Posts by Herb Silber, Q.C.

Herb Silber, Q.C.
Friday, May 6th, 2016    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.

One issue that often bedevils a mediator is the role of legal counsel at the Mediation. The goal from the mediator’s perspective is to encourage the parties to find a settlement. A Mediation that does not arrive at a settlement, or does not at least set the stage for one by narrowing the dispute, must be considered a failure. Legal counsel may be part of the solution, but often times are part of the problem. Some litigation counsel are stuck in the belief that any concession by their client is a sign of weakness. Thus, if the dispute does not settle they and their client will be seen as weak. It is precisely because of this perception that counsel with this mindset ought to have the most invested in a successful process. The parties, with perhaps the exception of a mandatory mediation (even then it is not all that clear), are “at the table” to find a resolution for a variety of reasons; cost savings, husbanding of non-pecuniary resources, preserving of relationships, privacy and others. Counsel must identify with these goals and try to find a path to achieve them, not be imprisoned by their own ego because the resolution will necessarily be a collaborative effort, and not engineered by them. One way to get Counsel on board is to persuade them of the risk of not settling, not the reward of not doing so. This requires a mediator with experience; a strategic thinker and one with judgment who either has or can gain the confidence of all parties and their counsel.

 

The other challenge that I wish to address that often arises in mediation is where does the truth lies between the parties. This is where mediation and a trial or arbitration part company. Mediation is not a search for the truth like a trial. It is a search for a settlement. A skillful mediator must understand that and be able to subtly influence the parties so they are not invested in finding the truth, but rather in finding a resolution. The resolution may reflect, in some fashion, the respective versions of the truth, but that is not crucial. What it needs to reflect are the respective interests of the parties and how they have been able to rationalize those needs to achieve a settlement.

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Herb Silber, Q.C.
Tuesday, March 29th, 2016    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 post, I addressed the question of whether an Arbitrator should conduct his or her own independent research of the facts outside of the evidence presented by the Parties. Now I want to address the second part of that question which deals with legal research. Succinctly put, should an Arbitrator engage in his her own legal research independent of the submissions made by the Parties or their Counsel.

It is not unusual for a Judge to refer to cases that have not been cited by Counsel that may be recent expressions of cases well known and referred to by Counsel to support one side or the other. I see no harm in that. However, once an Arbitrator embarks on his or her own to engage in legal research on an issue not raised or focused upon by the parties I believe he or she is on shaky ground and may subject their Award to a finding of arbitral error.

Underlying all arbitrations is the right of each party to know the case it needs to meet. That is inherent in the concept of a fair hearing. So for an Arbitrator to venture out on his or her own to research a legal issue that the parties have not raised or may be peripheral to the case, arguably, would be manifestly unfair. The saving grace however could be if the Arbitrator raised the legal issue with the parties that is of concern and asked them to address it, rather than doing his or her own research. This would be consistent with the direction to the Arbitrator in BCICAC Rule 19 to make a determination of the case on its merits, but in doing so treating both parties fairly and giving each an opportunity to present their case. Moreover, Rule 33 of the BCICAC Rules makes it clear any award must be decided in accordance with the law, in the absence of agreement by the Parties to do otherwise.

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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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