COVID-19 and the Commercial Mediation Act: Deal With Your Frustration
(This article was originally published by The Lawyer’s Daily, part of LexisNexis Canada Inc.)
ONTARIO’s Commercial Mediation Act - which has been around for a decade - provides a confidential framework for settling pre-litigation commercial disputes and make them binding as a court order.
COVID19 and government closure orders have led to many business activities being “frustrated” - no fault of your own. The rights and obligations that arise from contract frustration are unclear and often complex. That could make it hard both to reach a settlement and ensure that it’s enforceable.
“A settlement agreement registered with the court “has the same force and effect as if it were a judgment” of the Superior Court of Justice”
Working with a mediator under the Commercial Mediation Act ameliorates both problems. The legislation lets parties agree to give the force of a court order to a settlement reached with the help of a qualified commercial mediator — without starting a lawsuit.
Turn a Settlement into a Court Order: an Innovation
Jurisdictions in North America adopting UNCITRAL Model Law on Commercial Mediation.
“Commercial dispute” means 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”
The Commercial Mediation law is based on the United Nations Commission on International Trade Law (UNCITRAL) Model Law on International Commercial Conciliation (2002). The Model Law is designed to “ensure greater predictability and certainty on confidentiality and enforceability of settlement agreements”. This is a legal innovation.
Ontario enacted its law in 2010, joining Nova Scotia, New Jersey, Ohio and Illinois as early adopters of similar legislation in North America.
What is and isn’t a “Commercial dispute”?
To benefit from the Commercial Mediation Act, you need to be in a “commercial dispute” with another party in a business context and have not filed a lawsuit. A commercial dispute is when you have an issue over business-like things including a financial relationship, joint venture, supply and exchange, goods and services, distribution and trade, etc.
Some disputes are excluded from this process, notably, collective bargaining. Also not covered are family law, residential leases and other personal disputes.
Do you qualify for the Commercial Mediation Act?
Ask your lawyer, because the process, though voluntary, can compromise your rights. Find out whether the legislation can work for you and whether you should subject any settlement to court-ordered enforceability. Ask about the provisions covering privacy and confidentiality.
Can Algorithms Solve Your Dispute?
Robots may not mediate commercial disputes
At the present time, robot mediation is currently prohibited. You cannot use “a computerized mediation in which the mediation is not conducted with an individual as the mediator” (s. 2(4)(b)). As such, your mediator must be human.
You are allowed to use technology to assess your bargaining positions and negotiate a resolution. We use secure video conferencing for online mediation sessions, which is also how Ontario courtrooms are operating during the COVID19. We also use virtual data rooms for without prejudice disclosure of information.
In summary, the Commercial Mediation Act creates an opportunity to save cost, time and other resources by voluntarily cooperating to resolve the commercial realities of your situation and make it binding. You pre-empt a litigation threat, restructure the relationship, or find an exit ramp and move on.
ARI KAPLAN, LL.M, Q.Med, is principal of Kaplan Law in Toronto and legal mediator with Mediation Benefits. He helped settle a $700 million health benefits plan dispute under the Commercial Mediation Act with an employer and insurance company. Ari is not a robot.
✉ ari@kaplanlaw.ca | Mediation calendar: HERE