How Formal Must An Agreement To Arbitrate Be In Order To Enforce?
The practice of resolving family law matters through mediation and other forms of alternative dispute resolution rather than litigation is becoming more and more popular. If a couple is able to sort through their separation without going to court, they will likely sign a Minutes of Settlement document, which can address a number of items such as division of property, support, and how any future issues will be handled. In a recent case heard before the Ontario Superior Court of Justice, the court was asked whether a Minutes of Settlement that called for arbitration in the event of a dispute is mandatory.
The minutes of settlement
The mother and father were married for 16 years before they separated. They had three children while they were together. Following the separation the parties had a four-way meeting, from which Minutes of Settlement were produced. The Minutes of Settlement contained a paragraph stating the parties were to enter into arbitration later that year. The paragraph read,
“The parties agree to submit the issues outlined in paragraph 6 … to Arbitration with Stephen Grant on four of the following dates (subject to confirmation from Mr. Grant’s office and the parties regarding the appropriate amount of time for the hearing): July 27, 28, 29, August 2, 3, 15, 16 and 18. Provided that the arbitration proceeds, (the father) will not proceed with a motion to reduce the support and will withdraw his current motion re same without costs. The Settlement Conference date will be vacated.”
How we got before the courts
This arbitration did not occur. When the mother later brought a motion to the courts, the father argued that the proceedings should be stayed on the grounds that the Minutes of Settlement contained an agreement to arbitrate. The father relied on Section 7 of the province’s Arbitration Act which states, “the court in which the proceeding is commenced shall, on the motion of another party to the arbitration agreement, stay the proceeding” (emphasis in original).
In its analysis, the court found,
“While courts cannot take an active role by ordering parties to arbitrate, a court may make an order on consent once parties have themselves chosen that process. To overcome formal deficiencies, however, a court should not imply or engraft terms upon what is essentially a consensual process chosen by the parties.”
Ultimately, the parties did not follow the formal requirements necessary to enforce arbitration. The court wrote,
“ From a policy point of view, I am mindful of how important it is in family law to hold parties to their agreement. It is also important to have options such as arbitration and mediation/arbitration for parties who wish to opt out of the litigation process. Getting parties to agree on both process and substantive issues is, after, all an important function of case management. Had there been no formal requirements necessary, and had Justice McGee and the parties themselves not recognized the need for and importance of a formal arbitration agreement, I may have been persuaded to stay the court application or deal with the apparent breach of court order in some other manner.”
If you are considering mediation as a means to resolve issues in separation or divorce, please call us at 519.973.1500. We can also be reached online. Many of our clients are referred to us by former and current clients, as well as by lawyers, accountants and other professionals.