Ontario’s newly adopted Commercial Mediation Act is being viewed as a further legitimization of the use of alternative dispute resolution methods to help steer more cases away from busy courthouses.
The province is the second in Canada to enact this type of legislation after Nova Scotia did so in 2005.
Both acts came out of the Model Law on International Commercial Conciliation, which was created in 2002 and has been embraced in the United States by jurisdictions such as Illinois, New Jersey, and Ohio.
The legislation was passed here in October through the Liberal government’s omnibus Open for Business Act.
The new Ontario act doesn’t apply to the existing mandatory mediation provisions under the Rules of Civil Procedure.
“These new provisions apply where parties of a dispute, before anybody sues anybody else, try to mediate the dispute,” says Douglas Harrison, a litigation partner at Stikeman Elliott LLP in Toronto.
The law applies only to commercial disputes and isn’t enforceable in relation to family law matters, accident benefits issues with insurers, and various other types of disputes in which parties often use mediation.
Meanwhile, he says the most important aspect of the legislation is the fact that it allows parties that have mediated a commercial dispute to take their settlement to the court and have it registered, which gives it the same force as a judgment.
“You can then take steps to enforce the settlement much more easily than before,” says Harrison.
“Previously, you would have to effectively start a lawsuit to sue on a breach of contract for failure to abide by the settlement.
Now, it’s a much more streamlined process. You don’t have to start a lawsuit; you just register the settlement and, in a number of easy steps, you’ve effectively gotten yourself a judgment.”
Harrison notes that as lawsuits can take years to get through the court system, the act also cuts down on the time frame for parties to obtain the remedy they’re looking for.
Another key aspect of the new law involves obligations placed on mediators. They must now consider whether they “may have a current or potential conflict of interest or if any circumstances exist that may give rise to a reasonable apprehension of bias.”
If that’s the case, they must disclose it to all parties involved in the mediation.
“That is a positive obligation that is maintained throughout the course of the mediation,” Harrison emphasizes.
“So if they learn of something later, after they’ve been appointed, that may give rise to a conflict of interest . . . they have a positive duty now to disclose that.”
However, there was no existing problem of mediators failing to disqualify themselves from hearing matters in which they may be conflicted prior to the new legislation, Harrison points out.
“There’s a lot of great mediators, and effectively what I think the legislation does is [it] codifies the practice that all good mediators have in place.
“I think what it does is give a greater assurance to parties who are coming into this kind of a process, who has never had to deal with this sort of a process before, a certain assurance that there’s not any conflict of interest with the mediator they’re going to be in front of.”
To that end, the legislation gives further legitimacy to the expanded use of mediation and thereby allows for the diversion of more cases from the courts, he adds.
“It solidifies the notion that there are well-recognized alternatives to having to go to court in order to try and settle disputes.
Adoption of this kind of legislation by the government of Ontario furthers to legitimize an already accepted process but it helps to solidify the concept of using alternative dispute resolution.”
Corporate lawyers looking to build a dispute resolution mechanism making way for mediation into a commercial agreement should take note of the new legislation, according to Harrison.
He encourages them to include provisions in the document asserting that any such mediation will take place in Ontario, which will let them assure clients that they’ll gain the benefit of the provisions of the act.
That will be particularly important for those looking to ensure enforcement of any settlement agreements.
Meanwhile, it remains to be seen how well the legislation will be used to address the various issues that challenge commercial mediations.
David Rosenbaum, a litigation partner at Fasken Martineau DuMoulin LLP in Toronto, suggests that will take shape through practice and continued use of the new provisions.
“These are the kinds of things that, in the abstract, it’s very difficult to answer,” he says. “It’s only in the heat of the moment that you realize, ‘Oh jeez, where’s the provision that deals with that?’”