The arbitrator’s conscience and revivified legal pluralism
Adam Strömbergsson-DeNora Share
This post is cross-posted on CanLII.
International and domestic arbitration is becoming an attractive dispute resolution service, and it is one that allows parties to chose the law under which their rights are established. As this form of law becomes increasingly popular, the limits of arbitral jurisdiction will be tested. International and domestic law on this point is relatively vague: arbitrators must have enough power to deal with every issue that comes before them. English and Canadian courts have, however, historically sought to centralize power in the single institution of ‘law’.
This judicial approach is, frankly, self-serving and dangerous: it has been referred to as ‘common law constitutionalism’, which practise is anathema English and Canadian legal systems. One branch of the English legal system, common law, has come to represent the entirety of English private law, save, perhaps, for the legislator’s will.
Legal pluralists rebel at this notion: law is centripetal, in the hands of each judge. Each judge, though not a law unto themselves, decides in the microcosm before them. The issues, people, and law placed before a decision-maker forces each case to proceed on its merits. In such a system, appeals to one rule of law, or a systematic rule of law, are impossibly naïve: they efface the personality of each court or tribunal.
The law of equity (another branch of English law) in this context remains under-explored, and its exploration with a view to ascertain the limits of English and Canadian arbitral jurisdiction is even further neglected. Equity is, however, the more supple of these two branches. It relies, as the UNCITRAL Model Law on International Commercial Arbitration indicates, on the decision-maker’s discretion ex aequo et bono; the decision-maker’s conscience rules.
Freedom of conscience (itself a poorly defined freedom) is historically implicated in English equitable jurisdiction because the King’s Lord Chancellor was (until Sir Thomas More) an ecclesiastic. The Court of Chancery over which the Chancellor ruled was, therefore, a joint between church and Crown, and the Chancellor dispensed the King’s conscience. Equitable principles thus developed out of religious conviction. They bear some of the fuzzy hallmarks of these beliefs, which implicitly recognize the more personal, idiosyncratic nature of ecclesiastical decisions.
That conscience becomes the focal point for a more decentralized view of legal decision-making. The policy objectives behind the law of arbitration were admirably stated in the preamble to the Province of Canada’s 1854 bill for An Act to establish Courts of Conciliation in Upper Canada:
Whereas the moral power that would be exercised by Courts of Conciliation might have a very beneficial tendency in preventing expensive, vexatious, uncertain and prolonged lawsuits, which occupy much of the time of Courts, Judges, Jurors and Witnesses, and are productive of ill-will, envy and strife in society; And whereas it is desirable to establish such Courts for the prompt and final determination of controversies having their origin in passion, excitement and misapprehension–for repressing the spirit of litigation–for lessening the necessity of taking oaths–for avoiding needless exposures of human frailty in the legal tribunals–and for encouraging the speedy and amicable settlement of disputes and differences arising between friends and neighbours.
No. 84, 1st Sess., 5th Parl. (18 Vict.)
The bill goes on to vest equity jurisdiction in the Court of Conciliation (essentially a small claims court), which were to be composed of county judges ruling on matters of local and more minor concern. These judges would have been able to take evidence in informal ways, just like arbitrators, and hearings were to be in private. Parties could also self-refer their dispute to the county judge. These convenient powers were, as the preamble indicates, created not just to do justice; they were also proposed to achieve finality in disputes. Finality requires a panoply of instruments. Law is one such instrument.
Conscience is another. It represents a less explicitly reasoned approach to dispute resolution. As the old distinction goes, conscience appreciates the full story; law fits each narrative into causes of action. Hence equity’s notional dominance in most common law jurisdictions: judges are entitled to use their conscience to resolve disputes. The legal and judicial professions have, to be sure, created doctrines that guide conscientious decision-making. Equity does not embrace complete uncertainty. It nevertheless is uncertain (to lawyers’ chagrin) because a judge is likely to rely on intangible considerations elicited by the parties’ story.
Arbitrators are entitled to use similar approaches to decision-making. They must, however, deliver reasons through which parties and reviewing judges may understand their decision. This requirement tends to favour legal rules because these rules are more tangible. I think, however, that equity represents a still more efficient decision-making stream that affords parties more targeted remedies, enables faster times to decision, and generally lessens legal costs.
