More Litigation Than You Bargained For: The Occasional Perils Of Arbitration

Businesspeople often believe arbitration is a quicker and cheaper way of resolving business disputes. It is therefore common to include clauses in commercial contracts that require disputes to be arbitrated rather than litigated. However, a recent decision of the Supreme Court of Canada underlines the fact that, in certain circumstances, arbitration could well be more protracted and expensive than litigation in the courts.

When a dispute arises, it is very common for one party (particularly a defendant) to refuse to proceed to arbitration, often by claiming that the nature of the dispute falls outside the scope of the arbitration clause. In Dell Computer Corp. v. Union des consommateurs ("Dell"), the Supreme Court of Canada considered such a situation.