After the publication of our article, “DRC’s Jurisdiction Expansion,” several members and industry stakeholders raised questions about the potential impact of these changes on disputes involving parties outside of North America (Mexico, the United States, or Canada). Specifically, many are curious about how the new rules affect the seat of arbitration, the location of hearings, and the selection of arbitrators. These are important considerations for those not familiar with DRC Dispute Resolution Rules.
Before addressing these questions, we would like to remind everyone that DRC’s trading standards, transportation standards, guidelines, and Dispute Resolution Rules serve as the default provisions in any transaction between members unless otherwise agreed.
1. How is the seat of arbitration and location of hearings affected now that the dispute does not involve commerce with North American companies?
The DRC’s Dispute Resolution Rules designate Ontario, Canada, as the seat of arbitration. Ontario is recognized as one of the most favourable jurisdictions for arbitration globally. As outlined in the earlier section of this article, our rules and regulations serve as the default unless a contract specifies otherwise. Therefore, DRC members and any non-members choosing DRC arbitration can mutually agree to designate a different seat of arbitration, provided it suits their needs.1
It’s important to distinguish between the seat of arbitration and the location of hearings. While the seat of arbitration is legally the jurisdiction in which the arbitration process is based, the location of hearings can differ. If the contract does not specify a hearing location, DRC’s Dispute Resolution Rules stipulate that the hearings will be held in Ottawa, Ontario, or at a location determined by the arbitrator. This could be a virtual or in-person hearing, which does not impact the seat of arbitration.
2. What if parties wish to select an arbitrator who is not from DRC’s Roster of Neutrals?
The DRC’s Dispute Resolution Rules allow parties to appoint an arbitrator of their choosing, even if the arbitrator is not listed on the DRC’s Roster of Neutrals. However, DRC strongly recommends selecting an arbitrator from our roster for several reasons. Of course, all arbitrators must remain independent and impartial, regardless of how they are selected.
Our roster of neutrals consists of arbitrators who are highly experienced in disputes related to the produce trade. More importantly, they are thoroughly familiar with DRC’s operating rules, including trading standards, transportation standards, and our specific dispute resolution procedures. DRC arbitrators are trained to interpret the contractual terms agreed by the parties, and if the contract is silent on an issue, they prioritize DRC’s standards and guidelines over other laws, such as the United Nations Convention on Contracts for the International Sale of Goods (CISG).
Although most of our neutrals were originally from North America, they do possess international experience. Nevertheless, the DRC has expanded its roster to include arbitrators from South America and Europe. These neutrals have completed DRC’s educational process, ensuring they understand our services, rules, and the expectations placed on DRC arbitrators.
It’s also worth noting that in cases where the parties cannot agree on an arbitrator, DRC reserves the right to appoint an arbitrator from its roster.
1 By agreeing to arbitrate under the DRC and its Rules, the parties have expressly agreed that the subject matter of the arbitration agreement relates to more than one country, in accordance with Ontario’s International Arbitration Act, 2017, SO 2017, c 2, Sch 5, Schedule 2, Article 1(3)(c). Thus, if you choose another seat, it is beneficial if the seat’s arbitration law also permits this, should your dispute not be international.
RESOURCES:
DRC’s Dispute Resolution Rules
Article: DRC’s Jurisdiction Expansion
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