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Last month an important decision was released on the issue of whether an arbitration award made in the absence of a signed arbitration agreement is valid.

In Giddings v. Giddings, 2019 ONSC 7203 (CanLII), the parties agreed in Minutes of Settlement that any unresolved equalization issues would be “summarily arbitrated” by Stephen Grant.  They further agreed in said Minutes they would proceed with domestic violence screening and sign an arbitration agreement confirming Mr. Grant’s appointment.  Due to an oversight, they never did.

Problems began when counsel begin working with Mr. Grant before the arbitration agreement was signed.  He conducted a number of conference calls, appointed an appraiser to value a property and issued rulings as to the process to be followed with respect to challenging the appraisal.  Throughout, the parties and Mr. Grant acted as if he had the requisite authority as a properly constituted arbitrator and as if the arbitration agreement had been signed.  But it wasn’t.  In fact, in one award he even noted the parties had conducted themselves accordingly and ruled they were “e-stopped” from claiming he was not empowered to make awards.  But they weren’t.

By now, dear reader, you can predict what occurred.  An issue arose which led the husband to challenge whether Mr. Grant had any authority at all.   The issue was whether Mr. Grant or the appraiser was the final arbiter of the value of a property in question.  Mr. Grant ruled he had final say, which of course is correct assuming he was properly constituted as the arbitrator.  But he wasn’t.   

Unhappy with the ruling, the husband refused to sign the arbitration agreement and appealed, arguing Mr. Grant had no authority because the arbitration agreement was never signed.

The Honourable Mr. Justice Gray, an experienced jurist well familiar with family law arbitration issues, framed the issues as follows:

  1. Does the arbitrator have jurisdiction to proceed further in the absence of a family arbitration agreement?
  2. Did the arbitrator have the right to decide the ambit of his decision-making authority, and if so, is his decision reviewable?
  3. Does the court have the power to order the parties to enter into a family arbitration agreement?

Although he recognized that for any arbitral award to be valid an arbitration agreement needs to be signed, Justice Gray found the parties clearly agreed they were going to execute a formal, enforceable family law arbitration agreement.  Relying on principles of “good faith”, he found the husband could not participate in a process and later argue he was exempt from any award made pursuant to same:

            In my view, it does not lie in the mouth of the appellant, having asked Mr. Grant to decide the scope of his authority, to then use Mr. Grant’s answer as the only reason to decline to execute an arbitration agreement when he had agreed, in writing, that he would execute such an agreement.  His refusal to execute a family arbitration agreement is not consistent with his obligation of good faith contractual performance.  The court must have the power, in these circumstances, to require him to live up to his obligation.” (para 44)

As he did in Lopatowski, 2018 ONSC 824 (CanLII), he found this was sufficient to bind the parties to arbitration and, as such, ordered the husband to forthwith execute the arbitration agreement. 

Comment

In Lopatowski, Gray J. used the same principles of “good faith” to bind the parties to a parenting coordination process notwithstanding they could not agree on the PC and none of the requirements under the Arbitration Act had been met.[1]  This case goes further in that even though none of the requirements under the Act had been met, the court binds the parties not just to arbitration but allows awards made pursuant to such process to stand.

While the importance of holding parties to their agreement is respectable and understandable, this case, as was Lopatowski, is simply un-squareable with Horowitz v. Nightingale, 2017 ONSC 2168 (CanLII); and Michelon v. Ryder, 2016 ONCJ 327 (CanLII).   And the law.

The Regulation to the Arbitration Act, proclaimed in 2007, is clear that every secondary arbitration agreement shall contain provisions confirming the law of Ontario applies, what the appeal provisions are, the name of the arbitrator and a signature of the arbitrator confirming his obligation to treat the parties equally and fairly, confirming s/he has received the appropriate training approved by the Attorney-General and that the parties were separately screened for power imbalances and domestic screening.  What this decision does is allows parties to subvert the purpose and intent of the legislation by finding that a course of conduct is sufficient to void the “formalities” of the Arbitration Act.   That is simply not right.

Having courts bless arbitral awards nunc pro tunc is not, it is submitted, the appropriate way we in this field should be going about our business.  As Nelson J. correctly points out in Horowitz, “the legislature has chosen to make certain formal requirements necessary in order to have a legal and binding arbitration.”  With the greatest of respect to counsel and the arbitrator involved, no work should have been done until all terms of the arbitration agreement had been negotiated and signed with screening completed. 

Requiring parties to act in good faith is important, but there are sound reasons underpinning the formal requirements to constituting a valid arbitration of the Arbitration Act and Family Law Act.  Ignoring these requirements takes us back to the years prior to the legislation’s amendments in 2007 when a contextual analysis was required in each case in order to determine whether a meeting of the minds had occurred which, back then, was sufficient to constitute a valid arbitration agreement.  Please, let us not go back there.

Unfortunately, if other courts adopt the logic and reasoning in Giddings and Lopatowski, at some point we are going to require a ruling from the Court of Appeal as to whether an agreement to arbitrate constitutes a valid arbitration agreement for purposes of family law.   It shouldn’t be necessary.  But it seems like it will be.

Brahm D. Siegel is a lawyer, mediator and arbitrator at Nathens Siegel LLP. Brahm is a certified specialist in family law.


[1] The case was appealed but settled before it was argued.



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