by
CLAYTON G. SHULTZ, FCBV, FCA
for the Business ADR Conference - Vancouver B.C.
November 19, 2004 |
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This
little paper will focus on the extent to which arbitrators
selected for their specific expertise may properly rely
on their education and experience in conducting their
proceedings and preparing their awards. It will also
touch on an approach to the dilemma faced by non-lawyers
who must decide difficult legal issues during the hearing
or while crafting their awards.
At the outset of this discussion, it is useful to reflect
on the reasons that parties agree in advance to submit
future differences to arbitration rather than relying
on the court system. The (frequently wrong) perception
that an arbitrated solution will be less costly than
full court proceedings is a major motivator. In order
to achieve this expected economy, it is common for them
to identify a class of person with specialized talents
to adjudicate disputes in the specific area that the
agreement covers: engineers for construction issues;
professional accountants for profit sharing determination;
business appraisers for shareholder buyout matters and
so on. It is in their minds that such persons will use
their expertise to quickly isolate the relevant issues
and solve their problem so that they may continue their
endeavour in harmony or part company as friends. In
short, at the agreement stage, all problems are remote
and solvable with a bit of common sense.
Then the dispute erupts. A problem to be solved becomes
a fight to be won - lawyers are retained and the matter
proceeds to a hearing. The hearing takes on all of the
characteristics of a courtroom trial: witnesses testify
under oath; procedural objections are presented by both
sides in 75 page bound briefs of the settled decisions
on the topic, and all of the evidentiary aspects of
the matter must be presented as though the arbitrator
were a judge. Such parties now find themselves at the
mercy of arbitrators who appear to be unable to apply
the specialized expertise for which they were appointed
and lacking the legal knowledge that the process assumes
they have.
These two issues may, however, be addressed with more
authority and comfort than is generally understood.
The concept of adjudicators considering materials that
are not proven at the hearing is called "judicial notice."
The "facts" so considered are called "notorious facts".
Both are defined as follows1:
Judicial notice is the acceptance by a court
or judicial tribunal, in a civil or criminal
proceeding, without the requirement of proof,
of the truth of a particular fact or state
of affairs. Facts which are (a) so notorious
as not to be the subject of dispute among
reasonable persons, or (b) capable of immediate
and accurate demonstration by resorting to
readily accessible sources of indisputable
accuracy, may be noticed by the court without
proof of them by any party.
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Facts
described at (a) are "facts which are known to intelligent
persons generally" and the convention of accepting them
is necessary to prevent trials from becoming mired in
endless testimony that advances neither case; it needs
no further discussion.2
But those referred to at (b) are the more controversial.
As one author put it: "The borderline between judicial
notice and evidence is peculiarly ill defined."3 Wigmore
sets out the ability or perhaps even the obligation
of the tribunal to resort to referring to "indisputable
authority": as follows:4
But whether the matter is so accepted, or
what its tenor is if accepted, may not be
within his recollection, or even may not ever
have been known to him. Hence, he is entitled
to aid himself in reaching a decision by consulting
any sources of information that serve the
purpose - official records, encyclopedias,
any books or articles, or indeed any source
whatever that suffices to satisfy his mind
in making a ruling. (emphasis in the original)
.
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-
Sopinka, Lederman, and Bryant: The Law of
Evidence in Canada, 2nd Ed. 1999, p 1055
-
ibid
- GD
Nobes The Limits of Judicial Notice, LQR Vol
74 No 203 Jan 58
- Wigmore,
Vol IX, p. 720 3
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As
to whether these techniques are available to arbitrators,
useful guidance is to be found in the Statutory Power
Procedures Act (SPPA) which provides as follows: 5
16. A tribunal may, in making its decision
in any proceeding,
a.
take notice of facts that may be judicially
noticed; and
b.
take notice of any generally recognized scientific
or technical facts, information or opinions
within its scientific or specialized knowledge.
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The
SPPA does not have general application to proceedings
under the Arbitration Act of Ontario, but at s 2, the
Arbitration Act expressly includes s 16 of the SPPA.
Finally, Article II of the United States' Federal Rules
of Evidence provide a succinct, understandable summary
of the topic. It is appended to this paper in its entirety.
Two important restraints on the wholesale use of this
technique must be emphasized. First, the "facts" that
the tribunal intends to include in its deliberations
must be obtained from publications and sources that
…are indisputable and can be ascertained from
sources to which it is proper for the judge
to refer. These may include texts, dictionaries,
almanacs, and other reference works, previous
case reports,… 6
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The
facts cannot be known to the tribunal in his personal
capacity. As Wigmore explains:7
There is a real but elusive line between the
judge's personal knowledge as a private man
and these matters of which he takes judicial
notice as a judge. The latter does not necessarily
include the former; as a judge, indeed, he
may have to ignore what he knows as a man
and contrariwise.
