Arbitrator's discretion opens private arbitrations to the public
By Sandy Rubin
ONE OF ARBITRATION'S strongest selling points is privacy. Unlike litigation, it can be conducted away from the prying eyes of the media, the competition or the merely curious. In fact, just disclosing the fact that a company is involved in an arbitration can violate confidentiality. But for anyone who thinks that's a given, a fight over the funding of a blue-box recycling program should be a wake-up call.
The Association of Municipalities of Ontario and the City of Toronto v. Stewardship Ontario
is one of the few cases to directly consider privacy in Canadian arbitrations. The bottom line? Privacy is not automatic, a decision the commercial litigation and arbitration Bars are viewing with interest. “It's certainly gotten some attention because it's an unusual result,” says Ryder Gilliland at Blake, Cassels & Graydon LLP.
The case involves Stewardship Ontario, a non-profit financed by companies whose products and packaging end up in recycling bins. The organization collects and recycles the contents for Ontario's municipalities under the province's waste-diversion program. Each side pays half the cost.
When the parties were unable to agree on payment levels for 2014, they went before a single arbitrator, as stipulated in the governing statute. Then the city of Toronto and the municipalities did something unusual: they asked that the arbitration be open to the public, arguing that there is significant public interest in the blue-box program, half of which is paid for by taxpayers.
Stewardship Ontario opposed the move, arguing that arbitrations are presumed private. Arbitrator Robert Armstrong, a former justice with the Ontario Court of Appeal, noted that Canadian case law on the private nature of arbitration is sparse. “The Arbitration Act
is similarly silent on the issue.” But the Act does provide discretion to open the proceedings to the public, he continued, provided there is no specific agreement otherwise.
Earl Cherniak, a litigator at Lerners LLP, says that, while the decision didn't make media headlines, it's an important one. “The way I see it, what he says is that, absent an agreement by the parties that the hearing will be in private, there's discretion,” says Cherniak, who also frequently serves as an arbitrator. “I think it's a cautionary tale for the business community that, if they want to ensure that their arbitrations are conducted in private – without publicity – that they provide for that specifically in arbitration agreements.”
Gilliland of Blakes says this is especially important if one or more of the parties is a public entity. “I don't think business people should be concerned about the result, but they should be aware
of the result, and aware of the fact there's only a presumption that arbitrations are private. If they want to be sure their arbitrations are private, they need to take steps to ensure that.”