and where it refers to a defence, it also applies to a defence to such counter-claim.

Article 3

Receipt of Written Communications

(1) Unless otherwise agreed by the parties:

(a) any written communication is deemed to have been received if it is delivered to the addressee personally or if it is delivered at his place of business, habitual residence or mailing address; if none of these can be found after making a reasonable inquiry, a written communication is deemed to have been received if it is sent to the addressee's last-known place of business, habitual residence or mailing address by registered letter or any other means which provides a record of the attempt to deliver it;

(b) the communication is deemed to have been received on the day it is so delivered.

(2) The provisions of this article do not apply to communications in court proceedings.

Article 4

Waiver of Right to Object

A party who knows that any provision of this Code from which the parties may derogate or any requirement under the arbitration agreement has not been complied with and yet proceeds with the arbitration without stating his objection to such non-compliance without undue delay or, if a time-limit is provided therefor, within such period of time, shall be deemed to have waived his right to object.

Article 5

Extent of Court Intervention

In matters governed by this Code, no court shall intervene except where so provided in this Code.

Article 6

Court or Other Authority for Certain Functions of Arbitration Assistance and Supervision

The functions referred to in articles 11(3), 11(4), 13(3), 14, 16(3) and 34(2) shall be performed by the Federal Court or any superior, county or district court.

CHAPTER II. ARBITRATION AGREEMENT

Article 7

Definition and Form of Arbitration Agreement

(1) "Arbitration agreement" is an agreement by the parties to submit to arbitration all or certain disputes which have arisen or which may arise between them in respect of a defined legal relationship, whether contractual or not. An arbitration agreement may be in the form of an arbitration clause in a contract or in the form of a separate agreement.

(2) The arbitration agreement shall be in writing. An agreement is in writing if it is contained in a document signed by the parties or in an exchange of letters, telex, telegrams or other means of telecommunication which provide a record of the agreement, or in an exchange of statements of claim and defence in which the existence of an agreement is alleged by one party and not denied by another. The reference in a contract to a document containing an arbitration clause constitutes an arbitration agreement provided that the contract is in writing and the reference is such as to make that clause part of the contract.

Article 8

Arbitration Agreement and Substantive Claim before Court

(1) A court before which an action is brought in a matter which is the subject of an arbitration agreement shall, if a party so requests not later than when submitting his first statement on the substance of the dispute, refer the parties to arbitration unless it finds that the agreement is null and void, inoperative or incapable of being performed.

(2) Where an action referred to in paragraph (1) of this article has been brought, arbitral proceedings may nevertheless be commenced or continued, and an award may be made, while the issue is pending before the court.

Article 9

Arbitration Agreement and Interim Measures by Court

It is not incompatible with an arbitration agreement for a party to request, before or during arbitral proceedings, from a court an interim measure of protection and for a court to grant such measure.

CHAPTER III. COMPOSITION OF ARBITRAL TRIBUNAL

Article 10

Number of Arbitrators

(1) The parties are free to determine the number of arbitrators.

(2) Failing such determination, the number of arbitrators shall be three.

Article 11

Appointment of Arbitrators

(1) No person shall be precluded by reason of his nationality from acting as an arbitrator, unless otherwise agreed by the parties.

(2) The parties are free to agree on a procedure of appointing the arbitrator or arbitrators, subject to the provisions of paragraphs (4) and (5) of this article.

(3) Failing such agreement,

(a) in an arbitration with three arbitrators, each party shall appoint one arbitrator, and the two arbitrators thus appointed shall appoint the third arbitrator; if a party fails to appoint the arbitrator within thirty days of receipt of a request to do so from the other party, or if the two arbitrators fail to agree on the third arbitrator within thirty days of their appointment, the appointment shall be made, upon request of a party, by the court or other authority specified in article 6;

(b) in an arbitration with a sole arbitrator, if the parties are unable to agree on the arbitrator, he shall be appointed, upon request of a party, by the court or other authority specified in article 6.

