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The ADR Institute of Canada has adopted new arbitration rules, which came into effect in December 2014. The new Rules are significant because they apply to any new arbitration commenced under the ADR Institute rules after December 1. Although the Rules are designed mainly for domestic commercial arbitration, they can also be used for international and non-commercial disputes.
First adopted in 2002 to provide a comprehensive set of national arbitration rules, the last major revision of the Rules was in 2008. The new Rules are the product of an in-depth review and broad consultation that began in 2012. This included a review of Canadian court decisions since 2002 to identify any judicial concerns regarding the previous rules.
The Rules committee concluded that it wasn’t necessary to completely overhaul the existing rules, especially since they have been adopted in many contracts, which will carry on into the future.
Some things have not changed under the new Rules. For example, they default to a single arbitrator, unless the parties agree otherwise. There is still a simplified procedure, with shorter time periods and an expedited process, if the parties choose to adopt it.
Some of the changes are cosmetic – for example simplified wording, structure and numbering, to make the Rules easier to follow. Some changes are administrative – for example, they now spell out the Institute’s responsibilities in administering arbitrations under the Rules, and set a new fee schedule. The Rules now expressly allow parties to opt out of administration, if they wish.
Some of the more significant changes in the Rules:
- Interim Arbitrator – A party may apply to the Institute for urgent interim measures before a tribunal is appointed or if an arbitrator is challenged. The Institute will appoint an interim arbitrator as soon as possible, normally within two days. The procedure for hearing the application will be set quickly, again normally within two days, and the interim arbitrator has the full power to grant any interim relief he or she considers appropriate. The interim application may be made, and interim relief may be granted, without notice to the other parties. But the interim arbitrator must give the other parties the chance to be heard as soon as possible. And any order made without notice is valid only until the arbitrator renders a decision on notice to all parties. The Institute must end any interim proceedings if it doesn’t receive a notice of request to arbitrate or submission to arbitration within 10 days following the application for urgent interim measures.
- Adding Parties – A party may be added to an arbitration following appointment of the Tribunal, if the existing parties and the new party all consent. Previously, there was no provision in the Rules for adding parties, although there was a Rule that allowed pleadings to be amended. Parties could seek to amend a claim, defence or counterclaim to add parties to the arbitration, so long as the amendment did not go beyond the scope of the arbitration agreement or submission to arbitration and there was no prejudicial delay in seeking the amendment. Although the provision regarding amendments to pleadings has not changed substantially, the new rule on the addition of parties makes it clear that this can only be done with the consent of all concerned.
- Document production – The new Rules follow the International Bar Association model. Parties must deliver a list of documents on which they intend to rely. They may also deliver a Request to Produce to the other parties. The request must identify the documents sought, explain how they are relevant and material to the dispute, state that they are not in the possession of the requesting party (or if in its possession, would be “unreasonably burdensome” to produce). The party receiving the Request to Produce may object to production on specific grounds listed in the Rules. These include:
- Lack of relevance or materiality
- Legal impediment or privilege
- Unreasonable burden to produce them
- Loss or destruction; confidentiality; special sensitivity (e.g. classified as secret)
- “Considerations of procedural economy, proportionality, fairness or equality of the parties”
It will be up to the tribunal to determine whether the documents should be produced. The effect, one hopes, is to rein in the kind of unlimited electronic document discovery that causes litigation and arbitration costs to soar, but the wording still leaves the door open to pre-hearing wrangling over the scope of document production.
- Pre-hearing discovery – Parties have no right to any oral examinations before the hearing unless the tribunal considers it necessary for a fair hearing. The tribunal may order a party or party representative to be examined on specific issues in dispute. The tribunal may also order a party to respond to written questions. The response is in the form of a written affidavit or other sworn declaration.
- Privacy and confidentiality – Arbitration proceedings must take place in private, unless the parties agree otherwise. Confidential information (including the existence of the arbitration, communications, documents, evidence, awards, rulings, orders and decisions of the tribunal) must be kept confidential, with limited exceptions for enforcement or the appeal of an award or as “otherwise required by law.” Parties may disclose information to their lawyer, auditor, insurer or other advisors, but those persons must keep it confidential and use it only for purposes of the arbitration. The previous rules allowed the Institute to publish awards, if the parties did not object. That has been removed from the new Rules.
- Powers of the Tribunal – The new Rules clarify the power to make procedural rulings, interim awards and final awards. This includes interim measures for protection, security for costs and preservation of property. It also includes the express power to grant injunctions, specific performance and other equitable relief. These powers were included in the previous rules, but they included wording which some had argued limited the power of tribunals in certain circumstances. The Rules now frame these powers much more broadly.
- Document delivery – The Rules include specific provisions regarding delivery of documents and other communications to the parties and to the Institute. They define how they may be delivered and when delivery occurs with each method of delivery.
The Rules Committee of the ADR Institute is continuing to review the Rules and will revise them as needed. The committee is encouraging comments and suggestions for further improvement as people gain experience with the new Rules.