How to Appoint an Arbitrator in Canada

Choosing the right arbitrator is one of the most consequential decisions in any private arbitration. The arbitrator will manage the process, determine procedural disputes, assess the evidence, and ultimately decide the parties’ dispute. Yet the appointment of an arbitrator is often given less attention than it deserves.

Whether the arbitrator is appointed under an existing arbitration agreement or the parties agree to arbitrate after a dispute has arisen, the choice of decision-maker can significantly affect the cost and efficiency of the proceeding.

Drawing on my experience as an arbitrator, this article provides practical guidance on selecting and appointing arbitrators in Canada. It examines the qualifications parties should consider, the advantages and disadvantages of sole arbitrators and three-member tribunals, the mechanisms available when the parties cannot agree on who will be appointed, and the contractual and financial issues that should be addressed with the arbitrator before the arbitration begins.

Sole Arbitrator or Tribunal of Three? Weighing the Trade-Offs

This is one of the first strategic decisions parties must make. Each option carries distinct advantages and risks.

Sole Arbitrator

A sole arbitrator is generally less expensive and the appointment process can be faster.

However, it may be difficult for opposing parties to agree on a single individual. If the parties’ arbitration agreement contains no mechanism to facilitate the appointment, the parties may need to seek assistance from a court or an appointing authority, which can delay the appointment. Many arbitral institutions offer a service whereby the parties may ask them to appoint an arbitrator, even if they do not agree to use the institution's procedural rules.

Panel of Three Arbitrators

Some parties are reluctant to entrust the outcome of their dispute to a single decision-maker, particularly where the arbitration agreement provides no right of appeal from the arbitrator's final decision. A tribunal of three arbitrators can provide comfort that the final decision is more likely to be “right”.

In addition, a three-member tribunal is often a practical solution where both sides wish to select a decision-maker. In most circumstances, each party appoints one tribunal member, and those two appointees select the chair.

The principal drawback is cost. A three-person tribunal is often substantially more expensive than a sole arbitrator – more than three times the cost. Not only will the three arbitrators prepare for and attend the hearing and other proceedings, but they also will participate in deliberations and discussions among themselves to reach a final decision.

A Critical Note on Independence and Impartiality

All arbitrators owe the parties the same duty of independence and impartiality, even those sitting in a three-member tribunal. Although each side selects one tribunal member, a party-appointed arbitrator is not an advocate for the appointing party. Rather, each arbitrator's obligation is to ensure a fair process and decide the dispute impartially.

The Chair’s Importance

In a three-person tribunal, the chair occupies a uniquely important position that parties and counsel should not overlook.

The chair is often empowered to decide procedural matters without the participation of the other tribunal members, where the parties have agreed to that arrangement or the applicable procedural rules permit it. This can reduce costs, but it also gives the chair significant influence over how the arbitration progresses and how procedural disputes are resolved.

The chair is also responsible for managing the dynamics of the tribunal, guiding deliberations, and, in many cases, taking the lead role in drafting the final decision.

What Qualifications Should You Look for in an Arbitrator?

When selecting an arbitrator, parties should focus on qualifications that are important to the dispute. Common considerations include:

• Experience acting as an arbitrator, rather than exclusively as counsel;

• Subject-matter expertise relevant to the dispute;

• Case-management style and procedural approach;

• Reputation for fairness and skill; and

• Ability to write a clear and well-reasoned decision.

Parties sometimes assume that an arbitrator must be an expert in the substantive law governing the dispute. However, in practice, this may not be necessary. International arbitrators regularly determine disputes involving laws of jurisdictions with which they are not familiar. The primary responsibility for educating the tribunal on the applicable law rests with the parties and their counsel.

Mechanisms for Appointing an Arbitrator

Appointment by Agreement of the Parties

Appointment by agreement is common in practice. Counsel frequently exchange candidate names based on recommendations from colleagues, personal experience, professional networks, and independent research. Many arbitrators promote themselves through writing, speaking engagements, and professional profiles. All of this makes it relatively easy to assess candidates without direct contact.

Sometimes counsel reject the opposing party's initial list of candidates as a matter of course. The strategic value of doing so is questionable. Candidates should be evaluated on their qualifications, experience, availability, and suitability for the dispute.

One useful strategy is to narrow the field by first agreeing on the type of arbitrator desired. For example, the parties may seek candidates with specific expertise.  Or they may want those holding recognized arbitration credentials through the ADR Institute of Canada (ADRIC) or the Chartered Institute of Arbitrators (Ciarb) or candidates on recognized rosters such as Arbitration Place, ADRIC, Ciarb Canada, Vancouver International Arbitration Centre (VanIAC), and International Chamber of Commerce (ICC) Canada.

At the same time, parties should avoid creating criteria so narrow as to unnecessarily limit the pool of qualified candidates or make it impossible for any arbitrator to meet them.

