November 18, 2009
ARBITRATION-MEDIATION
In the process known as “Arb-Med”, after conducting the arbitration hearing, the arbitrator signs and seals his/her award, but does not deliver it. The arbitrator, or another neutral, then acts as mediator. If mediation succeeds, this award is not delivered, whereas if mediation fails, this award is delivered and constitutes their agreement. This method facilitates settlement because, a completion guarantor, bank, investor, distributor and producer, after experiencing a full hearing, paying its cost and knowing that the sword of Damocles, the sealed award, awaits them, are infinitely more focused on the reality of their positions and the risks of not settling. Examples of disputes that might be submitted to Arb-Med are: premature or unnecessary takeover of production by the completion guarantor; failure of the completion guarantor to complete and deliver; as well as payments pursuant to collection and disbursement agreements.
APPEAL OF ARBITRAL AWARDS AND COURT JUDGMENTS
Awards
By agreement, the parties appoint an arbitrator; all of them then design a private appeal process with respect to an award rendered by another arbitrator. They fix the delays for filing briefs, the maximum number of brief pages, the date for hearing counsels’ arguments, if any, and the rendering the appeal award. Legal costs are limited to preparation of the briefs and possibly some oral argument.
In Ontario, Articles 3, 5(2) and 45 of the Arbitration Act (Ontario) in conjunction with clear provisions in the arbitration agreement, or the absence thereof, govern appeals of arbitral awards, which, if permitted, are heard by the Ontario Court (General Division). In Quebec, the Code of Civil Procedure provides that there is no right to appeal or review the merits of an arbitral award, the only possible recourse being an application for its annulment. However, the question becomes whether the parties can nevertheless validly agree to appeal an arbitral award to another arbitrator or panel of arbitrators? While there is no clear case law on the point, and a discussion of the law is beyond the scope of this article, I believe that appeal of an arbitral award to another arbitatror(s) is valid in Quebec if properly agreed to, and that n in Ontario. Note that pursuant to Rule 34 of JAMS, Inc., a leading USA dispute resolution company, the parties may, before an arbitral award becomes final, elect to appeal it to a panel of arbitrators, in which event maximum 25 page double-spaced briefs may be filed, and a decision is rendered within 21 days.
Judgments
Similarly, when a court has rendered a judgment, can the parties validly appeal it to an arbitrator and obtain an award which the courts will recognize and enforce? Again, a discussion of this point is beyond the scope of this article, but I believe that this is not possible in Quebec or Ontario.
A familiar story
Almost three years after you launched a suit against your distributor and have paid $25,000 to your counsel and accountant for same, counsel tells you that the court has dismissed your claim for payment of the $250,000 minimum guarantee or, failing this, for termination of the distribution agreement plus damages. Worse still, the court has granted distributor’s counter-claim against you for $500,000 of damages resulting from your late and incomplete delivery, plus interest plus costs. Counsel requires $20,000 to launch an appeal, which will not be heard for at least two years, there is no guaranty of victory, and you have thirty days to file an appeal or pay the judgment. Your picture’s investors, and your minority shareholders (which include family and friends), are somewhat less than amused.
A few days later, counsel calls to say that he/she has probably convinced distributor’s counsel to recommend to distributor that the appeal be heard by Arbitrator A, an experienced entertainment lawyer, on the following terms. Arbitrator A will review the court record next week, maximum 15 page legal briefs must be submitted within two weeks, a one day hearing will be held in three weeks, and a non-appealable award will be rendered within two weeks thereafter. Your cost will be $5,000 for counsel plus a maximum of $7,500 for Arbitrator A.
You really want to appeal, and Counsel again promises that you have a good case. You prefer to have Counsel drawn and quartered rather than pay Counsel one more cent. You remember that five years ago, during negotiation of the distribution agreement, Counsel strongly suggested that you insist upon an arbitration clause – you did not. You start doing that reality check, and hope that distributor is doing the same thing.
My appreciation is hereby extended to Ruth Essebag, articling student, and Me. Daniele Lalande, of Gascon & Associates LLP, and Jennifer Matyas, law student at Osgoode Hall, York University, for their contributions with respect to Quebec and Ontario law, respectively, concerning arbitral appeals.
CONCLUSION
Given the international nature of the film-television industry as well as the increasing complexity of its relations and transactions in development, production, financing and exploitation, industry players can, using these alternate dispute resolution models, creatively structure a resolution process that is appropriate to the exigencies of that case, whether to help the parties reach a new agreement or to settle a dispute.
BIBLIOGRAPHY
Getting To Yes – Roger Fisher and William Ury, 1991; The Arbitration Practice Handbook, Arbitration and Mediation Institute of Canada Inc.,1996; The Mediator’s Handbook – John W. Cooley, 2000; Alternative Dispute Resolution Practice Manual – Allan J. Stitt, 2003; Mediating Commercial Disputes – Allan J. Stitt, 2003; Nelson on ADR – Robert M. Nelson, 2003; Commercial Arbitration in Canada – J. Kenneth McEwan & Ludmila B. Herbst, 2004; The Arbitrator’s Handbook – John W. Cooley, 2005; La Médiation: préparer, représenter, participer – Serge Roy, Avi Schneebalg, Eric Galton, 2005; Program Book, Arbitration Training Institute, Section of Dispute Resolution, The American Bar Association, 2005; Rule 33 JAMS – www.jamsadr.com.
This article contains general comments only. It is not intended to be exhaustive and should not be considered as advice in any particular situation.
Sander Gibson is a commercial attorney specializing in entertainment law with Gascon & Associates LLP in Montreal, and acts as an arbitrator and mediator in entertainment and commercial matters in Canada.
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