Toronto Commercial Arbitration Society: “Tylney Style” Conference
On September 22nd 2020, the Toronto Commercial Arbitration Society (TCAS) presented panels on “Class Actions and Arbitration” and “Arbitrating Small and Mid-Value Claims”, as part of the inaugural Canadian Arbitration Week.
Panel Session #1: Class Actions and Arbitration
Moderated by Myriam Seers (Torys LLP), this session explored the intersection between arbitration and class actions as two distinct forms of dispute resolution. The panel was composed of Bill Horton (William G. Horton Professional Corporation), Larry Lowenstein (Osler, Hoskin & Harcourt LLP) and Linda Rothstein (Paliare Roland Rosenberg Rothstein LLP).
The panelists began by discussing the similarities and differences between arbitration and class action litigation. Bill Horton contended that the two are polar opposites in several ways, and the panel proceeded to discuss some of the differences. First, while arbitration is a contractual form of dispute resolution, class actions arise from legislation. Second, they are meant to serve different types of claimants; class actions primarily serve the public interest—allowing parties with less power or smaller-value claims to pursue litigation—while arbitration is often imposed on a party with less power via a contractual clause. The panellists went on to discuss several more differences, including the precedential force of each form of dispute resolution, and the publicity of class actions versus the confidential and discrete nature of arbitrations.
The panel then shifted to thematic overlaps between arbitration and class actions, as exemplified in the Supreme Court’s recent decision in Uber v Heller. It was on this topic that majority of the session’s discussion unfolded. The panel began by expressing dissatisfaction with certain elements of the Uber decision. In particular, Linda Rothstein noted that the SCC in Uber did not address how to balance the competing statutory provisions in the Arbitration Act and class action legislation. Accordingly, the SCC missed a valuable opportunity to clarify how these two regimes should interact.
Larry Lowenstein spoke next, discussing what an appropriate regime would look like. Lowenstein explained that it was important to avoiding rendering a contractual provision mandating dispute mechanism (in this case, arbitration) illusory. He suggested that requiring the more powerful party to pay the costs of the arbitration is one potential solution, so that the arbitration agreement can be upheld but the plaintiff still provided a viable means of redress. Hence, despite Uber, the door to arbitration in a class action context remains open.
Continuing on the topic of Uber, Seers asked the panelists whether the idea of consent was the correct way to frame a class action suit in the face of an arbitration clause. The panel unanimously agreed that the arbitration clause in Uber was abusive, as it resulted in the weaker party (UberEats drivers) effectively signing away all means to vindicate their rights. The panellists then dove into the idea of class action arbitrations, and concluded that court sanctions will be an important premise for arbitral involvement in such cases. However, what this would look like in practice is still up in the air. Overall, the panellists engaged in a thoughtful discussion. Drawing on their experiences, the panellists actively built on each others’ insights, making for a rich and lively experience for those viewing remotely.
Panel Session #2: Arbitrating Small and Mid-Value Claims
This panel explored the specific considerations that must be taken into account when arbitrating small and mid-value claims. The panel featured the expertise of Joel Richler, an Independent Arbitrator, Lawrence G. Theal, senior partner at Theal Group LLP specializing in commercial litigation and arbitration, and Paula Kargas, Vice President and Claim Manager at Chubb Insurance Company of Canada. Megan Keenberg of Van Kralingen and Keenberg LLP served as moderator.
The session began by qualifying exactly what small and mid-value claims are, discussing the difficulty of precisely fitting this category within specific monetary boundaries. While these claims are not as big as monetarily other claims, they are equally important to the claimants and should be treated just as seriously. However, different considerations arise when it comes to procedural efficiencies and cost savings. This topic was the focus of the panel.
The first question was whether it is desirable to include a fixed set of procedural rules in an arbitration clause in order to avoid unnecessary wrangling after a dispute arises. Lawrence Theal kicked off the discussion by noting two things which drive procedural efficacy: procedural rules and the chosen arbitrator’s willingness to adopt the rules. Theal went on to note how a specific industry program may create a better process than the kinds of default processes seen institutional rules of procedure, and cited the auto industry as an example of one where arbitrations with standardized procedural rules are resolved efficiently.
Joel Richler spoke on the issue from the perspective of an arbitrator. Richler noted how an arbitrator can exert influence to create a smooth and fast arbitral hearing. Arbitrators can influence parties to choose more expeditious sets of rules from the outset and can streamline the proceedings as they unfold through their procedural orders and more informal agreements with the parties on matters of procedure.
The panel then tackled the question of whether arbitration or litigation is a more expensive form of dispute resolution for small and mid-value claims. Paula Kargas began by noting that the average cost of mediation was usually much less then arbitration; however, the costs of arbitration were often much less going to court. Theal followed with an impassioned defence of arbitral cost efficiency versus its counterparts. According to Theal, there were numerous cases where arbitration could save hundreds of thousands of dollars. Richler disagreed with Theal that arbitration is always cheaper than litigation, but agreed that it is almost always faster.
The speakers then discussed different methods to establish reduce time and costs during arbitral proceedings. The panel noted that counsel will often behave in a manner that prolongs proceedings, or creates difficulties in expediting the procedure. While costs awards should not be used as a sledgehammer against parties, Richler suggested that ordering costs can be used on occasion to elicit cooperative behavior from counsel.
The last topic covered was the use of mediation-arbitration (med-arb), in which mediation and arbitration are combined in a single procedure before a single mediator-arbitrator, for small and mid-value claims. Kargas remarked that med-arb can be extremely effective when there is time pressure and/or both parties want to avoid damaging an ongoing relationship. She noted that it can be efficacious to have the same mediator and arbitrator in such situations, provided the arrangement is agreed to by both the parties. The dual mediator/arbitrator obtains a more intimate knowledge of the parties and their needs, which can lead to a more amicable compromise and, if the mediation does not yield a settlement, to an arbitral award more sensitive to the commercial realities of the dispute and the parties’ relationship. However, Richler cautioned that the dual role of the mediator-arbitrator may negatively affect the mediation phase of the process. For example, parties may wish to withhold certain information during mediation for fear that it could negatively affect them during the arbitration phase.
This panel concluded the TCAS’s “Tylney Style” Conference, and was followed by a round of well-deserved virtual cocktails.
 Uber Technologies Inc. v Heller, 2020 SCC 16 [Uber].