Posts by Herb Silber, Q.C.

Herb Silber, Q.C.
Wednesday, March 25th, 2015    Posted by Herb Silber, Q.C. (posts)
Herb Silber, Q.C.
Herb Silber, QC brings a strong combination of experience, knowledge and empathy to the arbitration process as Arbitrator or Counsel. Herb’s approach creates the positive, respectful atmosphere critical to a successful arbitration process.

This topic can be divided into two parts – research of the facts and research of the law. This comment will focus on whether an Arbitrator can conduct independent research of the facts outside of the evidence presented at the Arbitration.

The British Columbia Court of Appeal has recently addressed this issue in a criminal case, R. v. Bornyk 2015 BCCA 28. I believe the Court’s findings are instructive for arbitration as well. In this case, the trial judge did his own reading of expert articles on the reliability of finger print evidence, which was key to the finding of guilt or innocence and concluded that the expert evidence presented by the prosecution was not reliable. The Appeal Court admonished the trial judge for doing so and overturned the not guilty verdict. The Court noted that ‘ It is basic to trial work that a judge may only rely upon the evidence presented at trial, except where judicial notice may be taken…” (which can only arise in exceptional circumstances where there is indisputable accuracy of the assertion, such as January 1, 2015 fell on a Thursday). The Court went on to state:

“[11] By his actions, the judge stepped beyond his proper neutral role and into the fray. In doing so, he compromised the appearance of judicial independence essential to a fair trial. While he sought submissions on the material he had located, by the very act of his self-directed research, in the words of Justice Doherty in R. v. Hamilton (2004), 189 O.A.C. 90, 241 D.L.R. (4th) 490 at para. 71, he assumed the multi-faceted role of ‘advocate, witness and judge’.”

As noted in the passage above, even where the trier of fact gives the parties an opportunity to make submissions on the factual findings made by relying on extrinsic evidence that is not sufficient as it ultimately for the trier of fact to ensure a fair trial, in this case not introducing evidence on his own initiative.

The Arbitrator must also conduct a ‘fair hearing.” One distinction between an arbitrator and a trial judge is that Arbitrators are often chosen because of their particular knowledge or expertise in an area and it may be reasonably expected by the parties that the Arbitrator will not ignore this expertise. However, general knowledge of the industry is not a substitute for the requirement that evidence on a specific matter ought to be expected to be presented by one or other of the parties so the other party has an opportunity to test the proposition on cross examination or respond with their own evidence. Given the requirement to conduct a fair hearing and to avoid being the “advocate, witness and judge”, it is best practice, in my view, for the Arbitrator to tread carefully on assumptions he or she makes based on their “general knowledge” of an industry and when in doubt, offer the parties the opportunity to address the issue if they choose to do so by the parties presenting evidence.

One area that an arbitrator can initiate a process is to order a view or inspection of property (see Section 29 (1) (d) of the BCICAC Rules). Thus if the Arbitrator concludes, as an example, where value is in issue, that he or she wishes to view a real property after hearing evidence in connection with the same, the appropriate practice, in my view, is for the Arbitrator to give notice to the parties of his or her desire to view or inspect the property. At that point an Order should be made to that effect, notice of the date and time of attendance given to the parties so that the parties and their representatives may be present, and given an opportunity to provide comments when the view or inspection takes place.

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Herb Silber, Q.C.
Monday, January 26th, 2015    Posted by Herb Silber, Q.C. (posts)
Herb Silber, Q.C.
Herb Silber, QC brings a strong combination of experience, knowledge and empathy to the arbitration process as Arbitrator or Counsel. Herb’s approach creates the positive, respectful atmosphere critical to a successful arbitration process.

In my last Case Comment, I examined some of the elements of the recent watershed Supreme Court of Canada decision, Sattva Capital Corp v. Creston Moly Corp, which provides a complete compendium on the application of the principles that are engaged where leave to appeal an arbitration award to the British Columbia Supreme Court is sought.

One of the elements I did not address in that Case Comment was the residual discretion of the Supreme Court to deny leave even where the substantive requirements of a Leave Application are met. Some of those factors were alluded to in the Sattva decision and include the conduct of the parties and the urgent need for a final answer.

An application of those principles can be found in a recent B.C. Supreme Court decision representing one of the first post Sattva cases, Owners, Strata Plan BCS 3165 (“Owners”) v. KBK No. 11 Ventures Ltd. (“KBK”), which was successfully argued by Shane Coblin of our firm. In that case, while the Court decided largely that the issues sought to be appealed were matters of fact or mixed fact and law and therefore did not satisfy the requirement that leave to appeal an arbitration award can only be founded on a question of law, nevertheless, the Judge did address the question of whether he should exercise his discretion to refuse the granting of leave to appeal, and in doing examined the two grounds referenced above.

On the matter of the conduct of the parties the Court considered the behaviour of the Owners in their attempt to delay the hearing of the arbitration, including commencing a futile Supreme Court of BC Action four days before the arbitration was scheduled to start and spending four days on a failed application to stay the Arbitration Hearing, as well as the Owners’ failure to acknowledge and pay any of their financial obligations to KBK, even the ones for which no appeal was sought.

