CAA Conference November 25, 2013
The 2013 Canadian Arbitration Association’s Annual Conference was held at its Head Office in Toronto on Monday, November 25, 2013. The conference featured a discussion of seven hypothetical situations that raise difficult issues arbitrators may encounter. Attendees earned 1.5 professionalism hours and 2.0 substantive hours for Law Society of Upper Canada (“LSUC”) Continuing Professional Development purposes. The situations and discussions are outlined below.
- The arbitration hearing is nearly over. You know you will be expected to make an order allocating costs of the arbitration, including your fees and expenses, and the costs of the parties.How will you ask the parties to make their submissions? In oral closing statements? By post-hearing briefs? By supplementary briefs once they know your decision?What are the pros and cons of each, and what kind of information will you want from the parties in order to make an order allocating costs?
One participant believed that, as counsel are familiar with having to prepare costs submissions at the end of the hearing, that is easier for them. Another participant suggested that the parties’ positions on costs may change depending on the result, and submissions in writing may therefore be better. A different participant mentioned that she usually asks for costs submissions with a post-hearing brief (that also includes final submissions on the substantive issues), and hears any reply orally via telephone conference call. She prefers post-hearing briefs to closing submissions in order to keep costs down.
One benefit of early costs submissions is that the parties may be more reasonable because they don’t know who will win. The challenge is that the parties don’t know the basis on which the decision will be made and how the reasons may impact the issue of costs. For example, if the decision is made on the basis of egregious behaviour, that is something that counsel will likely want to address in their costs submissions.
One participant said that it depends on the nature of the case and on the parties. He usually renders a decision and invites brief submissions regarding costs. He prefers receiving costs submissions in writing, or orally via teleconference for smaller matters, rather than in person.
There might be an issue in an arbitrator’s decision requiring further submissions or steps by counsel and therefore more costs. Costs are therefore not always determinable in advance.
One participant raised the possibility of sending the parties off to mediate the costs issue, noting that she has had success with this approach in the past. The consensus of the group was that mediation of the costs issue could be a viable option, if both parties were agreeable to the idea.
- The hearing is over, and you have declared the arbitration closed (except for the costs submissions maybe). You have not yet rendered your decision.
While reading the transcript, you are suddenly struck by the thought that there is a very important question that has not been addressed by either party. It could make a big difference to your final decision on the case, but it just did not occur to you during the hearing.
What do you do?
One attendee indicated that he would go back to the parties if the important question related to a development in the law. He would ask them if this makes a difference, as it would be inappropriate for him to make his decision on the basis of a case not discussed by the parties.
If there is an argument or a factual issue not addressed by a party in the hearing, and the hearing is not yet over, most participants felt it was appropriate to ask about the issue/law/fact but the arbitrator must be careful not to take over the role of counsel.
One attendee suggested that asking a question of counsel doesn’t put the arbitrator in the position of an advocate. She suggested that this is part of the function of the arbitrator and that it is how you pose the question to the parties that matters.
One of the main benefits of arbitration is to get out of the court-like world and to substitute efficiency and fast decision-making for process. There is a concern that some arbitrators are importing too much of the legal/justice process into arbitration.
One participant suggested discussing the parties’ expectations during a procedural hearing at the outset: will the arbitrator follow a strict adversarial approach or take a more liberal approach?
- You are the chair in a tribunal of three under the CAA Rules. The evidence is in and you are trying to convene a meeting of the tribunal to continue deliberations and produce an Award.
One of the side arbitrators, realizing that the outcome does not look promising for the party that appointed him, has stopped communicating with you and the other arbitrator. Your emails and telephone messages go unanswered and even a registered letter to him has been returned. You know he is alive, because you heard that he was at a Bar Association dinner last week, which you were unable to attend. He is clearly refusing to participate in the deliberations in order to try to delay or frustrate the proceedings.
What do you do?
One participant offered that, if the non-responding arbitrator is a lawyer, the Law Society of Upper Canada has sanctions for lawyers who do not respond to communications.
Another participant suggested that the panel has an obligation to issue a decision expeditiously, and that a general communication should be sent from the panel to the parties explaining why the panel is unable to render its decision quickly.
Another participant wondered whether the chair of the panel could consult the co-operating member of the panel and, if they agree, release a majority decision.
One attendee mentioned that the ICC has amended its Rules to deal with this issue.
A different suggested approach was that the chair and communicative panel member could draft a letter to the parties asking how they wished to proceed, and copy the letter to the non-communicative arbitrator.
Another suggestion was that the chair and the co-operating arbitrator should send a letter to the non-co-operating arbitrator first, expressing concern, giving the arbitrator seven days to respond before writing to the parties.
One participant suggested that the CAA administrative team should get in touch with the non-communicative arbitrator and, if necessary, arrange for the possible removal and replacement of that arbitrator.
One attendee raised the possibility of requiring the parties to choose whether to proceed with two arbitrators or to have the chair decide the matter alone. Another option is to have a hearing de novo with a new three-member panel.
Several participants agreed that the information and choice should be given to the parties.
- You are appointed as arbitrator in a heated dispute between former partners in an accounting firm. The parties’ contract references the CAA, though it is clear they had no idea what the CAA was when they entered into the contract (and, in fact, the CAA didn’t exist at the time). Counsel were unable to agree as to how best to proceed, and you issued a procedural order directing counsel to submit briefs by a set date. Counsel for the plaintiff submitted a brief and counsel for the defendant did not. Counsel for the plaintiff has requested a conference call to determine next steps but counsel for the defendant is not replying to emails or returning telephone calls from the plaintiff of from your assistant.
