Law, Equity, Fairness in Arbitration - Parties are free to choose.

A recent article by Toronto arbitrator William Horton in The Lawyers Weekly (here) highlights the need for parties agreeing to arbitration to consider what guidance, if any, they may wish to give the tribunal about “how to decide”. Should the test be strictly law-based, or should fairness or some other principles be considered? Parties are free to require that the tribunal’s decision be based on, say, business fairness or trade custom.

The Alberta Arbitration Act (s. 31) says “An arbitral tribunal shall decide…in accordance with law, including equity…” However, the parties are free to alter this requirement.

Of course, the time to consider the principles to be applied is when the parties are agreeing to arbitration before a dispute has arisen.

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