Law Times

Page 16 April 13, 2015 • Law Times www.lawtimesnews.com Sattva and Union Carbide rulings scc makes arbitration more final By JUdy van rhiJn For Law Times n a pair of decisions last year, the Supreme Court of Canada moved the goalposts in both arbitration and mediation. Union Carbide Canada Inc. v. Bombardier Inc. requires the addition of another layer of confidentiality to a standard mediation contract in order to avoid tabling materials for enforcement. Sattva Capital Corp. v. Creston Moly Corp. purports to make arbitration more final by sig- nificantly limiting the right to appeal a commercial arbitration. Ontario lawyers are paying attention to the cases despite questions over their applicability here. Mitchell Rose, a mediator and counsel at Stancer Gossin Rose LLP in Toronto, considers settlement privilege to be the cornerstone of mediation. "The wonderful thing about mediation is that you can say what you want to say without the risk that it's going to be used against you. Any- one involved — lawyers, mediators, and clients — should be concerned about the Union Carbide decision and not just those concerned about publicity. If it is possible that what you say in mediation can be dis- closed, you may be less likely to participate or be more guarded. That's not a good thing to promote settlement." The Union Carbide dispute arose not from a settlement agree- ment finalized at mediation but one negotiated after mediation based on what had occurred there. According to Rose, disputes over compliance are rare. "In most cases, it's not going to be a problem," he says. "An offer is made, accepted, and the agreement written up and signed at the mediation session, but problems can arise when negotiations take place later outside mediation." He notes there are certain exceptions to settlement privilege. "The court will allow certain evidence if it deals with proving the existence of a settlement." Union Carbide provides that the exception applies unless the me- diation agreement clearly states otherwise. "It cannot be presumed that parties who have contracted for greater confidentiality in order to foster frank communications and thereby promote a settlement also intended to displace an exception to settlement privilege that serves the same purpose of promoting a settlement," wrote Justice Richard Wagner. "Parties are free to do this, but they must do so clearly." While Rose calls the decision "required reading" for all lawyers, he says they should remember it's a case based on Quebec law. In this case, neither party drafted the mediation or confidentiality clause, he notes. In fact, it was a standard clause sent on the eve of mediation. "The Supreme Court said that the parties didn't intend to agree to displace the exception. That may be unique to Quebec contract law. They might have come to different conclusion if they applied common law to an Ontario contract. There were so many things that suggest they were contracting out of the exceptions." Rose refers to the Ontario case of Rudd v. Trossacs Investments Inc. in which the judge added an extra layer of privilege to Ontario mediations. Still, he's not ready to gamble on which interpretation the courts will follow in future cases. "One of the big takeaways from Union Carbide and Rudd is that when lawyers are sent the agreement by mediators, they have to care- fully consider the words. Often, lawyers assume that standard media- tion agreements are all the same but they do differ. They should see if it addresses their needs and their client's needs and understand what is excluded and not excluded at mediation and following mediation." It's an issue that has been attracting attention recently. In Oc- tober, the Law Society of Upper Canada published a new rule that requires lawyers who are also mediators to disclose certain infor- mation to the parties, even if they have counsel, around issues such as the confidentiality of the process and privilege. Drafters have also been considering the possibilities and are now facing the prospect of drafting a so-called Union Carbide contract. Another practice Rose recommends is to receive the mediation agreement well in advance. He notes this case wasn't unusual in that the parties received the agreement on the eve of mediation. "That's every case, or sometimes mediators give it on the morn- ing of mediation, and I know when people come to mediation they don't necessarily read it." With mediators usually retained weeks in advance, Rose says there's plenty of opportunity to obtain the agreement beforehand. "Lawyers should read it and think about the implications. Ask questions and require changes if necessary. You don't want to negoti- ate about the mediation agreement at the beginning of a mediation session. You don't want things to go off the rails over the agreement." Parties must also consider whether they actually want to limit FOCUS The Partners of are pleased to announce that the lawyers and staff of Levinter & Levinter LLP will be joining WILL DAVIDSON LLP effective March 30, 2015 and will be operating out of the Oakville office 1464 Cornwall Road Unit 4 Oakville, Ontario L6J LW7 905-337-9568 www.willdavidson.ca WILL DAVIDSON and LEVINTER & LEVINTER have proudly represented clients throughout Ontario for over 90 years WillDavidson-1/3_LT_Apr13_15.indd 1 2015-04-08 10:41 AM Untitled-3 1 2015-02-17 10:42 AM I See Supreme, page 17

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