(4) Where, under an appointment procedure agreed upon by the parties,

(a) a party fails to act as required under such procedure, or

(b) the parties, or two arbitrators, are unable to reach an agreement expected of them under such procedure, or

(c) a third party, including an institution, fails to perform any function entrusted to it under such procedure,

any party may request the court or other authority specified in article 6 to take the necessary measure, unless the agreement on the appointment procedure provides other means for securing the appointment.

(5) A decision on a matter entrusted by paragraph (3) or (4) of this article to the court or other authority specified in article 6 shall be subject to no appeal. The court or other authority, in appointing an arbitrator, shall have due regard to any qualifications required of the arbitrator by the agreement of the parties and to such considerations as are likely to secure the appointment of an independent and impartial arbitrator and, in the case of a sole or third arbitrator, shall take into account as well the advisability of appointing an arbitrator of a nationality other than those of the parties.

Article 12

Grounds for Challenge

(1) When a person is approached in connection with his possible appointment as an arbitrator, he shall disclose any circumstances likely to give rise to justifiable doubts as to his impartiality or independence. An arbitrator, from the time of his appointment and throughout the arbitral proceedings, shall without delay disclose any such circumstances to the parties unless they have already been informed of them by him.

(2) An arbitrator may be challenged only if circumstances exist that give rise to justifiable doubts as to his impartiality or independence, or if he does not possess qualifications agreed to by the parties. A party may challenge an arbitrator appointed by him, or in whose appointment he has participated, only for reasons of which he becomes aware after the appointment has been made.

Article 13

Challenge Procedure

(1) The parties are free to agree on a procedure for challenging an arbitrator, subject to the provisions of paragraph (3) of this article.

(2) Failing such agreement, a party who intends to challenge an arbitrator shall, within fifteen days after becoming aware of the constitution of the arbitral tribunal or after becoming aware of any circumstances referred to in article 12(2), send a written statement of the reasons for the challenge to the arbitral tribunal. Unless the challenged arbitrator withdraws from his office or the other party agrees to the challenge, the arbitral tribunal shall decide on the challenge.

(3) If a challenge under any procedure agreed upon by the parties or under the procedure of paragraph (2) of this article is not successful, the challenging party may request, within thirty days after having received notice of the decision rejecting the challenge, the court or other authority specified in article 6 to decide on the challenge, which decision shall be subject to no appeal; while such a request is pending, the arbitral tribunal, including the challenged arbitrator, may continue the arbitral proceedings and make an award.

Article 14

Failure or Impossibility to Act

(1) If an arbitrator becomes de jure or de facto unable to perform his functions or for other reasons fails to act without undue delay, his mandate terminates if he withdraws from his office or if the parties agree on the termination. Otherwise, if a controversy remains concerning any of these grounds, any party may request the court or other authority specified in article 6 to decide on the termination of the mandate, which decision shall be subject to no appeal.

(2) If, under this article or article 13(2), an arbitrator withdraws from his office or a party agrees to the termination of the mandate of an arbitrator, this does not imply acceptance of the validity of any ground referred to in this article or article 12(2).

Article 15

Appointment of Substitute Arbitrator

Where the mandate of an arbitrator terminates under article 13 or 14 or because of his withdrawal from office for any other reason or because of the revocation of his mandate by agreement of the parties or in any other case of termination of his mandate, a substitute arbitrator shall be appointed according to the rules that were applicable to the appointment of the arbitrator being replaced.

CHAPTER IV. JURISDICTION OF ARBITRAL TRIBUNAL

Article 16

Competence of Arbitral Tribunal to Rule on its Jurisdiction

(1) The arbitral tribunal may rule on its own jurisdiction, including any objections with respect to the existence or validity of the arbitration agreement. For that purpose, an arbitration clause which forms part of a contract shall be treated as an agreement independent of the other terms of the contract. A decision by the arbitral tribunal that the contract is null and void shall not entail ipso jure the invalidity of the arbitration clause.

