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COVID-19 and Commercial Mediation Act: Deal with your frustration

Tuesday, April 21, 2020 @ 12:49 PM | By Ari Kaplan


Ari Kaplan %>
Ari Kaplan
COVID-19 has, for all intents and purposes, closed our courts to the business community for most things except but the most urgent matters. But if a dispute has arisen that needs to be resolved quickly, an efficient dispute resolution mechanism is available.

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.

COVID-19 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.

Working with a mediator under the Act ameliorates both problems as 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

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 such as a commercial lease, 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?

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?

At the present time, your mediator must be human. 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, robot mediation is currently prohibited.

You are allowed to use technology to assess your bargaining positions and negotiate a resolution. We use Zoom video conferencing for online mediation sessions, which is also how Ontario courtrooms are operating during COVID-19. 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 is principal of Kaplan Law in Toronto and legal mediator with Mediation Benefits. Most notably, 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.

Photo credit / art-sonik ISTOCKPHOTO.COM

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