The ADR Institute of Canada (ADRIC) has adopted new arbitration rules and a new arbitrator appointment protocol, effective March 1, 2025. The new rules and protocol were prepared by ADRIC’s modernization committee, which was comprised of experienced arbitrators and arbitration counsel and reflect comprehensive revisions to the procedures that were implemented some ten years ago.
The new rules and protocol are intended to apply to Canadian commercial disputes, but parties can also apply them to international or non-commercial disputes. They provide a practical and flexible structure to support a streamlined dispute resolution process that underscores party autonomy in an effort to promote the fair and final resolution of disputes, while avoiding unnecessary recourse to an overburdened court system.
The highlights of the new rules and protocol include the following:
Customized support from ADRIC and a “menu” of available services
Arbitration is typically conducted on an ad hoc basis in Canada such that the parties do not require institutional support. When parties adopt the new rules, however, they have the option of customized ADRIC support from a “menu” of available services.
Upon the request of any party and payment of the applicable fees, ADRIC will provide the following services: (a) appointment of an arbitrator; (b) appointment of an interim arbitrator; (c) appointment of one challenge adjudicator or panel of three challenge adjudicators; (d) application for urgent interim measures; and (e) application to challenge an arbitrator, interim arbitrator or challenge adjudicator.
Upon the request of all parties and payment of the applicable fees, ADRIC will (a) administer deposits; and (b) appoint an appeal tribunal.
No distinction between international and non-international disputes
The previous rules indicated that if an arbitration to which the rules applied was international under the law of the seat of the arbitration, unless the parties agree otherwise, the arbitration was governed by the UNCITRAL Arbitration Rules. To the extent that the UNCITRAL Arbitration Rules conflicted with any provision of the previous ADRIC rules, the UNCITRAL Arbitration Rules would apply.
The new rules have removed the distinction between international and non-international disputes. This is a welcome change because the previous rules had the potential to sow the seeds of unintended conflict between the parties as to when the ADRIC rules applied or were displaced by the UNCITRAL Arbitration Rules.
The new rules will apply where an arbitration agreement or submission to arbitration expressly or implicitly adopts them or the arbitration rules of (a) ADRIC; (b) the Canadian Foundation for Dispute Resolution, Inc.; (c) the Arbitrators Institute of Canada; (d) any regional affiliate of ADRIC or its predecessor; or (e) the Arbitration and Mediation Institute of Canada.
Revised arbitrator appointment process
Under the new arbitration appointment protocol, ADRIC makes arbitration appointments and creates lists of candidates for appointment by the parties in accordance with the new rules from among candidates who meet ADRIC’s and the parties’ criteria for appointment.
ADRIC’s executive director will establish an appointment committee to make direct appointments and generate candidate lists. The executive director must consider equity, diversity and inclusion in making appointments such that the appointment committee reflects a wide range of perspectives and experiences.
A candidate who intends to be considered for an arbitrator appointment must, among other things, be a member in good standing of ADRIC and a regional affiliate, carry at least CA$1 million in arbitrator errors and omissions insurance and submit an ADRIC arbitrator profile that contains information about the candidate’s areas of expertise, experience as an arbitrator or arbitration counsel and standard rates.
Enhanced arbitrator challenge process
The new rules have established an expedited and integrated challenge process that avoids delay and publicization of the parties’ dispute. The process maintains confidentiality, which is a hallmark of arbitration.
Under the new rules, a party may bring an application to ADRIC to challenge an arbitrator in the event that (a) circumstances give rise to justifiable doubts about the arbitrator’s independence or impartiality; or (b) the arbitrator does not have the qualifications provided in the arbitration agreement or otherwise. A challenge application must be brought within 15 days of the party becoming aware of the grounds for challenge. ADRIC will appoint a challenge adjudicator normally within two days of receiving the challenge application. The new rules establish an expedited procedure for the orderly exchange of application materials. The decision of the challenge adjudicator is final and is not subject to any appeal.
Updated conflicts disclosure processes and standards
An arbitrator must be and remain independent and impartial. To that end, the new rules feature robust conflicts disclosure processes and standards, which appear to have been influenced, at least in part, by the recent decision in Aroma Franchise Company, Inc. v. Aroma Espresso Bar Canada Inc., 2024 ONCA 839, rev’g 2023 ONSC 1827 (Aroma).
In that case, the application judge set aside the arbitrator’s award because the arbitrator had agreed to serve as the arbitrator in another arbitration involving a dispute between another client of the appellants’ law firm and a third party. The arbitrator had accepted the engagement without disclosing to the respondents that he had agreed to do so. The application judge held that the arbitrator was required to disclose that he was being engaged for the second arbitration and that his involvement, without disclosure, gave rise to a reasonable apprehension of bias (even though the arbitrator was never made aware of the parties’ expectations about the disclosure of other engagements with the arbitrator). The Court of Appeal for Ontario ultimately set aside the decision of the application judge on the basis that the presumption of impartiality was not displaced by the arbitrator’s acceptance of a retainer to arbitrate the second matter that did not involve any of the parties to the initial arbitration or any meaningful overlapping issues. The new ADRIC rules seek to avoid the time and expense associated with cases like Aroma by mandating both party and arbitrator disclosure at the outset.
Before appointing an arbitrator, each party must disclose, to the extent known or reasonably anticipated, any information that would enable an arbitrator to assess whether circumstances exist that may give rise to justifiable doubts as to the arbitrator’s independence or impartiality. This may include information about the parties to the dispute, individuals or entities with a significant financial interest in the outcome of the arbitration, anticipated witnesses or the names of individual counsel and law firms.
Before accepting an appointment, an arbitrator must sign and provide to the parties a statement disclosing, to the best of the arbitrator’s knowledge, any circumstances that may give rise to justifiable doubts as to the arbitrator’s independence or impartiality and declaring that the arbitrator, among other things, will disclose as soon as possible to the parties any circumstances that arise after acceptance of the appointment and before the arbitration concludes.
Practical and customizable precedents
Finally, the new rules include practical and customizable precedents that can be tailored to fit the needs of both the parties and the arbitral tribunal; namely: (a) checklist for the first procedural meeting; (b) draft first procedural order; (c) standard terms of appointment of an arbitrator; and (d) standard statement of arbitrator independence and impartiality. These precedents are helpful ways to streamline the arbitration while managing the parties’ expectations from both a procedural and administrative perspective.
For more information about this topic or any questions related to the legal implications of this decision on your business, please contact the authors, Michael Schafler, Chloe Snider, Ara Basmadjian or Emily McMurtry.
