The courts cannot imply terms into arbitration contracts where legislation requires express terms be included for the contract to be valid.

Background Facts

The parties in this case had entered into an Interim Parenting Agreement (“the Agreement”) which stipulated any disagreement about parenting or child support must be resolved through a specific mediator/arbitrator/Parenting Coordinator.  The Agreement also specified the parties waive section 35 of the Arbitration Act and that the arbitration would constitute secondary arbitration as found under the Arbitration Act and the Family Law Act.

The Applicant brought a motion for the court to make a decision on an issue in the case. The Respondent requested a stay in the proceeding under section 7 of the Arbitration Act, based on the fact that there was an agreement in place pertaining to resolving issues through arbitration. The Respondent also argued that the Agreement showed an intention to execute a formal secondary arbitration agreement for future disputes.

The issue in this case was whether the Applicant may bring a motion to the court to decide on an issue or whether she was required to follow the arbitration process as set out in the Agreement.

Legal Analysis

Justice Mackinnon first explained the requirement for express terms in valid arbitration agreements as stipulated in Ontario’s Family Arbitration Regulation.  She cautioned that although courts do have the power to imply terms into a contract, where legislators have created specific requirements for a binding arbitration agreement, courts may not imply such terms into a contract in order to make it binding.

Mackinnon J. looked to Horowitz v. Nightingale, 2017 ONSC 2168.  In that case, the court denied a stay under section 7 of the Arbitration Act because the Minutes of Settlement did not comply with the specific requirements as set out in Ontario’s Family Arbitration Regulation. The Respondent did not provide the court with precedent which could contradict Horowitz v. Nightingale and therefore failed to present a case where the court may imply terms required by legislation into a contract.

This case was then distinguished from Lopatowski v. Lopatowski, 2018 ONSC 824. The idea in Lopatowski was that the knowledge of counsel and good faith execution of the contract should prove to the court that the requirements of the Regulation had been met. Mackinnon J. explained that the presumption of represented clients understanding and agreeing to the arbitration process is precisely why there is a requirement for such specified terms by legislators.

Finally, there was a provision in the Agreement stipulating that the arbitrator’s decision be binding, and the Family Arbitration Regulation requires a choice be given for the right to appeal under section 45(1) of the Arbitration Act.

Given the statute and case law analysis against the facts of the case, Mackinnon J. decided that the Agreement did not bar the Applicant from filing a motion in court.

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