Image: Bruce Reynolds, Morgan Burris
What qualities make for a strong construction arbitrator? For Bruce Reynolds, the answer to that question is threefold.
First, the Singleton Urquhart Reynolds Vogel LLP partner says, there are the characteristics you would want from any commercial arbitrator: a strong understanding of process, procedure, and the institutional rules that apply in different jurisdictions. Second, a good construction arbitrator should excel at contract interpretation. Third – and this is what Reynolds believes sets a great construction arbitrator apart from one who doesn’t focus on construction matters – they need to be fluent in the construction process itself.
“A strong construction arbitrator understands… the pouring of concrete,” Reynolds says. “They understand the manner in which concrete is supposed to be managed so that it produces the correct result. They understand the problems that can be developed with concrete and rebar… They understand… the welding of steel or the welding of pipelines. I could go on.
“That very deep and particular understanding is not readily available,” Reynolds adds. “It’s derived from an experience of decades.”
In recent years, it seems the already-limited number of construction arbitrators in Canada who check all those boxes has only dwindled further. For Reynolds, who specializes in construction and acts as an arbitrator and mediator on top of advising clients, and Morgan Burris, a construction litigator at Dentons, the challenge of finding an experienced construction arbitrator is not new – something they’ve dealt with for years as practitioners in the sector. But as Canada continues to pursue major nation-building projects and new legislation condenses construction payment deadlines, both lawyers expect that challenge to ramp up.
Both lawyers say they began noticing the shortage in the last few years. Burris, who works on matters in British Columbia and the Yukon, says that “the same group of names” tend to come up whenever she’s looking at lists of potential arbitrators.
“Some of those people are headed towards retirement,” she says. “I think we’re at a bit of a cusp where we need a new generation of mediators and arbitrators.”
Reynolds, who is based in Toronto, echoed Burris’ observation. “Canada enjoys, at the moment, a strong cadre of senior arbitrators who do have experience in construction,” he says. “But that cadre has been moving into retirement over the last 3 years or so, and it is to be anticipated that shortly we’ll be seeing some additional retirements from that group.”
As the pool of experienced arbitrators continues to contract, those arbitrators will likely become more overburdened and overscheduled, which could lead to longer wait times for parties waiting to hear back about a trial’s results, Reynolds says. Another concern is that law firms with robust construction practices will repeatedly find themselves having to work with the same small group of arbitrators, which could give rise to the perception that “the relationship between the repeatedly appointed arbitrator and external firm is becoming too close,” Reynolds says.
“The health of the system of construction arbitration in Canada benefits from having as many experienced arbitrators available,” he adds.
Burris says while she’s begun to see new names and faces in the arbitrator pool, there are significant risks involved in selecting an arbitrator with less experience – and whom you have less experience with.
“I feel a lot of pressure when advising a client… on a candidate for arbitration,” she says. “It’s not your fault if the judge makes an unfavourable decision… You didn’t pick the judge. But… if the client’s not happy with the arbitrator or the mediator, then it’s kind of on you.”
The costs of arbitration can be high, and there are few avenues for appeal unless appeal processes have been negotiated as part of an arbitration agreement, Burris says.
“The stakes are really, really high to pick an arbitrator that your client is going to have faith in, and that’s going to be right for your process,” she adds. “It’s really difficult, I think, to try someone new in that situation.”
These issues are likely to escalate soon, largely due to the large number of infrastructure projects the federal government is trying to push through. This push will likely increase demand for alternative dispute resolution services, such as arbitration. Reynolds notes that the companies bidding on these infrastructure projects include both Canadian and foreign firms.
“One of the realities of bringing international design and construction firms into a domestic market like Canada’s is that these entities are accustomed to resolving disputes through international arbitration and are comfortable with this modality of dispute resolution to a greater degree than they might be comfortable utilizing the domestic courts,” Reynolds says.
“Obviously Canada enjoys a very robust and experienced judiciary,” he adds. “However, for large commercial entities working in a domestic market such as ours, there’s a certain degree of concern that they might risk being ‘hometowned’ in the event they were to bring a major dispute to the domestic courts.”
The shortage of experienced arbitrators in Canada could prompt many parties to seek services in jurisdictions such as the United Kingdom or the United States, which have deep pools of experienced construction arbitrators, Reynolds says.
Burris, meanwhile, flags new legislation in BC that speeds up the timeline for paying businesses and workers involved in construction projects, which could increase demand for dispute resolution. Payment disputes will be adjudicated by a government authority, and decisions can later be challenged in court or through arbitration.
But Burris says she’s starting to see changes. Some of her peers have begun acting as arbitrators and mediators. “I think they’re really busy and doing well,” she says.
“I think it’s going to take a while to kind of replace that older generation,” Burris adds. “It’s just been a real lag where the same people were doing it for a very long time.”