(2) A plea that the arbitral tribunal does not have jurisdiction shall be raised not later than the submission of the statement of defence. A party is not precluded from raising such a plea by the fact that he has appointed, or participated in the appointment of, an arbitrator. A plea that the arbitral tribunal is exceeding the scope of its authority shall be raised as soon as the matter alleged to be beyond the scope of its authority is raised during the arbitral proceedings. The arbitral tribunal may, in either case, admit a later plea if it considers the delay justified.

(3) The arbitral tribunal may rule on a plea referred to in paragraph (2) of this article either as a preliminary question or in an award on the merits. If the arbitral tribunal rules as a preliminary question that it has jurisdiction, any party may request, within thirty days after having received notice of that ruling, the court specified in article 6 to decide the matter, which decision shall be subject to no appeal; while such a request is pending, the arbitral tribunal may continue the arbitral proceedings and make an award.

Article 17

Power of Arbitral Tribunal to Order Interim Measures

Unless otherwise agreed by the parties, the arbitral tribunal may, at the request of a party, order any party to take such interim measure of protection as the arbitral tribunal may consider necessary in respect of the subject-matter of the dispute. The arbitral tribunal may require any party to provide appropriate security in connection with such measure.

CHAPTER V. CONDUCT OF ARBITRAL PROCEEDINGS

Article 18

Equal Treatment of Parties

The parties shall be treated with equality and each party shall be given a full opportunity of presenting his case.

Article 19

Determination of Rules of Procedure

(1) Subject to the provisions of this Code, the parties are free to agree on the procedure to be followed by the arbitral tribunal in conducting the proceedings.

(2) Failing such agreement, the arbitral tribunal may, subject to the provisions of this Code, conduct the arbitration in such manner as it considers appropriate. The power conferred upon the arbitral tribunal includes the power to determine the admissibility, relevance, materiality and weight of any evidence.

Article 20

Place of Arbitration

(1) The parties are free to agree on the place of arbitration. Failing such agreement, the place of arbitration shall be determined by the arbitral tribunal having regard to the circumstances of the case, including the convenience of the parties.

(2) Notwithstanding the provisions of paragraph (1) of this article, the arbitral tribunal may, unless otherwise agreed by the parties, meet at any place it considers appropriate for consultation among its members, for hearing witnesses, experts or the parties, or for inspection of goods, other property or documents.

Article 21

Commencement of Arbitral Proceedings

Unless otherwise agreed by the parties, the arbitral proceedings in respect of a particular dispute commence on the date on which a request for that dispute to be referred to arbitration is received by the respondent.

Article 22

Language

(1) The parties are free to agree on the language or languages to be used in the arbitral proceedings. Failing such agreement, the arbitral tribunal shall determine the language or languages to be used in the proceedings. This agreement or determination, unless otherwise specified therein, shall apply to any written statement by a party, any hearing and any award, decision or other communication by the arbitral tribunal.

(2) The arbitral tribunal may order that any documentary evidence shall be accompanied by a translation into the language or languages agreed upon by the parties or determined by the arbitral tribunal.

Article 23

Statements of Claim and Defence

(1) Within the period of time agreed by the parties or determined by the arbitral tribunal, the claimant shall state the facts supporting his claim, the points at issue and the relief or remedy sought, and the respondent shall state his defence in respect of these particulars, unless the parties have otherwise agreed as to the required elements of such statements. The parties may submit with their statements all documents they consider to be relevant or may add a reference to the documents or other evidence they will submit.

(2) Unless otherwise agreed by the parties, either party may amend or supplement his claim or defence during the course of the arbitral proceedings, unless the arbitral tribunal considers it inappropriate to allow such amendment having regard to the delay in making it.

Article 24

Hearings and Written Proceedings

(1) Subject to any contrary agreement by the parties, the arbitral tribunal shall decide whether to hold oral hearings for the presentation of evidence or for oral argument, or whether the proceedings shall be conducted on the basis of documents and other materials. However, unless the parties have agreed that no hearings shall be held, the arbitral tribunal shall hold such hearings at an appropriate stage of the proceedings, if so requested by a party.

