THE MOST IMPORANT LEGISLATION YOU'VE NEVER HEARD ABOUT

Did you know about Ontario's Commercial Mediation Act, 2010 ?

Chances are you haven't heard of it, despite the fact that this month marks its first anniversary.

The Commercial Mediation Act, 2010 ("the Act") is based on the UNCITRAL (United Nations Commission on International Trade Law) Model Law on International Commercial Conciliation (2002). There is similar legislation in Nova Scotia and several U.S. states based on the Model Law.  Accordingly, an international regulatory framework for the conduct of mediation and the judicial enforcement of mediated settlements has been introduced into Ontario law.

The Act applies wherever Ontario law applies. The application of Ontario law would obviously depend on the circumstances of each occurrence or transaction but, presumably, the Act would apply if a business or employment contract specifies that it is to be interpreted in accordance with Ontario law. Even if such a contract did not explicitly provide that any disputes arising between the parties are to be mediated before court proceedings are commenced, the Act may still apply if Ontario law otherwise applies and the parties wish to avail themselves to the mediation process, subject to certain exceptions.

The Act is beneficial to businesspeople in that it allows for the advantages of mediation as a method of dispute resolution as opposed to litigation (such as speed, lower legal costs, risk avoidance, confidentiality) with the certainty allowed by a uniform set of rules governing the mediation process and the assured enforcement of mediated settlements by the Courts.

Here are some highlights of this brief (and hitherto "unknown") Act:

The Act applies to the "mediation" of a "commercial dispute" where the mediation commences on or after October 25, 2010 (s. 2(1)).

A "mediation" is defined as a collaborative process in which the parties to a commercial dispute agree to request a neutral person, referred to as a mediator, to assist them in their attempt to reach a settlement in their dispute, and the mediator does not have authority to impose a solution to the dispute on the parties. There are no surprises here.

What is surprising, but welcome, is the broad definition of "commercial dispute": "A dispute between parties relating to matters of a commercial nature, whether contractual or not, such as trade transactions for the supply or exchange of goods or services, distribution agreements, commercial representation or agency, factoring, leasing, construction of works, consulting, engineering, licensing, investment, financing, banking, insurance, exploitation agreements and concessions, joint ventures, other forms of industrial or business co-operation or the carriage of goods or passengers" (s. 3). This definition excludes disputes pertaining to family law and automobile statutory accident benefits disputes. As well, the Act has no application to collective (labour) agreements, computerized mediation, mediation pursuant to judicial or arbitration proceedings and mediations provided by Rules of Civil Procedure (thus, after the commencement of litigation) such as Mandatory Mediation (s. 2 (4)).

Interestingly, the parties can modify the provisions of the Act with some exceptions, or they can opt out of it altogether (s. 2(2)).

The Act provides a code with respect to the conduct of the mediations to which it applies. For instance, section 5 deals with the commencement and termination of a mediation, section 6 provides for the appointment and duties of a mediator, including the disclosure of any conflicts of interest, while section 7 sets out a code of conduct for the mediation itself.

The confidentiality of information is the subject of section 8, while its inadmissibility in arbitral, judicial or administrative proceedings is detailed in the following section.

Section 10 allows for the possibility of a mediation transforming into an arbitration (mediation-arbitration or "med-arb") on consent of the parties.

According to section 11 (1) "the parties may agree not to proceed with arbitral or judicial proceedings before the mediation is terminated" with an exception contained in the next subsection whereby
"an arbitrator or court may permit the proceedings to proceed and may make any order necessary if the arbitrator or court considers,

(a) that proceedings are necessary to preserve the rights of any party; or

(b) that proceedings are necessary in the interests of justice."

This section should be read in conjunction with section 11 of the Limitations Act, 1990. Accordingly, both the basic and ultimate limitation periods under the Limitations Act, 1990 may be suspended by agreement while a mediation under the Act is in progress. One should not assume, however, that limitation periods prescribed under any other legislation would be similarly suspended.

The finality of mediation settlement agreements and their enforcement by the Court are encoded in sections 12 and 13 respectively. In particular, section 13 (2) (b) allows for an alternative to moving on notice before a judge for judgment in the terms of the settlement by instead applying to the Registrar of the Superior Court of Justice for an order authorizing "the registration of the agreement with the court". Such an order would have the same force and effect as a judgment but, presumably, would have far less time and cost attached than a traditional judge's motion.

Mediators faced with unpaid accounts will rejoice when they read section 14, which would permit a mediator, in the right circumstances, to avail himself or herself to the enforcement provisions of section 13.

Finally, section 15 provides for the government's ability to pass regulations under the Act, although, to date, there are no such regulations.

All in all, the Act is a powerful and useful piece of legislation and one that should be welcomed by the legal and ADR communities, and by the public at large.

It's time to spread the word.