The Owners’ failure to pay even those obligations they were not contesting gave support to KBK’s claim to the urgency of obtaining a final answer so it would not be unduly burdened financially. As a result the Court exercised its discretion, in particular, on the basis of the urgent need for a final outcome, to deny the Leave Application even if the Owners had met the other burdens for a successful Leave Application.

As mentioned previously, given the other findings of the Court, the Judge’s refusal to exercise his discretion in favour of granting leave to appeal was not critical in this case. However, it does stand as a cautionary tale that the objectives that are set out in Rule 19 of the British Columbia International Arbitration Centre Rules, that I have noted in a prior Case Comment, i.e. that the process should “strive to achieve a just, speedy and economical determination on its merits” are to be ignored at one’s peril.

On a personal note, since my last Case Comment, I was honoured to have been appointed a Queen’s Counsel (QC) by the Government of British Columbia. I want to thank all of you who conveyed your support and good wishes.

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Herb Silber, Q.C.
Wednesday, October 8th, 2014    Posted by Herb Silber, Q.C. (posts)
Herb Silber, Q.C.
Herb Silber, QC brings a strong combination of experience, knowledge and empathy to the arbitration process as Arbitrator or Counsel. Herb’s approach creates the positive, respectful atmosphere critical to a successful arbitration process.

Sattva Capital Corp v. Creston Moly Corp, 2014 SCC 53 (Sattva)

In the past I have posed the question as to whether Arbitration can be more cost effective and efficient than a court process. The recent Supreme Court of Canada decision, Sattva, provides a complete compendium on the right to appeal a decision of an arbitrator. The upshot of that case is to clarify (if it had been required) that the right to appeal an arbitrator’s decision, particularly when the subject matter of the arbitration is the interpretation of a contract, is very limited- even more so than an appeal from a decision of an inferior court. The result is that it presents another benefit to the insertion of an arbitration clause in an agreement for those parties who wish to ensure that, in the event of a dispute, the outcome of a decision by the arbitrator is likely to be final, thus limiting the cost and enhancing the efficiency of this alternative dispute mechanism. Sattva represents the latest pronouncement of the Supreme Court of Canada’s philosophical adherence to providing parties access to justice by limiting the ability to appeal an arbitrator’s decision, thus ensuring that the more financially robust party will not be able to “tilt the playing field.”

Briefly, the facts in Sattva involved a contractual dispute over a finder’s fee that Sattva alleged was owing to it. In particular, under their contract, Sattva was to be paid a fee of US $1.5 million in shares. The issue that the arbitrator was asked to consider was the date the shares were to be valued. Nine million shares hung in the balance based on the alternative dates each of the parties contended for.

The Court first dealt with principles of contract interpretation and concluded that as most contracts involved a consideration of mixed fact and the law, the right to appeal under S. 31 of the Arbitration Act, SBC 2004, which is limited to questions of law, would rarely be able to be resorted to. The result of this is that in arbitrations involving an interpretation of a contract, which is most often the case, the arbitrator’s decision is likely to be final.

 

Additionally, the Court weighed in on the test to be applied by a court reviewing an arbitral decision, if it has the jurisdiction to do so. The Court’s approach was to re-iterate the importance it places on giving great latitude or deference to the arbitrator in his decision making process. This stems from recognition of the importance of maintaining the integrity of the arbitral process. As the Court noted at paragraph 89 of Sattva, arbitration often is chosen “…to obtain a fast and final resolution…” Later at paragraph 105, the Court observed that “… it may be presumed that [because the parties choose their decision maker] such decision makers are either chosen based upon their expertise in their area which is the subject matter of the dispute or are otherwise qualified in a manner acceptable to the parties.” For these reasons, the Court identified that the test for overturning an arbitral decision should be akin to that of overturning a decision by an administrative tribunal-reasonableness. This presents a high bar to overturn an arbitral decision.

The Sattva case represents, in my opinion, a high water mark in the promotion of an efficient and cost effective process that the parties can look to if they choose to have any disputes that may arise in their commercial relationship governed by arbitration.

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Herb Silber, Q.C.
Tuesday, March 18th, 2014    Posted by Herb Silber, Q.C. (posts)
Herb Silber, Q.C.
Herb Silber, QC brings a strong combination of experience, knowledge and empathy to the arbitration process as Arbitrator or Counsel. Herb’s approach creates the positive, respectful atmosphere critical to a successful arbitration process.

This is the third and final installment in the series on the topic of how arbitrations can be made more cost effective and efficient. The previous two articles considered strategies that could be deployed at the time the arbitration clause is negotiated and inserted in an agreement and at the time the dispute arises.

