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Arbitration helps level the playing field: Romero

Using arbitration to resolve disputes — whether among individuals or nations — is an important way to ensure issues are handled efficiently, fairly and quickly, says Toronto arbitrator and mediator Victoria Romero.

Arbitration also levels the playing field between unequal partners, Romero, principal of the mediation and law firm VR Law, tells AdvocateDaily.com.

She cites the importance of Chapter 19 of the North America Free Trade Agreement (NAFTA) to Canadian negotiators as they hammered out a new deal with the United States and Mexico. The clause was just as important during the initial discussions of NAFTA decades ago, says Romero.

For Canadians, Chapter 19 was the "red line" that couldn't be crossed, she says. The clause allows a treaty member to challenge another member's anti-dumping restrictions and countervailing duties. U.S. President Donald Trump — a proponent of distributive bargaining — wanted to renegotiate the agreement after threatening to leave NAFTA in 2017.

Chapter 19 was one of a number of sticking points negotiators dealt with this time around, but the Canadians refused to agree to a deal unless there was a dispute resolution process in place, reports the Financial Post.

"Look at how important it is to have dispute resolution processes in place. Without them, Canada was not willing to be part of the free trade agreement. It was really that important," Romero says.

"If you can go to these impartial panels, you're going to have a huge resource of expertise that will decide your matter efficiently and in a fair way. It shows Canada trusts the system and has the confidence that the process will achieve a fair result.

"The principle of neutrality and impartiality was important to Canada," she says, adding that it’s also true when it comes to personal and business matters.

Dispute resolution mechanisms are a method of dealing with quarrels that can't be overlooked or ignored, and contracts — ranging from personal, business to international — would be "very weak" without them, Romero says.

She says the benefits of arbitration over litigation include:

  • flexibility in the form and type tailored to suit the parties
  • speed — it can be started anytime and where discoveries and preliminary processes are kept to a minimum
  • cost-effective — although the parties must pay the costs of the arbitration, it is often less than litigation in the courts
  • confidentiality — for the most part, proceedings take place in private, and awards are not published without the consent of the parties
  • the system is voluntary 
  • it is final and binding

Romero says the arbitration process also places equal value on arguments presented by the parties — even if one party is overwhelmingly wealthy or politically powerful compared to the other.

"NAFTA is at the international level," she says. "Canada did it because it needed impartiality and neutrality in dealing with disputes. It needed equality, it needed a process that would enable it to deal with disputes, and it was so important that the country was willing to walk away from the table if it was not implemented.

"And that can be translated to a smaller scale for businesses," Romero says.

When two businesses are working out a contract, it’s important that they have dispute resolution measures in place, otherwise they would have to go to court to deal with issues that arise, she says.

Going through the court system is a slow, expensive way to deal with a dispute, Romero says.

"With NAFTA, we're talking about humongous amounts of money" tied up in international treaties and business contracts that without a dispute process could get bogged down in the courts for years, she says.

Dispute mechanisms in contracts apply equally to nations, businesses and individuals. They also treat both sides fairly in the process, says Romero.

"Cases are settled based on objective criteria," she says. "If I lose, I may not like the result, but I can live with it because I feel it was arrived at in a fair way."

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