Canada: A Guide To Arbitration Clauses

Last Updated: November 24 2015
Article by Kathleen Garbutt and Bryan Kwan

In the face of rising litigation costs and what can frequently turn into lengthy disputes, arbitration clauses are becoming increasingly common in construction contracts. Sometimes, arbitrating disputes results in earlier resolution of the issues, which can mean lower legal fees and other costs for all involved. Almost all standard form contracts contain some form of arbitration clause.

In Alberta, where a contract contains a mandatory arbitration clause, the parties are required to resolve any disputes arising from the contract through arbitration. The Arbitration Act provides the jurisdiction for an arbitrator to decide the issues between the parties. The rules and procedures governing the arbitration are typically found in the contract.

Canadian Construction Documents Committee ("CCDC") 40, contains an arbitration clause and also outlines the rules and procedures. For example, parties are required to first refer disputes to a Consultant. Where the dispute remains unresolved, the parties are typically required to continue working, while the dispute is referred to a Project Mediator. If the Project Mediator is unable to resolve the dispute within 10 working days, the issue may then be referred to arbitration.

Many contracts incorporate the rules and procedures outlined in the CCDC 40. Where a contract is silent, rules and procedures are left to be negotiated by the parties or to be determined by the Arbitrator.

It is noteworthy that notwithstanding an agreement to arbitrate, an unpaid party may still exercise its rights under the Builders' Lien Act. This means that an unpaid party may still register a builders' lien, and must commence an action in the Court of Queen's Bench to enforce its lien claim. However, if the contract between the parties contains an arbitration clause, the lien action may be stayed pending the outcome of the arbitration proceedings.

So what use is an arbitration clause where the Court may still be engaged in relation to a Builders' Lien?

Generally, even where a builders' lien has been registered, parties to a contract that contains an arbitration clause may still avoid lengthy court proceedings by relying on the arbitration clause. If an arbitration clause is triggered and a builders' lien has been registered, the parties are typically required to continue with arbitration.

Section 7 of the Arbitration Act specifically provides that the Court shall stay a court action where there is a relevant arbitration agreement, subject only to very narrow exceptions. Exceptions to this general rule are also found in section 7 of the Arbitration Act and include, for example, where the application for a stay was brought with undue delay or where the arbitration agreement is invalid. The Court may also decline to stay a court action if the action involves additional claims or parties that are not subject to the applicable arbitration clause.

With the lien action stayed, the parties will proceed with the arbitration and the outcome of the arbitration proceedings should determine the builders' lien claim.

Throughout an arbitration, parties must remain mindful of the strict timelines imposed by the Builders' Lien Act since they are not extended by the arbitration process.

What if the parties are not satisfied with the arbitrator's decision?

An arbitral award may be overturned or changed by asking the Court to review the decision. However, the circumstances where the Court will actually interfere with an arbitral decision are rare.

The case of Sattva Capital Corp. v. Creston Moly Corp., confirms that the Court will be slow to review an arbitral award and will typically only do so where there is a question of law. Generally, this does not include review of an arbitrator's interpretation of the contract in dispute or any monetary award ordered, as these are considered factual findings.

What should you consider before agreeing to an arbitration clause?

It is important that all clauses of a construction contract are carefully reviewed and considered. Arbitration clauses are not simply standard contract wording; they are important clauses which have a significant impact on the parties' rights.

Prior to entering a contract, parties should consider if they truly want to give up their right to access the courts in the event of a dispute. Although arbitration can result in a more efficient process, parties are also giving up many of the procedural rights of the litigation process. For example, the Court requires mandatory disclosure of relevant documents and records and where parties are uncooperative, court assistance may be sought. The right to document disclosure may be limited in an arbitration proceeding.

Once a contract containing an arbitration clause is entered into, parties should ensure they fully understand what they are agreeing to. Is the arbitration mandatory? Who will arbitrate? Are there any deadlines to be aware of? Where issues are complex, will arbitration ultimately take just as long as litigation?

Further, where there are potentially competing procedural processes, as where parties have agreed to arbitrate but may also properly register a builders' lien, they must tread carefully. Where a builders' lien has been registered, parties to an arbitration agreement must ensure that both processes are strictly followed to avoid prejudicing their claim and ultimately their ability to get paid.

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.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Kathleen Garbutt
Events from this Firm
19 Dec 2017, Webinar, Calgary, Canada

McLennan Ross previously conducted a webinar on June 6, 2017 about the passage of Bill 17, during which we reviewed the changes to the Employment Standards Code and the Labour Relations Code. During that webinar, we identified a number of issues which would depend upon the language of the Regulations, which had not yet been developed.

21 Nov 2018, Webinar, Calgary, Canada

Changes to the Employment Standards Code this year increased the number of unpaid leaves to which employees are entitled for the purpose of allowing them to deal with family related issues.

Similar Articles
Relevancy Powered by MondaqAI
In association with
Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions