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Why choose arbitration?

Introduction

Arbitration is getting more and more widespread.  As a matter of fact, when it comes to a private or an international contract, arbitration proves almost ineluctable.  This is due to the fact that the parties but reluctantly trust public or foreign courts.  Besides, it is easier to obtain homologation of a decision from an arbitration court than from a foreign state court.  This results from the New York Convention to which more than 130 countries adhere.

But why refer to arbitration instead of state run courts?

Mainly for 4 reasons:

1. Flexibility and speed

Arbitration allows to proceed quickly because the parties are not subject to the usual delay between readiness for trial and hearing date.  In addition, the arbitrator may establish a tight schedule, thus ensuring a quick hearing.  Hearing dates are fixed in accordance with your priorities and availability and not with a waiting list.  For certain construction contracts, among others, arbitration may allow the possibility to have a clause interpreted while the contract is being executed, which can circumvent onsite problems.

There are various types of arbitration.  For example, here is that which the Honorable Pierre A. Michaud, Qc., called the “baseball” type arbitration where the arbitrator may choose but between 2 solutions, the one proposed by party A or one proposed by party B, not having the competence to conclude otherwise. The latter respectfully suggests that this has the advantage of inciting the parties to make more reasonable demands in order to meet with the arbitrator’s approval.

2. Choosing the arbitrator

Having the possibility to participate in choosing the arbitrator(s) proves a definite advantage compared with the common law courts.  Indeed, arbitration allows the parties to choose among proven arbitrators on technical and/or legal aspects and who know how to conduct adversarial debates.  Nobody wishing for a decision rendered after overly long deliberations, you may choose an arbitrator known for his celerity to render decisions, thus avoiding said problem.

In short, arbitration allows you to choose the judge and assures hearing at an appointed date and time.  It is made-to-measure justice; some will even say "fast track justice".

3. Arbitrators’ decisions are final and without appeal

Once a decision has been rendered by the arbitrator, the parties are set; they will not have to wait for the outcome of possible appeals, thus avoiding delays and additional worry. This is a definite advantage.

Although an arbitral decision is subject to approval, the Court cannot look into the heart of the matter.  Indeed, the Court can refuse approval but for one of the following reasons:

  1. legal capacity of the parties;
  2. nullity of the agreement;
  3. one party proceeded in the absence of the other one and the latter was not advised of such;
  4. the arbitrator(s) went beyond the competency conferred by the arbitration clause;
  5. nullity of the method of appointing arbitrators.

Very seldom will the Court refuse to homologate an arbitral decision. In brief, homologation has nothing to do with the appeal process.

4. Confidentiality of the process

Medias, competitors or simply the curious are not privy to arbitration; nobody wishes to expose personal matters and sometimes personality conflicts to the public knowledge. Generally speaking, enquiry, or hearing of the witnesses, defense speeches and arbitral decision are kept private - sheltered from the belligerents. This often proves highly advantageous. We just gave you 4 reasons indicating why arbitration proved a serious option. But then arbitration is no panacea. Too often will the process get out of hand.

Thus it is paramount if one wishes to ensure that the procedure will immediately get underway, in a quick, direct, binding and restrictive manner, aware of the importance of distinguishing between arbitration costs on one hand and litigation true stakes on the other hand. It is paramount that one has to provide that it should be made under the aegis of the Canadian Commercial Arbitration Centre (to find out why, follow the link: “Why chose the CCAC”).

Conclusion

Hereinabove are but for (4) of many reasons indicating why arbitration is a serious proven option; but then arbitration is no panacea. Too often the process gets out of hand.