(2) The parties shall be given sufficient advance notice of any hearing and of any meeting of the arbitral tribunal for the purposes of inspection of goods, other property or documents.

(3) All statements, documents or other information supplied to the arbitral tribunal by one party shall be communicated to the other party. Also any expert report or evidentiary document on which the arbitral tribunal may rely in making its decision shall be communicated to the parties.

Article 25

Default of a Party

Unless otherwise agreed by the parties, if, without showing sufficient cause,

(a) the claimant fails to communicate his statement of claim in accordance with article 23(1), the arbitral tribunal shall terminate the proceedings;

(b) the respondent fails to communicate his statement of defence in accordance with article 23(1), the arbitral tribunal shall continue the proceedings without treating such failure in itself as an admission of the claimant's allegations;

(c) any party fails to appear at a hearing or to produce documentary evidence, the arbitral tribunal may continue the proceedings and make the award on the evidence before it.

Article 26

Expert Appointed by Arbitral Tribunal

(1) Unless otherwise agreed by the parties, the arbitral tribunal

(a) may appoint one or more experts to report to it on specific issues to be determined by the arbitral tribunal;

(b) may require a party to give the expert any relevant information or to produce, or to provide access to, any relevant documents, goods or other property for his inspection.

(2) Unless otherwise agreed by the parties, if a party so requests or if the arbitral tribunal considers it necessary, the expert shall, after delivery of his written or oral report, participate in a hearing where the parties have the opportunity to put questions to him and to present expert witnesses in order to testify on the points at issue.

Article 27

Court Assistance in Taking Evidence

The arbitral tribunal or a party with the approval of the arbitral tribunal may request from a competent court of Canada assistance in taking evidence. The court may execute the request within its competence and according to its rules on taking evidence.

CHAPTER VI. MAKING OF AWARD AND TERMINATION OF PROCEEDINGS

Article 28

Rules Applicable to Substance of Dispute

(1) The arbitral tribunal shall decide the dispute in accordance with such rules of law as are chosen by the parties as applicable to the substance of the dispute. Any designation of the law or legal system of a given State shall be construed, unless otherwise expressed, as directly referring to the substantive law of that State and not to its conflict of laws rules.

(2) Failing any designation by the parties, the arbitral tribunal shall apply the law determined by the conflict of laws rules which it considers applicable.

(3) The arbitral tribunal shall decide ex aequo et bono or as amiable compositeur only if the parties have expressly authorized it to do so.

(4) In all cases, the arbitral tribunal shall decide in accordance with the terms of the contract and shall take into account the usages of the trade applicable to the transaction.

Article 29

Decision-making by Panel of Arbitrators

In arbitral proceedings with more than one arbitrator, any decision of the arbitral tribunal shall be made, unless otherwise agreed by the parties, by a majority of all its members. However, questions of procedure may be decided by a presiding arbitrator, if so authorized by the parties or all members of the arbitral tribunal.

Article 30

Settlement

(1) If, during arbitral proceedings, the parties settle the dispute, the arbitral tribunal shall terminate the proceedings and, if requested by the parties and not objected to by the arbitral tribunal, record the settlement in the form of an arbitral award on agreed terms.

(2) An award on agreed terms shall be made in accordance with the provisions of article 31 and shall state that it is an award. Such an award has the same status and effect as any other award on the merits of the case.

Article 31

Form and Contents of Award

(1) The award shall be made in writing and shall be signed by the arbitrator or arbitrators. In arbitral proceedings with more than one arbitrator, the signature of the majority of all members of the arbitral tribunal shall suffice, provided that the reason for any omitted signature is stated.

(2) The award shall state the reasons upon which it is based, unless the parties have agreed that no reasons are to be given or the award is an award on agreed terms under article 30.

(3) The award shall state its date and the place of arbitration as determined in accordance with article 20(1). The award shall be deemed to have been made at that place.

(4) After the award is made, a copy signed by the arbitrators in accordance with paragraph (1) of this article shall be delivered to each party.