The fountain of arbitral conscience
Matters of conscience were, in traditional English law, subsumed to the common law, and common lawyers still think in these terms today. Charles Dickens’ famous description of England’s premier court of equity, the Court of Chancery, helps undermine equity’s goodwill. It was subject to jurisdictional wrangling and technical obfuscation throughout the nineteenth century. English common law courts achieved dominance in this environment.
The traditional rule thus required equity to follow the law; the amalgamation of judicial systems in the late nineteenth century, however, changed this position (viz. 2007 CarswellOnt 3265, para. 31, for the application of both branches of law in Ontario). Equity was, and remains, the preeminent branch of law, which is made quite clear in Ontario’s Courts of Justice Act:
Where a rule of equity conflicts with a rule of the common law, the rule of equity prevails.
s. 96(2)
Arbitrators, whether adjudicating domestic or international disputes, are on footing similar to Ontario’s courts. UNCITRAL’s model law is one example. Ontario’s Arbitration Act is more specific:
An arbitral tribunal shall decide a dispute in accordance with law, including equity, and may order specific performance, injunctions and other equitable remedies.
s. 31
Parties can reign this jurisdiction in by specifically indicating the rules of law that they wish to submit for the arbitrator’s consideration. Absent such specification, the Ontarian arbitrator has wide discretion in common law and equity. This discretion includes all equitable remedies available to courts and the power to issue temporary and permanent injunctions (2013 ONSC 122, paras. 47-53). These powers are, of course, founded on enabling legislation. Courts have also noted that parties’ contractual submission to arbitration opens them to the arbitrator’s equitable jurisdiction. This submission is an example of freedom to contract. It also exemplifies the unique exercise of appointing an arbitral tribunal: parties are selecting one or three individuals for their technical skill and their conscientious beliefs as these may manifest in equity.
Such beliefs are limited by the four corners of the parties’ submission to arbitration-another example of freedom to contract. Arbitrators cannot use equity to implicate a stranger to the submission (2011 ONSC 1819, paras. 50-69).
This exercise lets conscience pervade arbitral decision-making to parties’ potential benefit. Arbitration becomes flexible in the measure that arbitrators and parties feel comfortable with the arbitrator’s conscience.
Exercises of conscience, however, does not give the arbitrator unlimited jurisdiction: they must still respect the law, but the law allows equity to dominate.
A broader view of arbitral conscience
The depths of arbitral and judicial freedom of conscience when making decisions need to be plumbed, and only a research synopsis may be offered here. An arbitrator is, by her or his appointment, free to decide an issue within the bounds of parties’ agreement to submit to arbitration. That agreement often depends on strategic concerns, but arbitrators typically seem to have equitable and legal powers. These powers carry many personal idiosyncrasies into the arbitration.
Idiosyncracies and personal colour are not to be feared in arbitration or in justice alike. Acknowledging the arbitrator’s humanity and letting it run during a proceeding reminds parties that arbitration is an inherently personal business, one perhaps more curial than judicial decision-making.
More to the point, acknowledging an arbitrator’s conscience allows parties’ view of the entire issue to shine. Conscience requires narrative, which is a less technical pleading. The use for a lawyer on this view is somewhat lessened. Their technical knowledge is useful in submission to arbitration. They may help define a party’s issues, thus bounding the scope of the other side’s narrative.
Once the parties appear before the arbitrator, lawyers are of relatively less use. The narrative reveals the issues that, in the arbitrator’s opinion, require closure. Technical rules of evidence are not required at arbitration. Legal arguments may be made, but equitable rules often cover off the causes of action at common law. In other words, legal arguments are not necessary. The arbitrator, with or without counsel’s advise, is able to tailor remedies to the situation. Such ability goes further to resolving disputes. The neutral works to ensure that all of the inequities presented in the context of arbitration may be resolved in a manner befitting the parties’ context.
Arbitration under this lens is an exercise of conscience that appreciates the human element of every dispute. The object is ever so slightly displaced toward the human element instead of the technical exercise. Cutting the proverbial Gordian knot with this focus better serves the policies underpinning arbitration. The certainty provided by a decision melds with the social need to prevent extended litigation. On this point, an arbitrator’s jurisdiction founded on her or his conscience encourages rapid resolutions because the arbitrator’s role focuses on finding a solution that balances the parties’ positions. Equity is not retributive when the parties each come with clean hands. The arbitrator need only suss out the resolution that to them feels most natural. The written decision that flows from this method deduces the arbitrator’s conscientious conclusions.