Many turn to arbitration in Calgary as an alternative to settling disputes for a more efficient and cost-effective resolution than traditional litigation or mediation. Before entering into any contractual agreement, it’s crucial to understand the arbitration clauses within it. Once you do, you can make informed decisions and ensure that arbitration is an equitable and effective means of resolving your particular disputes.

Understanding Arbitration Clauses

An arbitration clause is a contractual provision or agreement in a contract or legal document that stipulates that any disputes or disagreements arising from that contract will be resolved through arbitration rather than traditional litigation in a court of law. 

This clause outlines the specific terms and conditions under which arbitration will take place, including details such as:  

  1. The choice of arbitrator;
  2. How the arbitration process will run;
  3. The location for the arbitration;
  4. Other relevant rules and procedures.

It serves as a legally binding agreement between the parties involved, specifying how disputes will be resolved if they arise. Arbitration clauses are commonly found in various types of contracts and move the authority to resolve a dispute from the Court system to an arbitrator.

Why Negotiate Arbitration Clauses?

  1. Choice of Arbitrator: One of the key outcomes of a negotiation is to specify the criteria for the selection of the arbitrator.
  2. Cost Control: You can specify how arbitration expenses will be divided between the parties, which can provide financial certainty.
  3. Procedural Rules: Negotiation can determine the procedural rules governing the arbitration process, such as the location, timeline, how evidence is submitted to the arbitrator and when it will be submitted.  

Negotiation Strategies For Arbitration Clauses 

Now, let’s explore negotiation strategies to develop the arbitration clauses themselves.

#1: Early Discussion

Start discussing the arbitration clauses as early as possible during contract negotiations. By addressing it upfront, you set the tone for open communication and demonstrate your commitment to a fair resolution process. Parties are often more willing to consider changes before the contract is finalized.

#2: Specify the Governing Law

In Calgary, the governing law can significantly impact arbitration outcomes. Negotiate to specify the governing law that will apply to the arbitration proceedings. For example, you may wish to emphasize that the governing law will be that of the Province of Alberta. If the law will be other than the jurisdiction in which you reside, make sure to have your whole contract reviewed by a lawyer in that other jurisdiction to ensure it is legally compliant and you are not met with any surprises.

#3: Arbitrator Selection

Negotiating who the arbitrator will be is critical. You can propose a list of preferred arbitrators or a specific arbitration institution. Ensure that the arbitrator has relevant expertise in the contract subject matter.

#4: Cost Allocation

The allocation of arbitration costs between parties to the contract is a pivotal aspect of negotiation. Is one party paying the entire cost of arbitration? Are they paying it up-front, with the arbitrator having the ability to apportion costs at the end of the arbitration? Is each party paying half? Consider specifying that the losing party bears all or a portion of these costs, which can act as a deterrent against frivolous claims.

#5: Discovery Procedures

Negotiate the scope of discovery procedures (i.e. the questioning of each party by the other party’s lawyer). Determine the extent to which parties can request documents and information from each other. Clarity on discovery can streamline the arbitration process and reduce costs.

#6: Location & Timeline

Define the location of arbitration hearings and the timeline for the proceedings. Specifying these details in advance can help avoid logistical complications and unnecessary delays.

#7: Appeal Rights

Discuss the scope of appeal rights. Some arbitration clauses may stipulate that the decision is final and binding with no room for appeals. Others may allow for limited appeals on specific grounds. Ensure the ability to appeal.

#8: Confidentiality

Negotiate the confidentiality of arbitration proceedings. Determine whether the proceedings and the award will be confidential, as public disclosure may affect your business or your reputation.

#9: Mediation Before Seeking Arbitration in Calgary

Consider including a mediation requirement before proceeding to arbitration. Mediation in Calgary has a lot of success in amicably resolving disputes without having to resort to an arbitrator who may not make a decision(s) that you like.

#10: Termination Clause

Include a termination clause that outlines the circumstances under which the arbitration clause can be terminated or amended. 

Confused with Clauses? Seek a Lawyer For Arbitration in Calgary 

Negotiating arbitration clauses is a strategic process that requires careful consideration of various factors. By proactively addressing key aspects such as arbitrator selection, cost allocation, and procedural rules, you can tailor the arbitration process to your specific needs and preferences. Remember that consulting with legal professionals experienced in arbitration in Calgary can be invaluable in effectively navigating the intricacies of arbitration clauses and contracts.

There is a brighter future ahead with McLean Legal Family Lawyers. As your dynamic, multi-service family law firm in Calgary, McLean Legal Family Lawyers can offer you personalized legal services tailored to your particular circumstances. We endeavour to resolve matters quickly and with minimal conflict, offering calm, professional, and realistic advice. Given our years of experience in family law, we can assist with your child support, spousal support, divorce, mediation, and separation agreements, as well as civil litigation issues, commercial/corporate services, and real estate transactions. With over 30 years of experience and success, we’re the Calgary family lawyers that offer you a brighter future. Book your free consultation by calling 587-353-2632.