Settlement Opportunities During Arbitration
By Gina Murray
Arbitration, as a dispute resolution process, can often offer parties a more timely resolution to their dispute than traditional litigation. This speed, however, does not come without challenges. This article considers the pace of arbitral matters and its creation of settlement disadvantage associated with arbitral proceedings compared to traditional litigation. It then suggests a way in which parties to an arbitral matter can retain the benefits of arbitration while increasing opportunities for settlement.
Arbitration Settlement Disadvantage
Reliable statistics are difficult to obtain. Anecdotal evidence suggests that matters that proceed by way of court litigation settle at a much higher rate than those that proceed by arbitration. Indeed, fewer than 3 percent of matters filed with the British Columbia Supreme Court proceed to trial. In contrast, available arbitral statistics suggest a much lower settlement rate. For example, though ICSID cases are inherently unique and therefore may not provide a reliable indicator of cases that may otherwise be addressed in court, the ICSID Caseload statistics indicate that of all arbitral proceedings under the ICSID Convention and Additional Rules Facility, including the UNCITRAL Rules, that were disposed of by tribunal rulings, settlement and discontinuance, only around 23 percent were disposed of by settlement.
Roadblocks to Settlement
Settlement opportunities are likely a casualty of the expedited timelines often associated with arbitral proceedings. Unlike litigation, where the steps and timelines create logical breaks in the process when the parties have sufficient time to engage in settlement discussions, the pace of arbitration obscures those opportunities. Without predefined opportunities to engage in settlement discussions, the next required step in an arbitral matter may occur so quickly that any meaningful opportunity to settle is lost.
Ways to Increase Settlement Opportunities
As alluded to above, the parties may consider building settlement opportunities into their procedural orders. While each matter will have unique considerations, two reasonable places to consider building in dedicated time for settlement discussions are after the exchange of fact witness statements and expert reports and at the conclusion of the hearing, before a decision is issued.
With respect to the first opportunity, once the parties have a better understanding of both sides of the dispute, they are in a better position to have meaningful settlement discussions. If a matter settles at this stage, the cost and time savings are significant. With respect to the latter opportunity, following the close of the hearing, the parties now have a complete picture and have an enhanced ability to advise their clients regarding possible outcomes. The parties should not overlook the cost savings associated with a settlement at this stage. Indeed, some commercial arbitration proceedings award full-indemnity costs.
To ensure these settlement opportunities are available, the parties may wish to consider building settlement periods into the arbitration agreement both after the witness statements and expert reports are exchanged and after the close of the hearing. Depending on the nature of the dispute, the parties may consider pre-selecting a mediator (who is not the arbitrator) to assist at either of these points. Agreeing to this step and selecting the mediator in advance ensures that settlement opportunities are not lost to scheduling conflicts.
Parties that want the expedited and reliable process associated with arbitration and want to enjoy some of the cost-saving opportunities associated with settlement should consider the benefits of expressly negotiated settlement periods that occur at defined times within the process. While settlement may not be an available option in every case, building in the time to consider it as an outcome may help lessen the settlement disadvantage between litigation and arbitration.
 Allard v. The University of British Columbia, 2021 BCSC 60 at para. 78, citing Goel v. Sangha, 2019 BCSC 1916 at paras. 66-69 and Teal Cedar Products Ltd. v. British Columbia (Ministry of Forests), 2011 BCSC 360 at paras. 78 and 85 (varied on other grounds, 2012 BCCA 70); K-Rite Construction Ltd v. Enigma Ventures Inc, 2020 ABQB 566 at para. 38.
Gina Murray is an Associate in the Litigation and Dispute Resolution Group at Blakes in Calgary. Gina’s practice focuses on all areas of corporate and commercial litigation and dispute resolution. She has experience in a variety of areas, including appellate advocacy, arbitration, insurance, administrative law and constitutional law.