Dismissal for delay in arbitration: Searching for the right test

By Alexandre Kaufman and Alexander Gay July 6, 20186 July 2018

Dismissal for delay in arbitration: Searching for the right test

 

Some delays in arbitration are unavoidable. Others are the fault of the parties. Worse yet, the plaintiff is sometimes the one responsible. 

When can an arbitral tribunal dismiss for delay? The power to do so in Canada is statutory and does not derive from any inherent power of an arbitral tribunal to control its own process. Under Ontario’s Arbitration Act, 1991 it can dismiss a proceeding where there is delay by the party who has commenced the arbitration (s. 27(4)).  But the word “delay” is not defined. The Act is also silent on the factors that an arbitral tribunal should consider when exercising its discretion. And there is no jurisprudence in Canada on the subject either. 

Still, when the Act is considered as a whole, there are limits to the exercise of discretion by an arbitral tribunal. Specifically, it provides that a tribunal can set aside an award on the ground that the applicant was not treated equally or fairly or had no opportunity to present or respond to the case (s. 46(1) 6).

While Canadian arbitration statutes are otherwise silent on how the discretion found in subsection 27(4) or its equivalent in other Canadian jurisdictions is to be exercised, section 41 of the English Arbitration Act, 1996 is not.  It explicitly provides that a claim may be dismissed where “the delay gives rise to, or is likely to give rise to a substantial risk that it is not possible to have a fair resolution of the issues in the claim, or has caused or is likely to cause serious prejudice to the respondent.” The English legislation has in essence incorporated the legal test that is generally applied for the dismissal of action for want of prosecution under common law. 

In the absence of statutory language in Ontario and other Canadian provinces, arbitral tribunals should consider the legal test for want of prosecution.  In Ontario, the test is articulated in Woodheath Developments Ltd. v. Goldman, which provides that an action should not be dismissed for delay unless: (a) the default is intentional and insolently abusive; or (a) the plaintiff or his or her lawyers are responsible for the inexcusable delay that gives rise to a substantial risk that a fair trial might not now be possible.

The jurisprudence also supports the presumption that memories fade over time, and an inordinate delay after the cause of action arose or after the passage of the limitation period gives rise to a presumption of prejudice.  A party seeking an order dismissing an arbitration for delay may therefore argue that deterioration in the quality and availability of evidence renders the proceeding unfair. It will then be up to the plaintiff to rebut the presumption.  This can be done by showing that all documentary evidence has been preserved that the recollection of witnesses is not essential, or that all necessary witnesses are available with a detailed recollection of the events. If the plaintiff succeeds in rebutting the presumption, the tribunal can still dismiss the action if the defendant can convincingly demonstrate actual prejudice.

Although not bound by the legal test for want of prosecution, arbitral tribunals can be guided by these legal principles. Ultimately, having an arbitration dismissed for delay is subject to an onerous test, as there must be a substantial risk that a fair hearing is no longer possible.

Alexander Gay is General Counsel at the Department of Justice. He maintains a broad civil litigation practice, with an emphasis on commercial and trade disputes. He is also a part-time professor at the University of Ottawa (Faculty of Law) and the author of the Annotated Arbitration Act of Ontario, 1991. Alex Kaufman is Senor Counsel at the Department of Justice. He maintains a broad civil litigation practice, with an emphasis on commercial and trade disputes. The authors’ views are their own.

Filed Under:
Comments
No comments


Leave message



 
 Security code