Business disputes don't have to be settled in the courtroom

A formal open courtroom – complete with robed lawyers, a presiding judge, and a public gallery – isn't the only place civil disputes, including business disputes, can be resolved.

Wally Oppal should know. In his long career, he has been a lawyer, prosecutor, County Court judge, judge of the Supreme Court of British Columbia, justice on the British Columbia Court of Appeal, attorney general for British Columbia, and chair of the Missing Women's Inquiry. Now in private practice at Boughton Law Corp. in Vancouver, where I also work, he has a lot to say about the resolution of civil disputes through alternative dispute resolution (ADR), which comprises much of his job.

Mr. Oppal says he believes the most common concern members of the public have about our justice system is perceived inaccessibility to the courts. This could be attributable to a number of factors, including the high cost of lawyers, the inability to obtain a judge, institutional delays, the intimidating nature of the courtroom to some people, judges that may be more familiar with other legal areas than the matter before them, and the sometimes cumbersome nature of our adversarial legal system.

As well, litigation can often be a zero sum game, where there is always a winner and a loser but all the lawyers are banking on being the sole winner. So there is always a risk of not prevailing.

There are a number of options for people who wish to resolve their disputes in a non-adversarial, less acrimonious way (and, more often than not, less expensive). It often makes more sense for parties to resolve a dispute through some form of ADR.

There are three basic ADR processes: negotiation, mediation and arbitration. Negotiation is a process where the parties, through their lawyers or in person, negotiate with one another to reach a settlement. But if all disputes could be resolved through negotiation, nobody would need civil courts.

Mediation, on the other hand, is a voluntary process where those involved in a dispute retain an independent third-party mediator to assist and facilitate a resolution.

In Mr. Oppal's experience, mediation is an extremely valuable tool to resolve complex disputes that would otherwise result in long, costly and acrimonious litigation with a winner and a loser. "Recently," he says, "I was appointed to mediate a commercial dispute involving the purchase and sale of a business. The case was set for trial for 45 days. With the assistance of proactive lawyers the dispute was resolved after two days of mediation.

"This is a classic example of the effectiveness of ADR, particularly mediation."

Other benefits of mediation are that the results can form the basis of a formal settlement contract, the proceedings and results are confidential, and they will not create a legal precedent. But beware of "binding mediation" clauses that require the parties to mediate for a minimum number of hours, if only because one party could use the process to exhaust the resources of the other.

Arbitration is somewhat more formal: parties refer the case to one or more people who are qualified as arbitrators. Arbitration may be voluntary or mandatory. The decision of an arbitrator may be binding or non-binding. And, like mediation, the proceedings and the result can be confidential.

You can also select an arbitrator who has experience in a particular area, such as marine, construction or franchise law. "The real difference between mediation and arbitration is that while a mediator will assist the parties in reaching a settlement, an arbitrator will be somewhat removed from the parties and the process and will give a decision to the parties in the dispute," Mr. Oppal explains. "While in most cases the decision will be final and binding, the parties have a limited right to appeal."

Ken Glasner, an experienced arbitrator and mediator in Vancouver, says he believes a great deal of care has to go into drafting ADR clauses within a commercial agreement. "While arbitration offers advantages over litigation," he points out, "poorly drafted clauses lead not only to costly and time-consuming delays, they also fail to meet the intentions and expectations of the parties – in particular business people who have entered into commercial contracts to achieve some rational commercial purpose.

"Those who draft contracts should adopt the same importance to the dispute resolution clause as they do in any other fundamental term of the agreement."

Mr. Glasner adds that the implementation of an ADR clause "carefully thought out during the negotiation of a contract, coupled with competent counsel knowledgeable in ADR and a skilled arbitrator knowing process can lead to a resolution of what would have been a months-long trial in perhaps a few days.

"Even better is a resolution by mediation, thus avoiding even those few days."

Tony Wilson is a franchising, licensing and intellectual property lawyer at Boughton Law Corp. in Vancouver, he is an adjunct professor at Simon Fraser University (SFU), and he is the author of two books: Manage Your Online Reputation, and Buying a Franchise in Canada. His opinions do not reflect those of the Law Society of British Columbia, SFU or any other organization.

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