Article 32

Termination of Proceedings

(1) The arbitral proceedings are terminated by the final award or by an order of the arbitral tribunal in accordance with paragraph (2) of this article.

(2) The arbitral tribunal shall issue an order for the termination of the arbitral proceedings when:

(a) the claimant withdraws his claim, unless the respondent objects thereto and the arbitral tribunal recognizes a legitimate interest on his part in obtaining a final settlement of the dispute;

(b) the parties agree on the termination of the proceedings;

(c) the arbitral tribunal finds that the continuation of the proceedings has for any other reason become unnecessary or impossible.

(3) The mandate of the arbitral tribunal terminates with the termination of the arbitral proceedings, subject to the provisions of articles 33 and 34(4).

Article 33

Correction and Interpretation of Award; Additional Award

(1) Within thirty days of receipt of the award, unless another period of time has been agreed upon by the parties:

(a) a party, with notice to the other party, may request the arbitral tribunal to correct in the award any errors in computation, any clerical or typographical errors or any errors of similar nature;

(b) if so agreed by the parties, a party, with notice to the other party, may request the arbitral tribunal to give an interpretation of a specific point or part of the award.

If the arbitral tribunal considers the request to be justified, it shall make the correction or give the interpretation within thirty days of receipt of the request. The interpretation shall form part of the award.

(2) The arbitral tribunal may correct any error of the type referred to in paragraph (1)(a) of this article on its own initiative within thirty days of the date of the award.

(3) Unless otherwise agreed by the parties, a party, with notice to the other party, may request, within thirty days of receipt of the award, the arbitral tribunal to make an additional award as to claims presented in the arbitral proceedings but omitted from the award. If the arbitral tribunal considers the request to be justified, it shall make the additional award within sixty days.

(4) The arbitral tribunal may extend, if necessary, the period of time within which it shall make a correction, interpretation or an additional award under paragraph (1) or (3) of this article.

(5) The provisions of article 31 shall apply to a correction or interpretation of the award or to an additional award.

CHAPTER VII. RECOURSE AGAINST AWARD

Article 34

Application for Setting Aside as Exclusive Recourse against Arbitral Award

(1) Recourse to a court against an arbitral award may be made only by an application for setting aside in accordance with paragraphs (2) and (3) of this article.

(2) An arbitral award may be set aside by the court specified in article 6 only if:

(a) the party making the application furnishes proof that:

(i) a party to the arbitration agreement referred to in article 7 was under some incapacity; or the said agreement is not valid under the law to which the parties have subjected it or, failing any indication thereon, under the law of Canada; or

(ii) the party making the application was not given proper notice of the appointment of an arbitrator or of the arbitral proceedings or was otherwise unable to present his case; or

(iii) the award deals with a dispute not contemplated by or not falling within the terms of the submission to arbitration, or contains decisions on matters beyond the scope of the submission to arbitration, provided that, if the decisions on matters submitted to arbitration can be separated from those not so submitted, only that part of the award which contains decisions on matters not submitted to arbitration may be set aside; or

(iv) the composition of the arbitral tribunal or the arbitral procedure was not in accordance with the agreement of the parties, unless such agreement was in conflict with a provision of this Code from which the parties cannot derogate, or, failing such agreement, was not in accordance with this Code; or

(b) the court finds that:

(i) the subject-matter of the dispute is not capable of settlement by arbitration under the law of Canada; or

(ii) the award is in conflict with the public policy of Canada.

(3) An application for setting aside may not be made after three months have elapsed from the date on which the party making that application had received the award or, if a request had been made under article 33, from the date on which that request had been disposed of by the arbitral tribunal.

(4) The court, when asked to set aside an award, may, where appropriate and so requested by a party, suspend the setting aside proceedings for a period of time determined by it in order to give the arbitral tribunal an opportunity to resume the arbitral proceedings or to take such other action as in the arbitral tribunal's opinion will eliminate the grounds for setting aside.

CHAPTER VIII. RECOGNITION AND ENFORCEMENT OF AWARDS

Article 35

Recognition and Enforcement

(1) An arbitral award, irrespective of the country in which it was made, shall be recognized as binding and, upon application in writing to the competent court, shall be enforced subject to the provisions of this article and of article 36.

