Following the wrong path ...

Arbitrations are often conducted by lawyers (both as advocates and as arbitrators). As a result there can be a tendency on the part of the players to replicate rather than avoid the formalities of the traditional legal system. The tendency must be resisted if it is not to eviscerate the benefits of ADR.

A recent case out of Ontario demonstrates what can go wrong if arbitrators and advocates are not more cautious about transferring court-like procedures into the arbitration process. In Van Kempen v. Brown Pineo Insurance Brokers Ltd a dispute arose between an employer and an employee. The employee considered himself dismissed in December 2003. Arbitration proceedings (pursuant to the employment agreement) were commenced. After a 23-day hearing the arbitrator released decisions on various aspects of the dispute in February and April 2008. Damages of $285,500 were awarded to the employer together with costs of $355,800.

The history of this case raises a question and a concern. First, why did it take more than four years to get to a hearing (or at least a decision), and why did the hearing take so long? Was it because the lawyers and the arbitrator chose the "traditional" approach of the courts to evidence and procedure? If so, wouldn't that defeat one of the ends of the arbitration process, which is to substitute more flexible (hence less expensive and quicker) procedures for those of the courts?

Second, the fact that the costs (which had been awarded on a full indemnity basis because of the losing party's failure to accept some offers to settle) were so high--higher than the damages awarded--raises the possibility that "ordinary" people will be reluctant to try arbitration because of the fear of the consequences. Which means that deep-pocked litigants will be able to "scare" impecunious opponents to give up otherwise meritorious claims or defences.

When that happens in the courts we become justly concerned about the resulting denial of access to justice. What then do we say when it happens in the field of arbitration--a field that at least in part was fashioned to address the problem that people couldn't afford to access justice through the court system.