Law Times

Law Times • augusT 6, 2012 BY RICHARD FOOT For Law Times E But some observers worry about vanishing trial as ADR grows Morrison notes he had one Toronto seeing arbitration boom FOCUS attract international arbitrations. "For disputes that have at least arbitrator in Toronto. Aſter an illustrious career that dgar Sexton opened a new chapter in his profes- sional life this year when he became a commercial included the chairmanship of Os- ler Hoskin & Harcourt LLP and 13 years as a judge on the Federal Court of Appeal, he stepped down from the bench and joined JAMS International, one of the world' largest providers of arbitration and mediation services, when it opened its first Canadian office in Toronto in May. Sexton and his new firm sym- s 'Arbitrators are going to have to be coura- geous in order to make the system work,' says former justice Edgar Sexton. bolize the growing popularity of commercial arbitration in Canada and the appearance of Toronto on the world stage as a competitive seat for international hearings. A month before JAMS opened its Canadian office, Arbitration Place — a new hearing centre with translation, reporting, and con- cierge services, as well as a host of top-flight arbitrators including the world-renowned Yves Fortier — also opened its doors for the first time in the heart of Bay Street. That two years ago of the Toronto Commercial Arbitration Society. What began with a small hand- ful of lawyers that included Ste- phen Morrison of Cassels Brock & Blackwell LLP and Earl Cher- niak of Lerners LLP has since blossomed into a membership of roughly 200 practitioners seeking to promote Toronto as an arbitra- tion destination. Even former judges of the Su- followed the founding preme Court of Canada are now taking up commercial arbitration in their post-judicial careers. The latest example is Ian Bin- nie, one of the high-profile mem- bers of Arbitration Place who, oddly, embarked on his new prac- tice this year while issuing a warn- ing in The Globe and Mail that the growth of private arbitration and the subsequent decline in public litigation are likely to "impoverish" and "balkanize" the legal system by depriving the courts of fresh legal thinking and new case law. Whether or not that' flexibility to design a hearing as the two sides see fit are what make arbitrations so attractive in com- parison to litigation. Also impor- tant is the confidential nature of the process, a critical factor for many businesses. "Parties typically select arbitra- tion because of their perception that it' more expedient, plus the fact that you get to select your judge, your arbitrator, presumably someone with specialized expertise in the area you're fighting about rather than go to court and get whatever judge is assigned, s quicker, less expensive, and commercial cases in court, ar- bitrations also offer parties the chance to appoint a full panel of experts to hear their case. "The parties may want a While a single judge hears " says Morrison. three-person panel, which you wouldn't get in the commercial list in Canada," says Janet Walk- er, an Osgoode Hall Law School professor and an experienced international arbitrator. "It' lacking in our courts. They're very clever folk and they're very dedi- cated. But you may want some- one, or a group of people, with specialized expertise in a particu- lar industry or you may just feel happier being able to work togeth- er to choose an arbitrator that you know will be good. s not that there's anything private settlement of business dis- putes is a rapidly rising phenome- non in Canada and an area whose practitioners, both counsel and arbitrators, are much in demand. Only months into his new s true, the job, Sexton says he already has several arbitrations on the go, including a multimillion-dollar dispute in which, within weeks of starting, the parties "have al- ready agreed on when the dis- coveries will the documents will be produced, when the hearing will be. " take place, when within the next few months," he notes. "It would have been very difficult to do that in a court." Such speed, efficiency, and And it's all going to take place bitration, Toronto isn't yet in the same league as New York, Lon- don, England, or Singapore. At the same time, Toronto' As a seat for international ar- " cheaper than in those cities and Canada has what it needs to com- pete on the world stage, including a knowledgeable bar of retired judges and counsel. "The linguistic capabilities of s facilities are Canadians, the very highly re- spected legal calibre of the legal community generally have made the move from commercial litigation into international arbitration a par- ticularly easy one for Canadian lawyers," system, the high that's why we're coming along so quickly in the field." says Walker. "I think Walker also says Toronto has a