The flexibility of the arbitration process invites parties to split up or bifurcate their cases into parts, ensuring that issues that don’t need to go to trial aren’t the subject of wasted time and attention.
It’s a practice now gaining the attention of judges looking for more efficient ways to manage their cases but it’s not an option that’s right for every matter, even in arbitration.
“It speaks to the power of arbitration that the parties can decide the process,” says mediator and arbitrator Barry Fisher. “Courts generally don’t like it.
They like to hear liability, mitigation, and damages all at once, which takes up unnecessary court time. In arbitrations, we can proceed in stages. . . . If you do it in chunks, there’s less work for everyone.”
Stanley Tessis, a partner at Laxton Glass LLP, believes arbitration is the perfect forum to bifurcate.
“As long as everyone is in agreement, you can do it any way you want. You choose who is going to hear it, when you will sit, which issues you will determine, and what order to decide the issues. Arbitration is much more flexible than the courts.”
Tessis believes it’s possible to adopt the practice successfully in a courtroom arena. “If there are certain distinct issues or it is strictly a legal issue, you can use a summary judgment motion or a motion on an agreed statement of facts. If the case involves any factual determination, usually it’s all over in one shot.”
Mediator and arbitrator Kathleen Kelly says there are numerous factors to consider in determining the appropriateness of bifurcating arbitration proceedings.
“In some cases, the issues of determination of liability and damages are so interlinked that the determination of one cannot reasonably be determined without making a finding about the other.
You should also consider whether the same persons, witnesses, and experts are required for both aspects of the claim. If the amount in dispute is small and the issues are uncomplicated, the time and costs of two processes cannot be justified.”
Fisher has recently adopted the approach in some commercial arbitration matters by using what he calls a decision tree. “There were a couple of key issues to decide to determine liability.
We tackled one discrete issue at a time. It seemed the natural way of doing things. For example, we had to determine the interest rate on a certain date. The spread was huge.
It was a concise point that was argued in two hours. Once that was determined, the remaining parts of the case fell into play. Looking back, it was the most important thing we determined.”
Fisher suggests that in commercial arbitration, there’s a natural bifurcation between liability and damages. Tessis also sees its application in insurance arbitration where there’s bifurcation between the questions of whether one company is entitled to be indemnified and the quantum to be indemnified.
“There’s no point going through quantum if there is no liability,” he notes.
Tessis also says that in insurance matters, there are always a lot of preliminary issues.
“For example, where one insurance company is trying to get back statutory accident benefits that it paid to another insurance company, you must first determine the question of whether there is a limitation period.
If they started their claim too late, that can be the end of it. You don’t get to the damages issue, so you don’t waste days and days.”
Tessis feels bifurcation is especially useful if there’s a legal issue at stake in the matter. “You just present briefs of documents and legal submissions.”
Meanwhile, Kelly says the process can help create a range of damages that will limit the risks of the decision going below an acceptable and agreed-upon lower limit and going above an acceptable top amount.
Sydney Baxter, a mediator and arbitrator based in Ottawa, doesn’t see the process used much in labour and employment arbitration.
He recalls declining a request for bifurcation in a case involving the introduction of computers in the Ottawa Public Library that had resulted in staff being exposed to pornographic images accessed by the patrons.
“They requested that I bifurcate the case against the employer on the merits and the Charter issues. I declined because the Charter arguments would have been hanging like the sword of Damocles over everyone’s head during the merits hearing.”
Baxter also felt it would have amounted to two costly hearings. “It’s not like the court where you set a matter down for trial and it goes until it’s finished. If an arbitration doesn’t finish, the parties may have to reconvene several months later.”
Kelly agrees that it’s not always time- or cost-effective to split the proceedings up. “When the evidence and expert opinions are such that the issues cannot be separated, economies of time, direct costs, and opportunity costs cannot be achieved.
The adoption of procedural steps or an arb-med process might create efficiencies that would render bifurcation uneconomical.”
Fisher acknowledges that the process can take a little bit longer but still insists it can remain more cost-effective. “In one case, I felt bad that the process took so long, but the lawyers said that it was still so much better than court proceedings. It allows them to set the timing.
The parties might not want to go to court straight away. As long as they are choosing the period of time when it happens, the certainty of the scheduling helps them."