Mediation & Arbitration in Family Law

Increasingly, mediation and arbitration are being used as alternatives to court in settling issues arising from divorce and separation proceedings. Before you agree to this process, it is essential to understand what it entails and what benefits it can provide for you.

First, it is important to note that mediation and arbitration are actually two different processes which can be separated into their component parts or combined as the parties feel is necessary. Sometimes, parties will only attend mediation or only attend arbitration. Sometimes parties will retain one mediator for the mediation phase and a separate arbitrator for the arbitration phase. Typically, in Calgary, parties will retain the same individual for both roles.

Mediation

Mediation is a form of Alternative Dispute Resolution (“ADR”) that parties can attend to try to settle their matters amicably. In Alberta, parties are required to attend some form of ADR before attending court, and mediation is a great venue to satisfy that requirement. Quite often, mediation is the first step that parties take in a family law matter after financial disclosure is exchanged.

Mediation is a collaborative form of ADR that involves a neutral third-party mediator to assist the parties in reaching a mutually acceptable resolution. It is a non-binding, without prejudice process. “Without prejudice” means that parties are able and encouraged to speak openly and negotiate on issues. What is said, or compromised, by either party in mediation cannot be held against that party if that issue needs to be litigated at a later date. Non-binding means that nothing is binding unless an express agreement is reached at mediation. The mediator’s role is to facilitate meaningful discussions, but they do not impose any decision. This is a collaborative process, not a directive one. If an agreement is reached at mediation, it is always best practice to have contemporaneous notes or to have the mediator provide a mediator’s report setting out the agreement.

Mediation is a great process to be able to look at the file holistically and to come up with creative solutions which would typically not be ordered by a Court. It is also a process that allows parties to settle all their issues at once. Or, settle the majority of the issues and lessen the need for lengthy and expensive litigation to settle those matters.

Unfortunately, mediation is not always 100% successful.

In the event that mediation does not result in a full and comprehensive agreement on all terms, arbitration may be necessary.

Arbitration

Arbitration is, in essence, a private court where the parties retain a third party to become their private judge. In Alberta, the Arbitration Act empowers arbitrators to make binding decisions. However, before an arbitrator can make such a decision, the parties must enter into a contract empowering the arbitrator.

The arbitration contract is a legally binding contract which restricts parties’ ability to proceed to court to deal with any of the enumerated issues within the arbitration agreement. For example, if the arbitration agreement states that the arbitrator shall have jurisdiction to deal with property division, a party may not proceed to court to force the sale of a home. That should be done through the arbitrator.

When signing an arbitration contract, it is important to get legal advice regarding the following areas:

1. Issues: It is important to carefully consider which issues the arbitrator is empowered to make decisions on as those issues cannot be brought to court;

2. Rights of appeal: There exists an inherent right of appeal to all litigants who proceed through the courts. The Arbitration Act sets out the standard rights of appeal for arbitration awards, but those can be changed upon agreement of the parties. It is important to talk to your lawyer regarding which rights of appeal are appropriate and what the legal ramifications of that decision are.

3. Hourly rate: Each arbitrator sets their hourly rate. It is important to talk with a lawyer regarding their experience with each arbitrator to understand the benefits or drawbacks of each arbitrator, which may be relevant to their hourly rate. It is also important to speak with a lawyer regarding how the arbitrator’s fee will be split between the parties. Typically, the arbitrator’s hourly rate is split between the parties.

4. Ability to proceed to court: An arbitration agreement limits parties’ right to proceed to court. Typically, this is a net positive because you have one decision maker who specializes in that area of law, following the file and making decisions. However, it is especially important to speak with a lawyer to understand what impact this may have.

5. Ability to exit the contract: Arbitration agreements can only be exited by the consent of the parties and by the arbitrator withdrawing. Once you have signed the agreement, the arbitrator becomes your decision maker for the specific issues enumerated in the agreement. Arbitration is a much more formal process than mediation. It typically resembles court proceedings in that all evidence is submitted formally, and hearings are held in essentially the same way they are held at court.

The Arbitrator’s decision is binding and enforceable.

Paradoxically, arbitration often saves parties money because the process can be combined with mediation and tailored to fit the specific needs of the parties. The court system is inherently a very structured system with specific issues only being appropriate for certain processes. In arbitration, you can customize the process to be as involved or truncated as possible. Because arbitration is often combined with mediation, it can also help to make decisions on sticking-point issues in a smaller process before returning to mediation once those issues are determined.

Overall, mediation and arbitration are highly recommended processes at Hayher Lee and can be the most effective tools in ensuring your divorce or separation proceedings finalize quickly and smoothly.