unique advantage in the contest to www.lawtimesnews.com one American party, they're not looking as commonly as they once did to Europe or elsewhere as a neutral place to hold their hear- ings," she says. "Many Americans now find Toronto very accessible and accommodating. " who may find navigating the U.S. border a bit of a challenge or might be a little uncertain about the legal system in the U.S. and its impartiality, they might feel a place nearby, such as Toronto, is more suitable for them." On the domestic side, the And to those from overseas growth of commercial arbitration is benefiting from recent court rulings, including Murphy v. Am- way, in which the Federal Court confirmed the enforceability of ar- bitration agreements and class ac- tion waivers in business contracts. But the real fuel behind ar- bitration's rise has been the ex- plosive length and expense of traditional litigation. It' growing issue since the 1980s as a result of amendments to the Rules of Civil Procedure aimed at improving the fairness of trials. Since then, disclosure times and costs have ballooned. "When I was first called to the s been a bar in the 1970s, there were very few trials that went more than a week," says Morrison. "Trials were three days or five days. Examina- tions for discovery were half a day or a day and documentary pro- duction was much more limited than it is today. case with four parties to a dispute that involved 150 days of discov- ery. "We had 89,000 documents in that case, blame for the large and unneces- sary volume of documents now produced at trials. " Sexton says e-mail is partly to " he says. would very oſten find piles of books full of documents in appeal books filed on the appeal. A pile could easily be four feet high. Yet when we heard the appeal, there might only be 10 or 15 documents that were actually referred to. of arbitration is part of the rea- son why it' sure with accuracy how fast the field is growing in Canada. But anecdotal accounts and court statistics offer some clues. "What I've noticed over the years is there's more and more Of course, the private nature s impossible to mea- " As an appellate judge, we courts and the lawyers to have stricter guidelines to hold people' think so. "To me, the answer is for the feet to the mat, saying, 'This case is not going to take 10 years. Here' how long it's going to take and here's how long your discoveries s s are going to last.'" Walker is less worried than commercial law principles out there. So it' there's some sort of major, ground- s hard for me to see that breaking corpus of disputes being resolved that are leaving us with- out principles. "One way or another, even if volved in preparing these cases, researching matters, and all this enriches their thinking generally. The more urgent concern may arbitrated decisions are not pub- lished, there' s still a lot of folk in- " domestic arbitration," says Sex- ton. "It goes hand in hand with the fact that there are fewer trials than there used to be. The van- ishing trial is a truth. In the Fed- eral Court trial division, there are about one-quarter as many trials as there were 10 years ago. the harmful impact of arbitration on the development of new case law, Sexton says Binnie is right. "I think the legal system needs As for Binnie's warnings about " be that arbitrations are showing signs of slipping into the same bad habits that gummed up litigation in the first place. "You've started now to see the same extensive disclosure and documentary processes creep- ing into arbitration," says Morri- son. "And parties are now saying, 'We've got to get back to the basics of arbitration or the process will lose its appeal and its benefits.'" But if independent judges can't a stream of cases so that decisions can be written, so the public know what the law is," he says. "Having said that, is the answer to shut down arbitration? I don't resolve the inefficiencies of the trial system, who will impose dis- cipline in arbitrations? " to be courageous in order to make the system work," says Sexton. LT The LAW of RETURNS Arbitrators are going to have Binnie or Sexton. "We already have a wealth of PAGE 11 Discover the shortest distance between your business and greater profi ts. Just as in nature, certain Laws in business are irrefutable. As surely as gravity causes the apple to fall, investing in a relationship with the Business Law Group of Lerners LLP will yield a return. Whether it's arranging favourable fi nancing, debt collection, protecting directors and offi cers, or effi ciently navigating laws and regulations governing your enterprise, our Business Law Group can help enhance your bottom line. Contact our Business Law Group or visit our website today. London: 519 672 4510 Toronto: 416 867 3076 www.lerners.ca

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