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The
second restraint is that the parties must know what
notorious facts the tribunal plans to refer to and
be given an opportunity to refer it to additional
or, perhaps more importantly, later references that
should be considered. Clauses (e) and (f) of the attached
excerpt from the Federal Rules of Evidence provide
helpful guidance as to the process to be followed.
5.
R.S.O. 1990, c22
6. Sopinka, p. 1058
7. Wigmore, p. 722 4
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My
approach to this issue is as follows; When the statements
of claim, defense and counterclaim are in my hands along
with the parties' expert reports, I review them to ascertain
the supplemental reference sources, including websites,
that I might wish to consult. Before the hearing starts,
I circulate the list and invite comment, additions or
objections. If, in the crafting of my final award, I
find it desirable to refer to materials not previously
identified, I (now) write to the parties and advise
them of my intentions and, again, invite comment.
Disputed
legal issues can be particularly troublesome to the
lay arbitrator. The problems are of two types: those
where interim rulings are required and those that arise
during the award drafting stage. An example of the former
is an objection to the admissibility of an expert report
or to the capacity of the expert to give opinion evidence.
The arbitrator must make the ruling without delay but
must consider and understand leading cases and principles
that are second nature to experienced counsel. In complex
technical cases the financial and time consequences
of a ruling of inadmissibility can be huge. It is equally
frustrating for lay arbitrators to find themselves with
a lack of understanding of the differing positions of
counsel after the hearing has terminated.
The techniques that I employ to address these challenges
are as follows:
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At the first hearing management meeting when
protocols and deadlines are being established
for the delivery of documents, expert reports
and so on, I set time limits for counsel to
object to the admissibility of their opponent's
experts or their reports. This process enables
me to take the time necessary to digest the
material, understand the matter and provide
a considered ruling without delaying the hearing.
- I
remind counsel that I do not have legal training
and that I will not make rulings without,
at a minimum, considering them overnight.
This technique stimulates counsel to provide
me with their written submissions in advance
so that I can better understand the oral submissions
and rule without delay. Even then, I recess
the hearing for as long as I need to satisfy
myself that I have no further questions before
deciding.
-
When counsel are relying on decisions, I ask
them to exchange the cases with each other
and with me at least 48 hours in advance of
their oral submissions. I then have a better
understanding of what I do not understand
when the application is made. As well, I become
comfortable that the lawyer opposing the application
has provided me with a comprehensive objection.
-
I remind counsel that they should not assume
that I will apply legal principles that they
have not expressly introduced into the hearing.
-
Finally, if all else fails, I remind counsel
of my right to call a legal witness on my
own motion to help me interpret the issue.
Not surprisingly, this threat stimulates cooperation
between opposing counsel.
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I
hope this paper will encourage ADR practitioners to
be creative in applying imaginative and non-traditional
techniques to give the parties and their clients the
full benefit of the flexibility of an arbitration process
that they expected when they initially agreed to it.
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EXCERPT
FROM THE (US) FEDERAL RULES OF EVIDENCE
ARTICLE 11. JUDICIAL NOTICE.
Rule 201. Judicial Notice of Adjudicative Facts.
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a. Scope of Rule. This rule governs only judicial
notice of adjudicative facts.
b. Kinds of Facts. Judicially noticed fact must
be one not subject to reasonable dispute in that
it is either (1) generally known within the territorial
jurisdiction of the trial court or (2) capable of
accurate and ready determination by resort to sources
whose accuracy cannot reasonably be questioned.
c. When Discretionary. A court may take judicial
notice, whether requested or not.
d. When Mandatory. A court shall take judicial
notice if requested by a party and supplied with
the necessary information.
e. Opportunity to be Heard. A party is entitled
upon timely request to an opportunity to be heard
as to the propriety of taking judicial notice and
the tenor of the matter noticed. In the absence
of prior notification, the request may be made after
judicial notice has been taken.
f. Time of Taking Notice. Judicial notice may be
taken at any stage of the proceeding.
g. Instructing Jury. In a civil action or proceeding,
the court shall instruct the jury to accept as conclusive
any fact judicially noticed. In a criminal case,
the court shall instruct the jury that it may, but
is not required to, accept as conclusive any fact
judicially noticed.
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