In van Rhijn v. van Rhijn, 2020 ONSC 8032, Madam Justice Lene Madsen reminded an arbitral party that awards were neither “suggestions” nor “an invitation to further negotiation”. Arbitration awards “spoke from when they were made”, creating obligations which required the party’s compliance, “whether he agreed with those terms or not”. The parties submitted their dispute to a med-arb process before the same neutral who, after having issued two (2) awards advised the parties of his withdrawal. Despite his withdrawal, the arbitrator retained jurisdiction to issue a costs award which he did issue after his withdrawal and after having invited costs submissions in one award released just prior to withdrawing.
Applicant instituted proceedings in Ontario’s Superior Court of Justice in April 2019. In June 2019 Applicant and Respondent negotiated a mediation-arbitration agreement (“Med-Arb Agreement”) in which they agreed to mediate the issues arising from their separation and arbitrate those issues for which they reached no agreement.
Despite mediating “over several sessions”, the mediation did not produce an agreement and the parties proceeded to arbitration.
The mediator served as arbitrator and, as such, issued two (2) substantive awards: a July 30, 2019 award, issuing on consent and on a “final basis”, resolving property issues (“Final Award”); and, an October 8, 2019 set of reasons with a December 11, 2019 award based on those reasons (“Interim Award”), issuing not on consent and on an “interim basis”, resolving support issues.
On October 11, 2019, following the release of the October 8, 2019 reasons but before the December 11, 2019 Interim Award, the arbitrator advised the parties of his withdrawal as mediator-arbitrator.
“[19] Following the arbitrator’s withdrawal, the respondent challenged the arbitrator’s authority to make a decision on costs, given that he had withdrawn. On February 23, 2020, the arbitrator ruled that he was seized of the costs issue notwithstanding having withdrawn and given that he had invited cost submissions in his Reasons dated October 8, 2020. On March 1, 2020, the arbitrator rendered his costs award. Neither the ruling about jurisdiction to award costs nor the costs award itself were appealed”.
The parties disputed the extent to which Respondent had complied with the Final Award and the Interim Award. Applicant alleged that compliance required Respondent to sign certain documentation, provide proof of having made an insurance designation and transfer interest in specific property to Applicant.
Effect of interim awards if arbitrator withdraws – Madsen J. noted that the parties’ dispute resolution process under the Med-Arb Agreement remained incomplete. “The arbitration process was not complete when the arbitrator withdrew. Consequently, the parties have not yet had their “trial””. See also para. 60.
The Med-Arb Agreement provided that, following withdrawal of the arbitrator, interim awards would continue to have effect until appointment of a replacement arbitrator.
“11.1 …. In the event of the withdrawal of the arbitrator or termination of arbitration, the parties shall appoint a replacement arbitrator either by agreement of the parties or by Court Order.
11.2 In the event that the arbitrator’s appointment is terminated, and the parties are unable to agree on a replacement, a court of competent jurisdiction shall appoint a replacement arbitrator on either party’s application to the court.
11.3 In the event the arbitrator’s appointment is terminated, the parties agree that any interim or interlocutory award(s) made by the arbitrator will continue to bind the parties and will continue in full force and effect as the basis of the continuation of the arbitration with the replacement arbitrator”.
Madsen J. at paras 32-37 identified key provisions from the Family Law Act, RSO 1990, c F.3 (“FLA”) which applied to family arbitrations, agreements and awards, including that the FLA prevails in the event of a conflict with the Arbitration Act, 1991, SO 1991, c 17.
Non-compliance – Respondent offered reasons for his non-compliance which Madsen J. reproduced at para. 40 and, having done so, dismissed them.
“[41] The respondent misunderstands the nature of an Arbitration Award. He was directed to take certain steps within certain timeframes. The awards spoke from when they were made and were neither an invitation to further negotiation, nor “suggestions.” While terms of the interim award could be adjusted as part of the final “arbitration” (the equivalent to the parties’ trial), until any adjustment is made in that process, the respondent’s obligation is to comply with Mr. McIntyre’s Awards, whether he agreed with those terms or not”.
Madsen J. ordered Respondent within ten (10) days from the date of her order “to comply with the terms of the arbitration awards as set out in my Order below”.
Later in her reasons when addressing Respondent’s grounds for non-compliance with an order regarding insurance, Madsen J. again commented that the awards were not “suggestions”.
“[52] Again, the Award was not a suggestion to the respondent. It was immediately binding upon him, absent an appeal or motion to set aside the award”.
Absence of motion to set aside – Madsen J. disregarded Applicant’s stated intention, in an affidavit, that she would seek to set aside the Final Award. No motion was before Madsen J. and she took no further notice of an intention without a formal motion.
Closing her reasons with a self-identified obiter, Madsen J. drew the parties’ attention to their control over the dispute resolution and their options to modify that process to reduce argument and expense.
“[63] I remind the parties that their med-arb agreement provided that in the event that the arbitrator were to withdraw, they would retain a new arbitrator. Their agreement further provided that if they could not agree on who that arbitrator should be, they could apply to the court for a determination of same. I am not aware that any motion has been brought to appoint a new arbitrator as the parties’ contract sets out.
[64] Of course, their med-arb agreement also provides that if they jointly agree, they can terminate the med-arb agreement (see para 11.1)”.
urbitral notes – First, for a sampling of recent articles on med-arb, see (i) Colm Brannigan and Conor Brannigan “Med-Arb – The Third Alternative” and (ii) Colm Brannigan and Marc Bhalla “Med-Arb The Perfect Couple, Strange Bedfellows or Something In Between – Part One and Part Two”.
Second, ADRIC has issued Med-Arb Rules, issues designations for Chartered Med-Arb and offers an upcoming May 21, 2021 Med-Arb Foundational Workshop. Colm Brannigan is the inaugural recipient of the ADRIC Chartered Med-Arb designation.