Labor & Employment Law

Costs in Labour Arbitration

By Michael Fitzgibbon

One party seeking its costs in labour arbitration under a collective agreement is a rare occurrence.  That's not to say that it doesn't happen, it just doesn't happen all that often.  

The general rule was succinctly stated in the leading text by  Brown & Beatty Canadian Labour Arbitration (4th) at paragraph 2:1430:

Collective agreements customarily provide that the costs of the arbitrator and the arbitration proceeding are to be borne equally by the parties.  Counsel fees and legal costs, however, are rarely, if ever, dealt with by the collective agreement and the general view is that an arbitrator has no jurisdiction, in the absence of an express provision in the agreement, to order that such costs be paid by the losing party.  Rather, arbitrators have assumed that, in view of the long-standing practice of each party bearing its own costs , an express provision granting the arbitrator such a power would be required to support making such an order. [Emphasis added]

An excellent recent review of the law of costs in arbitration is found in Weeneebayko Health Ahtuskaywin (a case where the Canada Labour Code applied). The following basic principles were expressed and accepted by the parties to the arbitration:

1. Normally, the costs of an arbitration hearing are borne equally by the Union and Employer;
2. Costs of a labour arbitration proceeding are not ordered to follow the cause;
3. Costs will not be ordered in a labour arbitration matter as a punitive measure;
4. Costs may be ordered in granting an adjournment, as the exercise of arbitral authority to control the process;
5. It is generally accepted arbitral thought that only exceptional circumstances will give rise to an order for costs; and
6. Arbitral discretion to award costs have been exercised rarely, and only in cases in which it appears that the party seeking the adjournment had reasonable control over the circumstance that caused the need to adjourn. (As, for example, in Hawker Siddeley Canada Inc. And I.A.M. Lodge 1922, [1989] O.L.A.A. No. 67, 7 L.A.C. (4th) 172, (Gorsky), in which an employer had ability to alter the vacation schedule of key witnesses, and assure their availability for hearing).

After reviewing the governing legislation (the Canada Labour Code) the arbitrator noted:

The Code specifies the elements of the authority of the board of arbitration to control its own procedure. Unlike the related provision of the Ontario Labour Relations Act, R.S.O., c. 228, s.45, (which only requires that the parties share equally the cost of the arbitrator when appointed by the Minister), the Code requires that regardless of the manner of appointment, each party shall bear its own costs, and shall pay the fees and expenses of the arbitration board, unless the collective agreement provides otherwise.

In this case, neither the Canada Labour Code nor the collective agreement conferred jurisdiction upon the arbitrator  to award costs and the arbitrator refused to do so.

The case is instructive on the (limited) circumstances in which costs will be awarded and the policy reasons for a restrictive approach.

Full post as published by Thoughts from a Management Lawyer on January 18, 2011 (boomark / email).