Posts Tagged ‘mediation’

Herb Silber, Q.C.
Friday, January 18th, 2019    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.

There is often a misconception about the role of the arbitrator appointed to an arbitration panel by one of the parties. Where there is a three person panel called for under an Arbitration Agreement, most often the two arbitrators appointed by the opposite parties appoint the third arbitrator, who will act as the Chair.

The misconception arises as to whom the “loyalty” of an arbitrator appointed by a party lies- to-the party appointing, or the process. The answer clearly under Canadian law is the latter-the process. All of the appointed arbitrators, regardless of who appoints them, owe a duty of impartiality to all of the parties’ He or she must be not only be unbiased, but must be seen to be unbiased. The Arbitration Panel being seen as a mirror of a judicial process requires the same degree of independence and impartiality as one would expect of a judge.

In a recent decision of the BC Court of Appeal, Hunt v, The Owners of Strata Plan LMS25561 it was determined that an ex parte communication (i.e. an undisclosed communication made in the absence of the other party) between a party and its appointee that did not go to the merits of the case, but merely a strategic consideration, was sufficient to give rise to a reasonable apprehension of bias resulting in the quashing of the arbitration award. The premise of this is that both evidence and representations (which this communication fell into) are not permissible. “Whoever is to adjudicate must not hear evidence or receive representations from one side behind the back of the other…”2

It has been a long held belief that the arbitrator appointed by a party, while required to be unbiased and impartial, can still be predisposed to the perspective of the party who appointed them. As an example, on a lease rent renewal, one would expect the Landlord to appoint an arbitrator who has a history of being more sympathetic to Landlords. The conventional wisdom is that there is nothing wrong with that per se, so along as the appointee is not an advocate or partisan for the party appointing that person. They can seek to explain their understanding of the position advanced by the party appointing them, but must not compromise their independence, even if it means coming to a conclusion that does not advance the interests of the party appointing them. The Hunt case makes it clear that the person appointed as an “arbitrator” is not the “nominee” of the person appointing them. The duty of arbitrators once appointed is not to act as advocates but as ‘free, independent and impartial minds.’”3

In the result it can be a very tricky path to navigate when dealing with an arbitrator appointed by a party. Given the admonitions from the Hunt case and the major consequences for going “offside”, it is the course of prudence once the appointment has occurred to deal with that person no differently than one would with a sole arbitrator appointed by both parties or a judge. Communications on an ex parte basis of a strictly procedural nature may be permissible but anything beyond that is perilous.
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1 Hunt v. The Owners, Strata Plan LMS 2556, 2018 BCCA 159
2 Hunt, supra, at para. 87, p. 18
3 Hunt, supra, at para. 115, p. 22

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Herb Silber, Q.C.
Monday, March 6th, 2017    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.

Typically the format of a mediation hearing involves the following stages:

  1. The parties meet in a plenary session with the mediator to set the stage for the mediation. This provides the forum where the parties can state their positions.
  2. The mediator caucuses with each party. These sessions are confidential save to the extent the mediator is authorized to take information to the other party.
  3. After one of more of these sessions, a point will come where the parties will either reach a settlement or find they are unable to do so.
  4. If a settlement is reached it is documented; if not, some mediators, including myself, have expressed a willingness to remain involved to facilitate ongoing discussions between the parties which may lead to a settlement.

Even an unsuccessful mediation can bear fruit. It can clarify and narrow the issues which can bring about a settlement at a later stage. That said, the optimum is to encourage a settlement if one is to be had on the day set aside for the mediation. The parties are most invested in trying to reach a settlement then. They have set aside the time and each has usually approached the Mediation with an optimism that a settlement is possible, albeit on terms they see most advantageous to themselves.

With that in mind, mediators look to try to bridge any gap that exists. An activist mediator will try to achieve this through a mix of encouraging the parties to try harder, utilizing one’s realistic or practical advice, commercial perspective and the use of other skills. Some may suggest a med-arb approach whereby the mediator makes a written determination of the outcome and places it in sealed envelope only to be opened at the end of the mediation if there is no settlement. That is a risky business but if the parties buy into it they will be encouraged to moderate their positions so they achieve a collaborative solution rather than one that will have been imposed.

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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 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, December 5th, 2013    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.

Perhaps the most important stage of the process to try to ensure the efficiency and cost effectiveness of an arbitration occurs when an arbitration clause is negotiated. Too often one sees an arbitration clause that merely refers the matter to arbitration in accordance with Commercial Arbitration Act [in B.C. now called the Arbitration Act]. That may lead to a convoluted process of negotiation between counsel as to how to best navigate the dispute. In B.C. the Domestic Arbitration Rules, which by virtue of Section 22 of the Arbitration Act are incorporated in every arbitration governed by that Act, provides most significantly that the Rules apply, except where the parties otherwise agree. This provides a baseline, at least, for the process. I have seen arbitration clauses that specifically exclude the Domestic Arbitration Rules. My view is that would be a mistake as it gives the parties the ability to try to take strategic advantage of one another, which will undoubtedly increase the cost and protract the time required to have the Arbitration heard.

There are a number of considerations that a party should reflect upon as to the wording of the arbitration clause, besides the nature of the process, that, depending on the nature of the underlying transaction, may advance the process and thereby reduce the cost and avoid delay. In this article I will take the opportunity to mention two that, in my experience, should always be part of the calculation. They are the following:

  1. Should the parties be required to go to mediation before they can resort to arbitration?
  2. The number of arbitrators

There is value, as I have indicated in the past, to giving serious consideration to requiring the parties to first seek a mediated resolution. As then noted, there is no mechanism, apart from agreement, to force the parties to mediate, as there is in under the Mediation Regulation accompanying an Action in the Supreme Court of British Columbia. My experience has indicated that mediation in advance of resorting to arbitration may be a useful tool, particularly in matters such as rent renewals under a commercial lease, where there is generally objective evidence to resolve matters and all that may be needed is the presence of an experienced mediator to get the parties to bridge the gap.

The selection of the number of arbitrators is also a key to conducting a cost effective and expeditious arbitration. I believe that the “default position” should be a single arbitrator. By that I mean there must be a cogent reason present before a three person panel is justified. Consideration could also be given to limiting the number of arbitrators based upon the amount of the claim; as an example, if one were dealing with an arbitration clause in connection with a dispute arising out of a sale of a business or a valuation issue. In this way, claims that are genuinely valued above a certain threshold (as spelled out in the Agreement itself) could, if insisted upon by one of the parties, result in a three person arbitration panel; and those below that value would be determined by a single arbitrator.

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