Mediation and arbitration are both methods of dispute resolution where parties can choose to settle disagreements outside of court. Parties might enter into minutes of settlement adopting negotiation or mediation, followed by arbitration to settle disputes that arise. Still, in some circumstances, one party may seek to resolve a dispute through the court and refuse to participate in arbitration.
Generally, an arbitrator obtains jurisdiction to proceed with hearing a dispute from a valid arbitration agreement. However, courts have grappled with whether they can enforce dispute resolution clauses in private agreements and compel parties to participate.
Why Choose Arbitration?
Arbitration is a dispute resolution process which takes place before a neutral arbitrator outside of a courtroom. In arbitration, each party has the opportunity to explain their side of the story and asks the arbitrator to make a decision based on the law. However, both parties must agree on what the arbitrator will decide on in advance of the arbitration taking place.
Family law participants are increasingly turning to alternative dispute resolution forums outside of courts to resolve their issues. However, this has left the courts to decide whether they have the power to compel parties to participate in an arbitration process that they previously agreed to. It is important to note that there is a distinction between court-ordered arbitration and private arbitration agreements between parties. Courts generally have jurisdiction to order arbitration as an enforceable dispute resolution process, mainly where the parties have explicitly undertaken to complete a formal agreement granting the arbitrator jurisdiction.
Parties are Expected to Abide by Their Agreements
Moncur v. Plante is a decision from the Ontario Superior Court of Justice that addressed whether a dispute should be resolved through arbitration or return to court because the parties had yet to enter into a valid and enforceable arbitration agreement.
An order had been granted by the Court which reflected the Minutes of Settlement agreed to by the parties in arbitration. However, the applicant later sought to resolve the issues in Court instead. The Court held that the terms of the existing order may bind the parties. However, the previous order required the parties to take additional steps in order to make the order operative. Practically, it was intended that the parties enter into a formal arbitration agreement which met the standards prescribed in the Family Arbitration Regulation.
The Court acknowledged that the dispute resolution clause the parties agreed to was not a valid arbitration agreement as it did not contain the required provisions in the Regulation. Nevertheless, the parties’ objective was clear. They had each consented to the terms which showed a common intention to resolve any future disputes through mediation and arbitration.
Court Requires Parties to Execute Family Arbitration Agreement
The Court adopted Justice Gray’s analysis from Lopatowski v. Lopatowski, which stated that the principles of good faith and honest contractual performance would require the parties to take steps to make the agreement operative. Moreover, evidence of their common intention was evident in the fact that each party participated in two mediation sessions; however, the applicant subsequently refused to participate in the arbitration.
In making its decision, the Court considered the validity of family court orders which could contravene the formal statutory requirements and referenced the case of Geropoulos v. Geropoulos which held that the legislation was not intended to apply to settlement agreements requiring the intervention of the court. Further, no purpose was served by ensuring such agreements comply with the formalities given the court’s supervision.
Consequently, the parties in Moncur v. Plante were ordered to execute a family arbitration agreement and to follow through with arbitration as originally planned.
Courts May Require an Express Agreement That Complies with Legislation
In the past, case law has disagreed on whether a private agreement between parties to arbitrate future disputes that does not constitute a family arbitration agreement can be enforced through a court order. In Giddings v. Giddings, it was suggested that an arbitrator has no jurisdiction to proceed without a family arbitration agreement.
The legislation requires certain formalities to be observed before a valid agreement is found to be in place. However, in Giddings, in the Minutes of Settlement the parties agreed that a formal family law arbitration agreement would be executed. In doing so, the parties recognized that certain statutory requirements would have to be met. A party later refusing to execute such an agreement would not be consistent with their obligation of good faith contractual performance. However, the court must be able to require the party to live up to their obligations.
Agreement Terms May Impact Ability to Bring Dispute Before the Courts
The specifics of the Agreement reached between the parties relating to dispute resolution can significantly impact whether the parties end up litigating their dispute before the courts. In Magotiaux v. Stanton, Justice Mackinnon decided that an interim parenting agreement did not restrict the applicant from proceeding in court. The Agreement provided that the parties would jointly retain a third party to act as a mediator or arbitrator if they could not resolve their dispute through negotiation.
Justice Mackinnon stated that parties must ensure that their Agreement complies with the statutory requirements where express terms have been mandated. The Court suggested that the situation could be different if the parties have directly undertaken to execute an arbitration agreement that complies with the legislation. In those cases, it was felt the court could order the parties to comply.
Here, the Interim Agreement illustrated an intention of the parties to resolve any disputes outside of court. Therefore, the question was whether the Court could imply terms into the Agreement to include the required provisions.
The Court ultimately did not accept that a clause contemplating the execution of a further valid agreement was implicit in their parenting agreement. Overall, the Court was not persuaded that there was a basis for it to read the missing mandatory requirements into the Parenting Agreement.
Courts can Enforce Their Own Orders Requiring Parties to Arbitrate
In Fekete v. Brown the parties reached Minutes of Settlement which Justice Shelston turned into a final order. The Agreement provided that future disputes between the parties would be resolved by arbitration. The applicant challenged the arbitration process, leaving the court to determine whether Justice Shelston’s order was enforceable. The Court noted that a court may only order parties to arbitrate with their consent.
The Court referred to the decision in Lopatowski v. Lopatowski, which established that a court has jurisdiction to order arbitration as a future dispute resolution mechanism. Looking at the definition of “secondary arbitration” in the Family Law Act, the Court found that while the legislation does not specifically state that courts have the power to order parties to arbitrate, it was implied that the courts could make an order on consent.
Courts may enforce their own orders by requiring parties to execute a valid family law arbitration agreement. Justice Mackinnon suggested that “prudence dictates that family litigants wishing to provide for a potential future arbitration should append a detailed family arbitration agreement containing the mandatory terms to their settlement document and should agree to complete and execute the agreement.” The Court ordered that the parties sign the Arbitration Agreement in order to proceed with arbitration.
The Experienced Lawyers at Howie Johnson Barristers & Solicitors in Windsor
At Howie Johnson Barristers & Solicitors, our seasoned family law team exclusively focuses on resolving family law disputes including separation, divorce and support claims. We represent parties in alternative dispute resolution processes, including mediation, and we provide superior advocacy on behalf of clients in the courtroom if litigation is necessary. We have been providing clients in Windsor and Essex County with honest advice tailored to their unique circumstances for over 25 years. To discuss your matter further, or arrange a confidential consultation, please complete our online questionnaire or contact us at 519-973-1500.