Appointment by an Arbitral Institution

Sometimes the parties’ arbitration agreement states that they agree to use the procedural rules of an arbitral institution and that an arbitral institution will “administer” the arbitration by providing administrative support. Where parties cannot agree on the choice of arbitrator but wish to avoid going to court, they may agree to use an arbitral institution solely as an appointing authority. This service is generally available for a modest fee and does not require the institution to administer the arbitration itself or for the parties to use that institution’s procedural rules.  A significant benefit of asking an arbitral institution to appoint the arbitrator is that the appointment can be made quickly.

Each institution has a different appointment process. Some provide the parties with a list of potential candidates and allow them to rank or strike candidate names before the appointment is made. Parties should review the applicable institutional rules carefully because the institution may ultimately make the appointment.

In international disputes, additional considerations, such as nationality and language facility, may also influence the selection process.

Appointment by Court Application: A Last Resort

If no agreement on the choice of arbitrator can be reached and the parties have not agreed on an alternative appointment mechanism, the applicable arbitration legislation permits a party to apply to the court for the appointment of an arbitrator.

This is generally the least desirable option because it undermines two of the principal advantages of arbitration: privacy and efficiency. First, court proceedings are public. Second, Canadian courts are backlogged, and it can take weeks or months for a court to hear an application to appoint an arbitrator. 

Emergency Arbitrators

Some institutional arbitration rules provide for the institution to appoint an emergency arbitrator when a party requires interim relief before the arbitrator or tribunal that will decide the main dispute has been appointed.

Examples of when this may arise include where:

• A party believes assets are being moved or dissipated before a final decision on the dispute can be obtained; or

• A party is experiencing ongoing harm that cannot adequately be compensated by an award of damages at the end of the arbitration.

Where available, emergency arbitrator procedures can provide a fast and effective alternative to seeking urgent court intervention.

Paying Your Arbitrator: Fees and Deposits

Terms of Appointment

Often where an arbitration is not being administered by an institution, the parties and the arbitrator or tribunal will enter into an agreement called Terms of Appointment. There is no standard form of agreement, but it typically covers such issues as: the scope of the dispute that the arbitrator or tribunal is to decide; the services to be provided; confidentiality and privacy; disclosure of potential conflicts that could give rise to justifiable doubts as to the arbitrator’s independence and impartiality; immunity of the arbitrator or tribunal; document handling and retention; and financial terms, including fees, expenses, and deposits.

Fee Structures and Timing

Arbitrators generally charge by the hour, by the day, or a combination of both. Daily rates offer certainty because the cost of a hearing day remains the same regardless of whether the hearing concludes early or runs longer than anticipated. The three members of a tribunal may or may not charge the same fee or rate depending on a variety of factors, including their relative experience and whether they are serving as the chair. Arbitrators are also entitled to have their expenses, such as travel costs, reimbursed.

Liability for arbitration fees and expenses rests with the parties, not their counsel. Counsel should not agree to become personally responsible for the arbitrator's fees and expenses unless there is a compelling reason to do so.

The Terms of Appointment usually include a term requiring parties to pay a cancellation fee if the hearing is cancelled or adjourned within a certain number of days before the hearing starts.

Parties should seek to understand an arbitrator's fee structure before making an appointment. This topic is often discussed during a pre-appointment meeting.

Staged Deposits

Terms of Appointment usually require pre-payment of an estimate of the Arbitrator’s fees and expenses through staged deposits. An initial deposit typically covers the early phases of the proceeding, including the first procedural conference. Once the arbitrator gains a clearer understanding of the scope and complexity of the dispute, additional deposits can be requested as needed.

It is common for Terms of Appointment and institutional procedural rules to permit the arbitrator to withhold services, including the release of the final decision, until all deposits or outstanding fees and expenses have been paid.

Any amounts on deposit that exceed the Arbitrator’s fees and expenses are returned to the parties at the end of the arbitration.

Key Takeaways

The appointment of an arbitrator has significant implications for cost, efficiency, and the parties’ comfort in the process.

Parties should have an arbitration agreement that deals with whether one or three arbitrators should be appointed. They should ensure that, if they cannot agree on an arbitrator or a three-member tribunal, they agree on an appointment mechanism to avoid the lengthy delay of going to court.

When choosing their arbitrator, parties should also carefully consider the candidates’ qualifications, availability, and experience. Importantly, the appointment process requires the arbitrator, counsel, and the parties to disclose any circumstances that may give rise to justifiable doubts about the arbitrator's independence or impartiality to avoid a challenge to the arbitrator later on. Parties should also have a clear understanding of the financial terms governing the engagement before the appointment is finalized.

The right arbitrator does far more than decide the dispute. An experienced and effective arbitrator can promote procedural efficiency, ensure a fair process, manage costs, encourage productive settlement discussions where appropriate, and deliver a well-reasoned and enforceable decision. For that reason, time invested in selecting the right arbitrator is well spent. A thoughtful appointment process lays the foundation for a fair and efficient arbitration for the resolution of the issues that truly matter to the parties.