A Deal is a Deal for Commercial Disputes in Ontario

The Commercial Mediation Act, 2010 (CMA) is celebrating its fifth anniversary of existence since being enacted on October 25, 2010. It is still early to gauge the extent of the business community’s use of this piece of legislation, but there is no denying that Ontario now offers several advantages to mediating disputes under its laws.

The stated purpose of the CMA is to facilitate the use of mediation to resolve commercial disputes. The term “commercial dispute” is very broadly defined as a dispute between parties relating to matters of a commercial nature and includes supply or exchange of goods or services, consulting, engineering, licensing, investment, financing, banking and insurance amongst other commercial matters.  The CMA does not apply to, a mediation under or relating to the formation of a collective agreement; a computerized or other form of mediation in which the mediation is not conducted with an individual as the mediator; mediations governed by the mandatory mediation rule of the Rules of Civil Procedure; or attempts by judges or arbitrators during the course of a legal proceeding or arbitration to promote a settlement. The parties to a mediation of a commercial dispute may also agree not to have the CMA apply to a mediation.

The CMA applies to commercial disputes in Ontario and those governed by Ontario law. It is therefore advisable when drafting any commercial agreements that the CMA be considered and specifically referenced in the dispute resolution provisions when selecting the governing law of any disputes relating to the agreement.

The CMA not only establishes rules and procedures for commercial mediations in Ontario, but perhaps the most appealing aspect of the CMA is that parties who settle their dispute through mediation can register the settlement agreement with the court. Essentially, if a party to a signed agreement resulting from a mediation breaches or otherwise does not comply with the agreement, another party may apply to a judge of the Superior Court of Justice for judgment in the terms of the agreement; or apply to the Superior Court of Justice for an order authorizing the registration of the agreement with the court.  On the filing of a true copy of the settlement agreement with the registrar pursuant to an order authorizing the registration of the agreement, the terms of the agreement can then be enforced through the court in the same manner as a judgment.

During the course of a mediation under the CMA, the mediator may disclose to one party information received from the other party unless the mediator is expressly asked not to do so. The CMA also mandates that all information revealed in the mediation process be kept confidential as between the parties and the mediator unless (a) all the parties agree to the disclosure, the disclosure is required by law, the disclosure is required for the purposes of carrying out or enforcing a settlement agreement, the disclosure is required for a mediator to respond to a claim of misconduct; or the disclosure is required to protect the health or safety of any person.

Much of the structure of the CMA is a formalization of practices being used by the legal community. However, Ontario now provides a structure for disagreements between commercial entities to be resolved through meaningful mediation and allows for parties to hold each other accountable for settlements.  Prior to the enactment of the CMA, parties would have to rely on the Rules of Civil Procedure or Common Law remedies in order to obtain results in enforcing agreement.  The enforcement provisions of the CMA should be seen as a useful tool for commercial parties in Ontario to abide by the old adage, “a deal is a deal.”