There are new and important advantages to mediating a commercial
dispute in Ontario, as compared to other Canadian jurisdictions.
With the October 25, 2010 enactment of the Commercial Mediation
Act, 2010, S.O. 2010, c. 16, Sch. 3 ("CMA"), parties
settling a commercial dispute through mediation will be able to
register their settlement agreement with the court, gaining the
advantage of having it treated like a judgment for enforcement
purposes. The CMA also provides parties involved in the mediation
of a commercial dispute with more certainty about the appointment
of mediators, the conduct of the mediation and the confidentiality
of the process.
Ontario becomes the second jurisdiction in Canada, after Nova
Scotia, to adopt legislation of this nature. Like its Nova Scotia
counterpart, the Ontario CMA is based on the UNCITRAL Model Law on
International Commercial Conciliation (2002), which is also the
basis for similar legislation in Illinois, New Jersey and Ohio. The
CMA applies not only to mediations of commercial disputes conducted
in Ontario but also to those governed by Ontario law. Accordingly,
parties who include dispute resolution clauses in their commercial
agreements and wish to avail themselves of this new legislation
should consider stipulating that any mediation be governed by
Ontario law or be held in Ontario.
Importantly, if an Ontario mediation of a commercial dispute
results in a signed settlement agreement with which a party fails
to comply, another party wishing to enforce it may now apply to a
Superior Court judge for judgment in the terms of the agreement or
to the Registrar of the Superior Court for an order authorizing
registration of the agreement with the Court. The Registrar must
make such an order unless it is shown that a party did not sign the
settlement agreement, did not consent to its terms, that the
settlement agreement was obtained by fraud, or that it does not
accurately reflect the terms agreed to. Once this order has been
obtained, the agreement can be registered with the Superior Court,
which would have the effect of giving it the same force and effect
as a judgment of the Court. Arguably, it could then be registered
in other provinces or the United Kingdom under the applicable
reciprocal enforcement of judgment rules.
The CMA applies to mediations of commercial disputes only, whether
contractual or not, unless parties agree not to have the Act apply
to their mediation, or the mediation is governed by the mandatory
mediation rule of the Rules of Civil Procedure. Family law
disputes or disagreements with insurers over accident benefits are
not considered to be commercial disputes. The CMA also does not
apply to mediations under or relating to the formation of a
collective agreement, a computerized or other form of mediation in
which there is no individual acting as the mediator, or to attempts
by judges or arbitrators during the course of a legal proceeding or
arbitration to promote a settlement. The CMA binds the Crown and
also provides parties with the flexibility to choose to have some
but not all of its provisions apply to a mediation. Mediations
commenced before October 25, 2010, the date on which the CMA came
into force, are not subject to the Act.
A further benefit is that parties will have greater certainty that
the mediators they select are appropriate. Mediators are required
by the CMA to disclose any current or potential conflict of
interest and any circumstance that might give rise to a reasonable
apprehension of bias. This duty to disclose continues until the
mediation is terminated. A conflict of interest is deemed to occur
if a mediator has a financial or personal interest in the outcome
of the mediation, or has an existing or previous relationship with
a party or a person related to a party to the mediation. Once
appointed as a mediator, that individual cannot also be an
arbitrator of the dispute or a related dispute unless the parties
agree.
Once appointed, a mediator has a positive duty to maintain fair
treatment of the parties throughout the mediation, taking into
account the circumstances of the dispute. Parties cannot relieve
the mediator from complying with this obligation. As between the
parties, the mediator may disclose to a party any information that
he or she receives from another party unless that other party
expressly asks the mediator not to do so.
Information relating to the mediation (that is not otherwise public
or considered by the parties to be non-confidential) must be kept
confidential by the parties, the mediator and anyone else involved
in the conduct of the mediation. However, disclosure of such
confidential information can be made if the parties agree or if
required (a) by law, (b) in order to carry out or enforce a
settlement, (c) for a mediator to respond to a claim of misconduct,
or (d) to protect health or safety. Similarly, absent consent of
the parties (and, if necessary, the mediator), no information
concerning the mediation is discoverable or admissible in any
judicial, arbitral or administrative proceeding, unless that
information is required (a) by law, (b) in order to carry out or
enforce a settlement, or (c) for a mediator to respond to a claim
of misconduct.
The CMA states that parties can agree not to proceed with arbitral
or judicial proceedings before a mediation is terminated. However,
an arbitrator or a court may allow the proceedings to proceed if
they are necessary to preserve a party's rights or are in the
interest of justice (note, however, that agreeing to mediation
tolls any applicable limitation period under section 11 of the
Ontario Limitations Act, 2002). The commencement of an
arbitral or judicial proceeding is not of itself to be regarded as
a termination of the agreement to mediate or of the
mediation.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.