With arbitration, parties in conflict submit their contentious issues to a neutral arbitral tribunal (“the Tribunal”) that may consist of only one member or as many as three members. Usually, the Tribunal’s determination of the case is final and binding. Parties may end up in arbitration in one of several ways:
(a) by operation of statute: a particular law may stipulate that persons submit their matter to arbitration: e.g.: a dispute between auto insurers over the payment of statutory accident benefits: cf. the Insurance Act of Ontario, R.S.O. 1990, c. I.8. s. 275(4).
(b) by collective agreement: collective bargaining agreements usually require the resolution of certain types of dispute through arbitration: most North American professional sport leagues resort to arbitration for salary disputes
(c) by an arbitration clause: parties may agree to the insertion of a clause in their contract requiring that certain types of disputes or, indeed, any dispute arising from the contract be determined by an arbitrator.
(d) by court order: on application by a party, a judge may determine that arbitration – given the specialized nature of the dispute – is a more suitable forum to resolve some or all of the contentious issues. Construction matters are frequently referred by the courts to arbitration in this way.
(e) by consent of the parties: after the dispute has arisen, the parties may opt to arbitrate their matter rather than proceed to court
In Ontario, disputes are most often arbitrated under either (a) the Arbitrations Act, 1991 or (b) the Ontario International Commercial Arbitrations Act which largely incorporates the Model Law on International Commercial Arbitration adopted by the United Nations Commission on International Trade Law ( “the UNCITRAL Law”).
In parallel fashion, the Canadian government has enacted the federal Commercial Arbitration Act governing arbitrations where at least one of the parties is the federal government, one of its departmental or Crown corporations or where the subject matter of the dispute is in relation to maritime or admiralty matters. And the United Nations Foreign Arbitral Awards Convention Act was enacted to enable a party obtaining an arbitral award abroad to enforce that award in Canada. Increasingly – as with the example given above from the Insurance Act – more and more provincial and federal statutes are being amended – so as to require parties to submit to arbitration: cf. for example, the Ontario Condominium Act where certain types of condo disputes must proceed to mediation and, if that fails, to arbitration: cf. s. 132