Strict Requirements for Terms of “Agreement to Arbitrate” Not Optional

As family law arbitration becomes commonplace, issues will undoubtedly arise that can only be resolved by the Court. One such example is the case of Horowitz v Nightingale, 2017 ONSC 2168 where the parties entered into Minutes of Settlement that included the following provision:

“The parties agree to submit the issues outlined in paragraph 6 … to Arbitration with Stephen Grant on four of the following dates (subject to confirmation from Mr. Grant’s office and the parties regarding the appropriate amount of time for the hearing): July 27, 28, 29, August 2, 3, 15, 16 and 18. Provided that the arbitration proceeds, Murray will not proceed with a motion to reduce the support and will withdraw his current motion re same without costs. The Settlement Conference date will be vacated.”

Ultimately, the arbitration referred to in the Minutes of Settlement did not take place, which prompted the respondent, Mr. Nightingale, to bring an application to the Court to stay court proceedings, based on his position that the parties had agreed to arbitrate.

Mr. Nightingale relied on s. 7 of Ontario’s Arbitration Act which provides that if a party to an arbitration agreement applies to Court in respect of the matters to be arbitrated, the court matter shall be stayed. He argued that the arbitration provision in the Minutes of Settlement constituted an “agreement to arbitrate” pursuant to the definition in s. 1 of the Arbitration Act. He also maintained that the additional formalities found in most agreements to arbitrate need not be strictly observed.

Ms. Horowitz advanced the position that other requirements such as clauses identifying choice of law, the appeal process, confirmation of violence screening, and independent legal advice, are not optional.

To overcome these shortfalls, Mr. Nightingale posited that the Court could simply imply terms to reflect the parties’ intentions, but the Court distinguished the cases he cited saying:

“While courts cannot take an active role by ordering parties to arbitrate, a court may make an order on consent once parties have themselves chosen that process. To overcome formal deficiencies, however, a court should not imply or engraft terms upon what is essentially a consensual process chosen by the parties.”

The respondent also cited Haas v. Gunasekaram, 2016 ONCA 744 (CanLII), where the Court of Appeal states that “the law favours giving effect to arbitration agreements”, a principle endorsed by the hearing judge, however, he also found that the term in the Minutes of Settlement could not be characterized as an “agreement to arbitrate” absent the statutory terms required by the Arbitration Act.

Referring to Parker v. Pal, 2014 ONSC 7035, the Court agreed with the importance of holding parties to their agreement, affording a high degree of deference, but distinguished the case:

“It is to be noted in this case that the parties had already signed a valid arbitration agreement and the arbitrator had already made an interim (temporary) ruling. The aggrieved party was moving against the arbitration process by claiming bias. Once again, the court points out the mandatory nature of section 7.(1) of the Arbitration Ac to grant a stay. In Parker v. Pal, a valid arbitration was not at issue as it is here.”

The Court also considered McFarland v. McFarland, 2015 ONSC 2355 (CanLII), where Justice Minnema in dealing with Minutes of Settlement that set out the fact there would be a consent order for secondary arbitration stated:

“The Minutes of Settlement indicate: “The parties shall execute an Agreement in the form and manner acceptable to the Parenting Coordinator, and which shall conform with the provisions of the Arbitration Act and the Family Law Act, and the regulations thereunder.” Can the court order parties to agree? Can the court order the parties to sign a document dictated by a third person before they have seen it?”

The Court reluctantly dismissed the respondent’s application, noting that options such as arbitration and med/arb are desirable alternatives to the litigation process, however, the absence of formal requirements mandated by the Arbitration Act was fatal to the application’s success.

Lawdiva aka Georgialee Lang

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