(2) The party relying on an award or applying for its enforcement shall supply the duly authenticated original award or a duly certified copy thereof, and the original arbitration agreement referred to in article 7 or a duly certified copy thereof. If the award or agreement is not made in an official language of Canada, the party shall supply a duly certified translation thereof into such language.

Article 36

Grounds for Refusing Recognition or Enforcement

(1) Recognition or enforcement of an arbitral award, irrespective of the country in which it was made, may be refused only:

(a) at the request of the party against whom it is invoked, if that party furnishes to the competent court where recognition or enforcement is sought proof that:

(i) a party to the arbitration agreement referred to in article 7 was under some incapacity; or the said agreement is not valid under the law to which the parties have subjected it or, failing any indication thereon, under the law of the country where the award was made; or

(ii) the party against whom the award is invoked was not given proper notice of the appointment of an arbitrator or of the arbitral proceedings or was otherwise unable to present his case; or

(iii) the award deals with a dispute not contemplated by or not falling within the terms of the submission to arbitration, or it contains decisions on matters beyond the scope of the submission to arbitration, provided that, if the decisions on matters submitted to arbitration can be separated from those not so submitted, that part of the award which contains decisions on matters submitted to arbitration may be recognized and enforced; or

(iv) the composition of the arbitral tribunal or the arbitral procedure was not in accordance with the agreement of the parties or, failing such agreement, was not in accordance with the law of the country where the arbitration took place; or

(v) the award has not yet become binding on the parties or has been set aside or suspended by a court of the country in which, or under the law of which, that award was made; or

(b) if the court finds that:

(i) the subject-matter of the dispute is not capable of settlement by arbitration under the law of Canada; or

(ii) the recognition or enforcement of the award would be contrary to the public policy of Canada.

(2) If an application for setting aside or suspension of an award has been made to a court referred to in paragraph (1)(a)(v) of this article, the court where recognition or enforcement is sought may, if it considers it proper, adjourn its decision and may also, on the application of the party claiming recognition or enforcement of the award, order the other party to provide appropriate security.

[<-] 1. Each province and territory, with the exception of Quebec, has 2 arbitration statutes: one governing commercial and domestic arbitration, the other international arbitration.

[<-] 2. R.S. 1985, c. 17, 2nd Supp., as am.

[<-] 3. Article 5 of the CAA

[<-] 4. In the United States for example, constitutional restrictions allow for the federal government to participate in arbitration only in cases in which it cannot be bound by the decision of the arbitrator.

[<-] 5. Although certain statutes require the use of arbitration where a dispute occurs which is governed by the legislation. Examples include the Canadian Security Intelligence Service Act, R.S., 1985, c.C-23, s.s.8,9; Elections Canada Act, R.S., 1985, c. E-2, ss. 308, 309, 315, 317.

[<-] 6. Increasingly in the United States, arbitration is being unilaterally imposed on clients by large service industries in an effort to eliminate the risk of litigation. Recently financial institutions and the manufacturers of consumer products have introduced this type of approach.

[<-] 7. Article 10 of the C.A.A., Articles 3, 10, 11, 13, 17, 19 - 26 and 34(2)(a)(iv)

[<-] 8. Article 7 of the Code. An agreement in writing includes a telex, letter, telegram or other means of telecommunication which provides a record of the agreement. Although the parole evidence rule provides that a verbal contract is generally enforceable to the same degree as a written contract, subject to the Statute of Frauds, only written arbitration agreements are recognized as enforceable under C.A.A. and the Code.

[<-] 9. Article 8 of the Code. The House of Lords in Scott v. Avery (1856), 5 H.L. Cas.811(1843-60) All E.R. 1 ruled that an arbitration agreement which expressly provides that arbitration is a condition precedent to litigation, does not, in and of itself, oust the jurisdiction of the court. However, on the motion of one of the parties seeking to enforce the agreement, the House of Lords upheld the clause requiring the parties to submit to arbitration.

