Mediation and arbitration: Practical dispute resolution for the automotive aftermarket
By Barry S. Arbus, K.C.
What is mediation?
As a practical and less expensive alternative to litigation, mediation can help disputing parties reach a mutually agreeable solution with the help of a neutral third party, such as a professional mediator. The process, which is entered into on a voluntary basis by both parties (except in the case of court-mandated mediation), is private and confidential, and, most importantly, results in the participants and not the mediator or a judge deciding the outcome.
The mediator’s role is to constructively guide the parties towards a happy medium or a creative solution with which they can both live. A mediator who is effective at managing interaction and facilitating open communication can have an enormous impact.
Even if mediation does not result in a full negotiated settlement for a given dispute, it may result in the narrowing of the issues in dispute, or it may provide the parties with greater insight and understanding regarding the other party’s position.
What is arbitration?
Arbitration is a process in which an independent person makes an official decision that ends a legal disagreement without the need for it to be solved in court. Arbitration is a voluntary process; the parties to a dispute typically agree to the submission of their dispute to arbitration either at the beginning of their relationship or at the time a dispute arises.
The decision-maker is called the “arbitrator” or the “arbitral tribunal” and is typically one person or a three-person panel. The arbitrator or the arbitral tribunal makes a decision, called an “award”, based on the parties’ submissions and arguments.
Canadian courts offer significant deference to arbitrator’s awards. In addition, an award may be registered in court if enforcement becomes a challenge, in which case the award will have the same force and effect as a court order.
Why consider mediation or arbitration as alternatives to litigation?
The ability of parties to have their disputes resolved outside of the public view is one of the primary benefits of mediation and arbitration. This is especially important in a commercial context, where a dispute might cause reputational or financial harm to either or both of the parties. Disputes that are litigated become a matter of public record.
By choosing to mediate or arbitrate, parties have the ability to resolve their disputes in a quick and cost-effective manner, avoiding the lengthy delays inherent in the court process.
Additionally, mediation allows parties to have a say in the resolution of their dispute. Arbitration, on the other hand, allows parties the ability to select their decision-maker based on factors such as subject matter expertise and availability, and to control the process.
In what situations might mediation and/or arbitration be useful to AIA Canada members?
Mediation and/or arbitration can be useful to resolve disputes between auto parts manufacturers and distributors, including disputes involving pricing and payment, exclusivity, warranties, product liability, or trademarks and licensing. Mediation and/or arbitration can also be useful to resolve disputes between auto parts distributors and retailers, such as those involving credit agreements, defective products, supply shortages, or counterfeit parts. Disputes between auto manufacturers and retailers fall under the National Automobile Dealer Arbitration Program (NADAP) administered by ADR Chambers, and these disputes may involve franchise termination, pricing and advertising, inventory requirements, or incentive and bonus programs.
About me
I am an experienced arbitrator and mediator with ADR Chambers. Prior to becoming a mediator, I worked as a corporate lawyer and gained extensive experience acting for commercial clients, including auto parts manufacturers, distributors, importers, and exporters. If you have any questions about mediation or arbitration, do not hesitate to contact me at barbus@barryarbus.com.