The biggest difference in the strategies during the arbitration itself is that this is the forum in which the Arbitration Panel has the most active role. At this stage the parties will have agreed, or will have been guided by the Arbitration Panel, as to the shape of the process and rules that will inform the Arbitration, so it leaves the greatest scope for the Arbitration Panel to exercise their discretion to assist in making the arbitration both cost effective and efficient. The Panel can, by their skill and creativity be part of a solution, or conversely, be part of the problem. The overarching principle that arbitrations are governed by can be found in Rule 19 (or a variation thereof) of the Rules of the BC International Domestic Arbitration Centre (BCICAC) which states:

  1. Subject to these Rules, the arbitration tribunal may conduct the arbitration in the manner it considers appropriate but each party shall be treated fairly and shall be given full opportunity to present its case.
  2. The arbitration tribunal shall strive to achieve a just, speedy and economical determination of the proceeding on its merits.

 

It is important for both Counsel and the Arbitration Panel to always be mindful of this rule when they are considering how the Arbitration will be conducted, both prior to the Hearing and at the Hearing. Rule 19 provides a balance between equity and efficiency, so that while each party must be treated fairly, they must also recognize that the arbitration process does not guarantee perfect justice.

Rule 19 gives the Arbitration Panel the discretion in the procedure to use in adopting its decisions. As an example, there is Authority to support the proposition that the Courts should not review an interlocutory ruling (not being an “award”). However, given that Arbitration is built on a consensual process, the experienced Arbitration Panel, should always try to encourage the parties to come to or build a consensus as to how the arbitration should proceed. The ability to do this separates the good arbitrators, who will be sought out, from others who do not have this mindset or skill.

Some ideas that should be considered by the Arbitration Panel, with the participation of the parties, would include the use of written submissions wherever possible, including having the Hearing done by way of a written hearing. This could be particularly useful if the facts are really not in dispute and could certainly result in a saving of time and costs. Other ways to make the Arbitration more cost effective may be to carefully consider, what if any cross examination may be needed and should there be time limits on it. Where expert witnesses are retained by both parties, should they meet and try to provide a “joint report identifying those matters which are not in dispute and those which are in dispute.”[1]

The ideas presented in the previous paragraphs are but a few that could be considered by the Arbitration Panel, working in conjunction with the parties to ensure that the Arbitration is cost effective and efficient, while still maintaining the important touchstone of “fairness”.

[1] Rule 27(3) BCICAC Rules

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Herb Silber, Q.C.
Thursday, January 2nd, 2014    Posted by Herb Silber, Q.C. (posts)
Herb Silber, Q.C.
Herb Silber, QC brings a strong combination of experience, knowledge and empathy to the arbitration process as Arbitrator or Counsel. Herb’s approach creates the positive, respectful atmosphere critical to a successful arbitration process.

In my last article I looked at what could be done at the time the arbitration clause is negotiated to advance the efficiency and cost effectiveness of the Arbitration. How that process ends up will be a harbinger as to what can or cannot be done at the next stage, when the dispute arises.

Regardless, what is first necessary for one to do is to carefully read the Arbitration Clause and the Agreement it is found in to ensure that there are no false steps. One of the surest ways to protract the arbitration is to give fodder to the other side, should the party seeking to invoke arbitration makes a misstep. Some points to consider, therefore, to avoid this occurring are to identify if there are any limitations to be found in the agreement to permit the arbitration of the specific dispute. If there are, have “they passed” or do they need to be addressed? Has the dispute that has arisen such that it can be arbitrated? It may be for instance that the dispute is not yet “ripe.” Absent a” dispute” as contemplated by the Agreement containing the Arbitration Clause, there is nothing to arbitrate.

One consideration in British Columbia is whether to engage the BC International Domestic Commercial Arbitration Centre (BCICAC) to administer the Dispute, assuming they are not designated to do so in the Agreement under scrutiny. In the context of the objective that this article is addressing the benefit of having the BCICAC administer the Arbitration is to put time limits on the process as a starting point. As an example, Section 12 of the BCICAC Rules set out a time table for the appointment of an arbitrator after the Arbitration is deemed to have commenced (the filing of the Submission to Arbitrate with BCICAC along with the commencement fee). If the parties cannot agree on the appointment of an arbitrator within the time limits, one of the parties may request that the BCICAC appoint the arbitrator. There are similar default provisions in favour of the BCICAC if it is a three person arbitration panel to be appointed.

In my earlier articles I have written about the consideration of proceeding to mediation of a dispute before an arbitration could be sought. The challenge with that, as I have noted, is that if a provision to force the parties to choose that route is absent from the arbitration clause in the Agreement, then there is no mechanism to force the recalcitrant party to follow this path. That said, one option that might be considered to encourage the recalcitrant party to accept mediation is to hold over them the spectre of being penalized in costs. Rule 30 of the BCICAC Rules permits a party to make a Settlement Offer that the Arbitrator can consider, if it is rejected by the other side, when it comes to deciding issues of costs. I see no reason why a “settlement offer” by one party asking that the other refer the dispute to mediation before arbitration, once rejected, could not be a consideration by an arbitrator when it comes to deciding costs of the Arbitration. The BCICAC Rules gives the Arbitration Panel a wide discretion in deciding costs at the conclusion of the Arbitration.

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