06 Nov

On November 2, 2015, the Canadian Bar Association ran a piece on arbitrations involving consumers:   “Mandatory arbitration clauses: How do the Consumers Fare?

Featured in the CBA’s article was another article, run by the New York Times over the past weekend. The NYT article implied that, at least in the United States, arbitration has become an “alternate system of justice” which tends to favour businesses with arbitrators “who commonly consider the companies their clients.”

The ADR Institute of Canada (ADRIC) is Canada’s preeminent ADR organization, representing more than 2000 arbitrators, mediators and other alternative dispute resolution professionals from every province and territory.

In ADRIC’s opinion, the situation in Canada is entirely different from the American experience reflected in the NYT article. Indeed at its 2013 conference, ADRIC debated whether Canada was even ready for consumer class arbitration – and concluded that, absent legislative reform, it was probably not. It was also noted that, in Canada, the courts exercise “core supervisory roles” over arbitration proceedings. Typical Canadian arbitration legislation specifically states that parties to an arbitration cannot contract out of the judicial review processes that exist. And while judicial intervention is supposed to be limited, the courts will intervene “to prevent unequal or unfair treatment of parties to arbitration agreements.”

The concerns described in the CBA article are met head-on by existing legislation in Canada, suggesting that whatever issues the NYT may have identified are not Canadian issues. Arbitrators must by law be independent of the parties. They must also act impartially. The basic rule, enshrined in all Canadian legislation, is that in an arbitration, the parties “shall” be treated equally and fairly. Furthermore, mandatory consumer arbitration clauses and class action waivers are unenforceable under consumer protection laws in many Canadian provinces.

To conclude, though, that arbitration is not well regarded in Canada would be a mistake. The Supreme Court of Canada has repeatedly recognized the benefits of arbitration over traditional litigation. Access to justice is a key theme throughout. And while the NYT may be right that arbitration is an alternate system of justice, in Canada at least, that is not a bad thing. As Justice Binnie stated in the Supreme Court of Canada’s decision in Seidel v. Telus (2011), “the virtues of commercial arbitration have been recognized and indeed welcomed by our Court.”   Indeed, the minority opinion in Telus acknowledged that access to justice may no longer necessarily mean access to a judge.

Arbitration in Canada, including consumer arbitration, cannot and does not suffer from the problems the NYT identified. Apart from the laws and regulations that exist to ensure equal and fair consumer treatment, arbitrators in Canada are highly qualified. Claims of arbitral bias in Canada are extremely rare. Organizations such as ADRIC offer a number of services that are aimed at promoting the highest ethical standards and conduct. For example, ADRIC has a Code of Ethics that applies to all of its members. The ADRIC Arbitration Rules demand arbitral independence and impartiality and full disclosure of any material conflict of interest. Any breach of these basic rules will result in ADRIC removing the arbitrator from the case. Many if not all Canadian dispute resolution institutions adhere to similar codes and rules, as do international organizations, including the International Bar Association.

As Scott Siemens, the President of ADRIC said, in response to the NYT article: “ADRIC is committed to ensuring that private arbitration continues to be a meaningful alternative to traditional litigation procedures and that the arbitrators who perform their duties do so at the highest standards of excellence”.

Given the Canadian experience, consumer class arbitration may, in fact, be a better solution than the court processes. We should, therefore, embrace arbitration as a meaningful access to justice tool, as many legal systems around the world have done for centuries.

Janet McKay
Executive Director

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