Arbitration is essentially a private trial. It can be a voluntary choice or compelled under a contract or statute.
The parties choose the arbitrator. If the parties cannot agree on the arbitrator, an application can be made to the Superior Court of Justice to appoint the arbitrator.
In Ontario, the Arbitration Act, 1991 and/or the terms of an Agreement to Arbitrate generally govern the scope and procedure of the arbitration.
Each side calls its witnesses to give evidence under oath, and the parties and the arbitrator may each ask the witnesses questions.
All of the evidence and documents are to be disclosed to the other side in advance.
Compared to traditional trials, arbitration can usually be completed more quickly and is less formal.
At the end of each party’s evidence and argument, the arbitrator decides, on the facts and law, which side is successful. The onus or burden of proof is on the party commencing the arbitration to prove its case.
When a party is successful, the arbitrator will then decide what remedy it is entitled to receive. If the party bringing the arbitration is unsuccessful, the arbitrator will dismiss the claim. Either way, it is likely that the losing party, will end up paying a significant portion, if not all, of the other party’s legal and arbitration costs.
Arbitration can proceed even if one of the parties does not attend the hearing although that does not relieve the party who commenced the arbitration of the burden of proving its case.
After the hearing and usually within 30 days, the arbitrator issues an award that is in effect a judgment. Some awards simply announce the decision while more commonly the arbitrator gives reasons for the decision.
The arbitrator must conduct the arbitration hearing in a manner that is fair to all parties. Parties must know their rights and responsibilities in advance so they may properly prepare and present their positions as the arbitrator cannot assist either party in that regard.
While arbitration is a less formal process than court based litigation, it is still an adversarial process and an arbitration award can be enforced through the Superior Court.
It is very difficult to overturn an arbitration award and it can only be appealed on very narrow grounds so it is very important that the arbitrator be selected with care.
This outline is not legal advice and is provided for information only, if you have not already done so, you should consult a lawyer with experience in arbitration for advice on both the legal and procedural aspects of the arbitration process.