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Arbitration is a process by which civil disputes may be adjudicated using a process outside of a formal court system. The results of arbitrations are binding on the parties and are enforceable by the courts.

In British Columbia, commercial arbitrations are governed by the Commercial Arbitration Act. RSBC 1996 c 55 . The Act defaults to the rules of procedure published from time to time by the British Columbia International Commercial Arbitration Centre (BCICAC). The financial affairs of BCICAC are administered by the British Columbia Arbitration and Mediation Institute (BCAMI), an affiliate of the ADR [Alternate Dispute Resolution] Institute of Canada (ADRIC). BCAMI, in addition to its administrative responsibilities to BCICAC, conducts courses and provides the qualifying process leading to the Chartered Arbitrator (C.Arb) designation granted by ADRIC.

The arbitration process commences with an agreement between two parties to submit their disputes to arbitration. That agreement might arise from a shareholders agreement entered into at the outset of a business relationship or partnership. Or, parties may already be engaged in a dispute and decide to take the arbitration route to its resolution. In either event, the parties commence the arbitration process by either selecting one or more arbitrators (three is a practical maximum) or, if they cannot agree on an arbitrator, the claimant (analogous to a plaintiff in civil proceedings) submits a Notice of Intention to Arbitrate with BCICAC and asks BCICAC to appoint one or more. BCICAC then identifies four candidates (more if the arbitration is to be conducted by a three-person panel) and invites the parties to choose from that list. If the parties still do not agree, BCICAC makes an appointment which is binding upon them.

Following the appointment, the parties exchange statements of claim and defense and, usually, but not always, a hearing is convened and the arbitrator(s) hear evidence, normally under oath. The arbitrator then renders a written decision, called an award, and delivers it to the parties. The award is similar in content to a judgment of the court and is enforceable by the courts.

There are several advantages and some disadvantages to the use of arbitration as a dispute resolution process. The advantages include:

  • The timetable is in the hands of the parties and the arbitrator; this, in the normal course results in a more expeditious process.
  • The proceedings are entirely private as is the award. This is a significant advantage when the dispute involves otherwise confidential financial issues.
  • The parties can agree on any lawful issue and that agreement will be binding on the arbitrator.
  • The arbitrator, in consultation with the parties is entitled to set his or her own procedures. Thus, if the matter at issue is straightforward and there are no credibility issues it is frequently a possible to do away with the hearing. Such procedures, called "documents only" arbitrations are very useful in resolving single issue matters.
  • If the matter at issue is technically complex the parties may select an arbitrator with specific skills and experience-something not possible within the court system.
There are, of course, some disadvantages including the following:
  • Although arbitration is frequently promoted as being less expensive than court proceedings, this is not always the case, particularly when more than one arbitrator is appointed.
  • An arbitration award is very difficult to appeal, much more so than a judgment of the Supreme Court.
  • The arbitration process omits certain procedures which, in many cases serve a useful purpose in. For instance, examinations for discovery are fairly rare .
Clayton Shultz is a Chartered Arbitrator and a past president of the BCAMI. He is a panel member and a Trustee of the BCICAC. Clayton has conducted numerous arbitrations relating to valuation and commodity pricing issues.
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