[<-] 10. Many arbitration organizations such as the British Columbia International Commercial Arbitration Centre and the Quebec National and International Commercial Arbitration Centre have developed their own rules for arbitration.

[<-] 11. Article 34 of Code. Please see also a discussion of judicial review under section 18.1 of the Federal Court Act, at section VIII.F of this module.

[<-] 12. Due to the existing lack of familiarity with the arbitration process and the quality of arbitrators, there is a tendency to seek security in numbers. This decision can have significant cost consequences. While a single arbitrator is often sufficient for standard commercial disputes, more complex and technical disputes may be resolved more effectively and efficiently with an arbitration panel of up to three members. A panel of more than three arbitrators can be unweildy, while an even number of arbitrators is not recommended in case of a deadlock between them.

[<-] 13. Please refer to the document,"Confidentiality: Access to Information Act and Privacy Act " contained in this Reference Guide.

[<-] 14. R.S.C. 1985, c. C-5.

[<-] 15. Subsection 4(2)

[<-] 16. See the Guide for Drafting Dispute Resolution Clauses into Government Contracts produced by the Dispute Resolution Project, included in this Refernce Guide,.

[<-] 17. Treaty Land Entitlement Agreements and Comprehensive Land Claim Agreements negotiated to date have generally included some form of arbitration agreement.

[<-] 18. See draft arbitration agreement attached. Some arbitration agreements may not require the service of a notice of intent.

[<-] 19. Article 19 establishes the right of the arbitral tribunal to determine the rules of procedure, subject to the agreement of the parties and the Code. This includes admissibility, relevancy, materiality and the weight of any evidence.

[<-] 20. Unlike some American institutions which have been in existence since 1926 (American Arbitration Association (AAA)), similar Canadian organizations (the Arbitration and Mediation Institute of Canada Inc. (incorporated in 1974) and their provincial counterparts are relative newcomers to the field. In 1993, the AAA processed approximately 30,000 requests for arbitrations.

[<-] 21. At the present time the Centre accepts any individual on their roster who has a chartered arbitrator designation.

[<-] 22. Affiliated provincial organizations are located in British Columbia, Alberta, Saskatchewan, Manitoba, Ontario, Quebec and Nova Scotia.

[<-] 23. Individuals who complete this training are given the designation "chartered arbitrator".

[<-] 24. Adapted from Justice training materials prepared by Judith P. Ryan, "Appropriate Dispute Resolution for Counsel: A Training Program In Arbitration", January 1995.

[<-]25. Preparatory conferences deal with all procedural aspects of the process that have not been covered in the arbitration agreement. This can include jurisdiction and composition of arbitral panel, determination of evidentiary order, language of hearing, administrative support and costs, etc.

[<-] 26. Article 24.

[<-] 27. Article 24.

[<-] 28. Article 25.

[<-] 29. Article 25.

[<-] 30. Article 31(1) provides that an award may contain simply the signatures of the majority of arbitrators so long as reasons are provided for the omission of the other signatures.

[<-] 31. Article 28(2) provides that failing the agreement of the parties, the law of the contract shall be the law as determined by those conflict of laws rules that the arbitral panel thinks appropriate.

[<-] 32. Article 31(2).

[<-] 33. Article 33.

[<-] 34. The United Nations Foreign Arbitral Awards Convention Act, R.S., 1986, c 21.

[<-] 35. A State includes any jurisdiction that adopts the Model Law and agrees to adhere to its basic terms.

[<-] 36. Prior to entering into an international arbitration agreement, counsel should confirm that the foreign State has ratified the U.N. Convention.

[<-] 37. Article 10 provides that there shall be 3 failing the agreement of the parties. Normally one is sufficient.

[<-] 38. These include the two Centres located in Quebec and Vancouver as well as private-sector facilities.

[<-] 39. Commercial Arbitration Code, Op cit., article 17.

[<-] 40. Code, Ibid., article 26.

[<-] 41. Code, Ibid., article 28(3).

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