August 14, 2023
Arbitration agreements are often overlooked in the drafting and negotiation of contracts. Sure, the agreement may contain an arbitration clause, but frequently, they are added by the lawyers and given little, if any, scrutiny by the parties.
THE ISSUE
As with any provision in your commercial contract, the arbitration clause affects your rights. Ignoring them is dangerous.
Among the provisions that may vary in arbitration submissions is the right to appeal. This may vary from a full right of appeal to the Superior Court, a right to appeal on issues of law only, or no right to appeal at all. If you are the unsuccessful party in the arbitration and think you got a raw deal, that is not when you want to realize that you ought to have paid attention to your rights of appeal.
THE CASE
This is reviewed and emphasized by the Ontario Court of Appeal decision in Baffinland Iron Mines LP v. Tower-EBC G.P./S.E.N.C.. In that case, the arbitration clause adopted the Rules of Arbitration of the International Chamber of Commerce. Unlike Ontario’s Arbitration Act, the ICC Rules waive any form of appeal.
The Act provides that its default provision allowing an appeal on questions of law (with leave of the court) only applies if the arbitration agreement “does not deal with appeals on questions of law”.
Baffinland, as an unsuccessful party in the arbitration, attempted to appeal, arguing that the agreement did not deal with appeals, so the Act applied. The courts disagreed, applying the ICC Rules. Baffinland was not even heard on the leave motion because the Superior Court judge ruled that there was no right to appeal. The Court of Appeal agreed.
Did Baffinland ask their lawyers what the ICC Rules provided about appeals? Did they consider the arbitration clause at all? If so, did they wonder what the ICC Rules said about appeals? We will never know the answers, but we do know that these questions were worth asking.
TAKEAWAYS
- There is no such thing as “boilerplate” or “fine print” in YOUR contracts. Even if the language may be a common term your lawyer took from a prior agreement or a form book, once it is in YOUR contract, the wording is binding on you just as much as if you wrote it yourself.
- That means you need to understand what every term of the contract means.
- As you review the terms of a contract, ask yourself, “what could go wrong?”. Your lawyer will have done this, but lawyers never know your business or your needs as well as you do.
- Even arbitration clauses are negotiable.
- This is increasingly important as more disputes are submitted to arbitration.
- Never be afraid to ask your lawyer, “what does that mean?” or “what are the rights to appeal after arbitration?”
WHAT WEILERS LLP CAN DO TO HELP YOU
At Weilers LLP, our corporate commercial and dispute resolution lawyers have experience interpreting unusual clauses in agreements and do our best to make sure our clients understand them, but in order for that to work, our clients need to be open with us about their understanding of the terms, and of course, need to read the fine print.
If you are dragged into a complex commercial arbitration, Weilers LLP has lawyers well-suited to represent you at a realistic cost, with realistic advice and strong representation. We work closely with our own commercial drafting colleagues within the firm to provide clear and concise opinions. We are able to share the same cooperation with many outside lawyers who appreciate our commitment to our mutual clients.
And at Weilers LLP, we love it when clients ask, “What does it mean?”