What do you do?
What if neither party is responding to emails or calls from either you or your assistant and neither has submitted a brief?
Does it matter whether or not either side has paid its share of your retainer?
The facilitator asked participants to assume that the defendant attended at the procedural hearing and has not been heard from since that time.
One participant suggested that it would be prudent to confirm the jurisdiction of the arbitrator and of the CAA during the procedural hearing. This confirmation should be included in the Terms of Appointment.
Another participant raised Rule 14 of the CAA Rules, which deals with the failure of a party to comply with the Rules. The facilitator asked how an arbitrator would deal with the retainer in this situation.
One attendee recommended asking the participating side to front the costs of the other side, and then allowing the participating side to recover that money through the arbitrator’s Award.
One participant suggested that, where one party doesn’t pay the retainer, sign the Terms of Appointment, or even participate in the preliminary hearing, he would go forward with the Terms of Appointment as is.
The questions raised as a result of this scenario highlight the importance of thinking about these things in advance. No consensus was reached among participants as to how to best to proceed.
- At the beginning of the conference call to discuss preliminary issues, counsel for the defendant says that she disputes the jurisdiction of the arbitrator to continue because the parties just learned that, when you were a partner at your old firm, one of your partners did some corporate work for one of the subsidiaries of the plaintiff. Both parties had agreed on your appointment once they came to the CAA for assistance in resolving their dispute under the generic arbitration clause in their contract. Counsel for the plaintiff states that he is unprepared for a motion and understood the purpose of the call to be dealing with procedural issues only. Counsel for the defendant says that she won’t discuss procedural issues until the issue of jurisdiction is determined. The schedule is extremely tight and an adjournment to give time to prepare and argue a motion would cause irreparable harm.
What do you do?
What if one of the lawyers accuses you of bias based on whatever decision you make?
One participant was of the opinion that an issue of potential conflict could be resolved immediately, during the preliminary conference call.
Another participant mentioned that challenges to the arbitrator are addressed in the CAA Rules. The arbitrator should advise counsel for the defendant that if she wishes to raise a challenge, that challenge should go to the CAA and not to the arbitrator. The preliminary conference call should continue.
If the allegation is that the CAA has no jurisdiction, one participant said the jurisdictional issue could not be decided then and there. The arbitrator would go ahead with the procedural hearing as scheduled, and set a new date and time for a jurisdictional hearing.
Bias and jurisdiction are two separate issues.
- You are the arbitrator in a CAA arbitration. The plaintiff began the arbitration with counsel, discharged his lawyer, twice retained and then discharged counsel, and is now self-represented. He is doing his best to undo any work done by his previous counsel, including reneging on a narrowing of the issues in dispute. You have already spent a significant amount of time on the case. The defendant argues in a procedural conference call that the plaintiff has been attempting to run up the defendant’s legal bill.
What do you do?
This situation is difficult to deal with because of the balancing with which the arbitrator is tasked.
One participant would take a firm approach with the plaintiff: your lawyer was your agent; he had your authority to narrow the issues; and the case is now proceeding on that basis.
One attendee said that he finds himself explaining things more than usual when dealing with self-represented claimants; he has to explain what he is doing and why. He recommended that the arbitrator be patient and methodical but the arbitrator should also remember that he or she is in charge.
Sometimes arbitrators worry too much about judicial review or appeal of their decisions, and they can’t make their decisions on that basis. In reality, it is more likely that an arbitrator will be personally sued by a self-represented litigant for making the wrong decision than it is likely that an arbitrator’s decision will be overturned on appeal.
In response to the assertion by the defendant that the plaintiff has been attempting to run up the defendant’s bill, several participants agreed that it would be appropriate to ask the defendant “What do you suggest I do about that?” and leave the remedy or resolution (such as an order for security for costs), to the defendant’s lawyer to think of.
- You are the arbitrator for a matter in the early stages of the proceeding under the CAA rules. You prepared for the preliminary conference call but the call was cancelled due to the plaintiff’s retention of new counsel on the eve of the call. The plaintiff’s new counsel requests time to allow him to be brought up to speed on the file. Several weeks pass and the lawyer maintains that he needs more time. You feel that this should be a relatively straightforward matter and that the lawyer has had more than enough time to prepare. Counsel for the defendant is not complaining about the delay.
What do you do?
Does your answer change if counsel for the defendant is complaining about the delay?
To what extent does an arbitrator take control of the process? One attendee suggested that it is in the plaintiff’s interests to move this matter forward and that that responsibility rests with him.
One participant was of the opinion that the preliminary conference call should not have been cancelled, even if the other side had no problem with the adjournment. The call should have proceeded, and a new date should have been selected for another call with the new lawyer regarding next steps.
The facilitator asked what would happen if counsel wanted a six-month adjournment. One attendee pointed out that the process belongs to the parties and not the lawyers.
It was suggested that it might be helpful to have the parties participate in the preliminary call. That way, they would at least know that the arbitrator is not causing the delay.
Another participant was opposed to the idea of requiring the parties to participate, as this brings a risk of antagonizing the lawyers and possibly blind-siding them in front of their clients.
There was consensus among the participants that the function of an arbitrator is to serve the parties and not the lawyers.