Can a Court Enforce an Arbitration Process That Started Before an Arbitration Agreement Was Signed?March 3, 2022
written on behalf of Feigenbaum Law
When people can’t reach a consensus on a topic, they may decide that they’re just going to have to “agree to disagree.” However, what about situations where people agree to agree to something? For example, someone might see a car listed for sale, talk to the dealership, and agree to come in to purchase the car. In between that conversation and the planned transaction, the would-be purchaser may decide they no longer want to purchase it. Despite telling the dealership they wanted the car, they can’t realistically be held to that agreement. Similar situations may pop up in family law. For example, divorced or separated parents might agree to something in principle when negotiating and then change their mind when it comes time to sign an agreement. A recent decision from the Ontario Superior Court of Justice looks at a case where two parents had agreed to pursue arbitration before submitting motions to the court for any disputes that may arise between them. The father asked the court to require the mother to enter into an arbitration agreement, while the mother said their agreement to arbitrate did not fall within the necessary boundaries of the Family Arbitration Regulation 134/07, and as such is not something she is bound by.
Parties agree to arbitrate. Or do they?
The parties separated in August 2011. During the litigation that followed, a series of final orders were reached, with the most recent dated August 6, 2020. The most recent final order contained language stating that the parties would enter into arbitration before litigating before the court. However, in the months leading up to the signing of that order they had met with an arbitrator. This meant that the arbitration process was initiated before the final order was in place. The final order would eventually go on to state:
19. Any support review moving forward shall be on a moving forward basis with no retroactive adjustment. The review shall be prospective, and not retroactive. It shall be conducted via an in-writing Arbitration process with Ms. Julie I. Guindon. The initial costs associated with this process shall be shared equally by the parties.
27. All future disputes between the parties will be resolved via an Arbitration process. This term replaces subparagraph 12.5 of the Final Divorce Order.
A second issue requiring arbitration arose when the parties could not agree on whether their oldest child should still be considered a child of the marriage, and therefore included in child support calculations. The father once again contacted the JG to serve as an arbitrator. A pre-arbitration meeting was held in order to do initial interviews and outline the process the parties would follow. Later, an arbitration agreement was drafted and presented to the parties in October 2020. This was signed by the father and the arbitrator, but not by the mother, who said she opposed the arbitration process on jurisdictional grounds. The mother hired a lawyer who was funded by Legal Aid Ontario, but only for the purposes of court processes and not arbitration.
On February 8, 2021, the mother issued and served a Motion to Change the Final Order before the Court, asking the court to allow her to pursue resolution outside of arbitration. The mother told the court she objected to the arbitration process from the outset and questioned the arbitrator’s authority to perform in that role. She said she only attended the pre-arbitration meeting under the belief that it was not in and of itself “arbitration.”
Can the parties be ordered to arbitrate?
The court began its analysis by stating that while it has the jurisdiction to order parties to arbitrate with their consent, there is no agreement in case law as to whether arbitrations people agree to privately carry the same weight as arbitrations ordered by the court, and whether private agreements constitute an “arbitration agreement.” In a 2019 decision, the court relied on the contractual obligation of good faith contractual performance, while a 2020 decision ruled that an interim parenting agreement was not actually a bar to proceeding before the court.
In turning the facts of the situation before it, the court noted that the parties conducted themselves in a way that was consistent with the arbitration process, notably by taking part in a series of meetings with the arbitrator over the years. The mother acknowledged this, but said she only took part in those meetings because they were described as pre-arbitration meetings, and secondly because the mother believed the arbitrator had no authority to proceed without a fully executed family arbitration agreement in place.
We know that the parties eventually agreed to take part in arbitration as evidenced in the Final Order they signed, even though the mother later objected to it. The court found that the willingness of the parties to participate in the preliminary steps of the arbitration process was enough to demonstrate that they intended to follow through with arbitration. The fact that there had not yet been an arbitration agreement in place was not in and of itself enough to allow the mother to avoid arbitration. As a result, the court ordered that the parties participate in the arbitration process.
Contact Feigenbaum Consulting in Toronto for any family law issues relating to arbitration proceedings
The team at Feigenbaum Law, led by Mark Feigenbaum assists clients, especially those involved in high-net worth separations, in all areas of family law. It is critical to immediately consult with an experienced family law lawyer as soon as a separation seems likely. We have extensive experience helping clients work through business, tax, and accounting considerations associated with separation or divorce, as well as in issues related to child support, spousal support, hidden assets, property division, and more. If you find yourself contemplating a separation or divorce, please don’t hesitate to contact us online or by phone at 1-877-275-4792 to see how we can help you today.