An international company
may set the location of the
arbitration in an international
jurisdiction even though
you performed the work in
Alberta. You would then need
to incur significant additional
costs to proceed with the
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the process, it may become increasingly difficult for you to
effectively prepare your case.
Other arbitration clauses may prescribe some or all of
the procedural steps required for the arbitration. This has
the benefit of providing the parties with certainty as to the
process that will be required in the arbitration. However, it
is important to ensure that the process is reasonable and effi-cient.
For example, if the timeline to bring a notice of claim
is too short, then parties may not have a reasonable opportu-nity
to initiate the arbitration. On the other hand, the arbitra-tion
may be unnecessarily delayed if timelines are too long or
the process requires lengthy steps to initiate the arbitration.
3. Location of the arbitration proceedings
Arbitration clauses often specify a particular location where
the arbitration proceedings must take place. It is important to
specify the location of arbitration because this is frequently
a point of disagreement when there are parties based in
Nevertheless, you need to ensure that the location speci-fied
in the contract is reasonable. Typically, arbitration clauses
require the arbitration proceedings to take place in the juris-diction
where the work is performed; however, the other
contracting party could propose a different location for their
own benefit and to your detriment.
For example, an international company may set the loca-tion
of the arbitration in an international jurisdiction even
though you performed the work in Alberta. You would then
need to incur significant additional costs to proceed with the
arbitration internationally. This may discourage you from
moving forward with arbitration for cost reasons, even if
arbitration is the only form of recourse permitted under
4. Incorporation of arbitration rules by reference
Instead of specifying the rules of an arbitration, some con-tracts
simply adopt arbitration rules published by third
party organizations (such as the arbitration rules of the
International Chamber of Commerce or the Canadian
Construction Documents Committee).
This may have some benefits because such organizations
often publish rules that are thorough and comprehensive.
However, each organizations’ rules are significantly different,
so it is important to review the rules and ensure that they are
suitable for your contract. Some such rules contemplate pro-cesses
that are prohibitively expensive unless the dispute is
worth millions of dollars. Further, you should be aware that
the rules sometimes require the organization to administer
the arbitration. In such cases, the organization may charge
substantial fees for its administration services, which may
greatly increase the cost of the arbitration.
This article has highlighted four critical topics that you should
consider whenever you are dealing with arbitration claus-es;
however, the rules that may be included in arbitration
clauses are wide-ranging. Ultimately, although you may be
focused on other concerns while negotiating a contract, it is
important to take the time to consider any arbitration clauses
and ensure that the clauses are acceptable to you. n
Graham Henderson is an associate at McLennan Ross
LLP in Edmonton.
C O N S T R U C T I O N L AW