Commercial Arbitration

A private, binding decision from an arbitrator you choose, on a timetable you set. The arbitration agreement decides most of how it runs.

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Arbitration ClausesHearingsAwardsEnforcementContracts

An arbitration is only as good as the clause that started it.

The Short Answer

How does commercial arbitration work in Ontario?

Domestic arbitrations are governed by the Arbitration Act, 1991 and the parties’ agreement; international commercial arbitrations have their own statute. The parties choose the arbitrator and the procedure, the hearing is private, and the award is binding. A court will generally stay a lawsuit brought in breach of a valid arbitration agreement.

THE CLAUSE

Before a Dispute Starts

Scope: which disputes go to arbitration.
Seat and rules: where it is legally based and which procedural rules apply.
The arbitrator: how many, what qualifications, and how chosen if the parties cannot agree.
Appeals: whether any appeal is available, which the agreement can widen or exclude.
Confidentiality and costs.

DURING

Running the Arbitration

We act for claimants and respondents: starting or defending the arbitration, document exchange, witness and opinion evidence, and the hearing itself. Where one side sues in court despite an arbitration clause, we seek a stay so the dispute goes where the parties agreed.

AFTER

Enforcing the Award

An award that is not paid can be enforced through the court. Grounds for setting an award aside are narrow, which is part of what makes arbitration final.

COMPARED

Arbitration or Litigation?

Businesses choose arbitration for privacy, for the ability to pick a decision-maker who understands their industry, and for a process they can tailor to the dispute. Court remains better where a party needs urgent orders against third parties, where a public judgment matters, or where the other side is unlikely to cooperate in setting up a tribunal.

Neither is automatically cheaper. A lean arbitration can be faster and less expensive than litigation, but a heavily contested arbitration with three arbitrators and extensive document production can cost as much as a trial. The arbitration agreement, and the way the process is run, make the difference.

THE PROCESS

Evidence, Procedure and the Hearing

The parties and the arbitrator agree the procedure at the outset, usually in a procedural order. Document production is often narrower than in court. Witness evidence is frequently given in written statements, with cross-examination at the hearing. Opinion evidence from independent witnesses, such as valuators or engineers, is common in technical disputes. Hearings can be held in person, by video or both.

The arbitrator, and in some circumstances the court, can make interim orders to preserve property or evidence while the arbitration runs.

INTERNATIONAL

Cross-Border Disputes

Where the parties are in different countries, Ontario’s International Commercial Arbitration Act, 2017 applies instead of the domestic Act. Canada is a party to the New York Convention, which means awards made in Ontario can generally be enforced in other member countries, and theirs here. Choosing the seat of the arbitration carefully is especially important in international contracts.

IN PRACTICE

Where Arbitration Clauses Appear

Arbitration clauses are common in shareholders’ and partnership agreements, franchise agreements, supply and distribution contracts, technology and licensing agreements, and many commercial leases. They are often signed without much thought and only read when a dispute arises.

Construction disputes have an additional route. Ontario’s Construction Act provides for adjudication of certain payment disputes during a project, a fast interim process that sits alongside any arbitration or court proceeding.

If you are negotiating a contract now, it is worth deciding deliberately whether you want arbitration, and on what terms, rather than accepting a clause drafted for the other side’s benefit.

CHALLENGES

Challenging or Resisting an Award

Arbitration awards are meant to be final, and the grounds for challenging them are narrow. Depending on the arbitration agreement, a party may be able to appeal on a question of law, sometimes only with permission. Separately, a court can set aside an award on limited grounds, such as a party not having been given a fair opportunity to present its case, or the arbitrator deciding a matter outside the arbitration agreement.

Time limits for challenges are short. A party that is unhappy with an award should get advice immediately, rather than after the deadline has passed.

AN EXAMPLE

A Shareholders’ Agreement Dispute

Two founders of a software company fall out over the value of one founder’s shares on his departure. Their shareholders’ agreement requires arbitration before a single arbitrator with business valuation experience.

The parties agree a short timetable: document exchange, a report from each side’s valuator, and a two-day hearing by video. The award is delivered within weeks of the hearing. Because the process was private, the dispute never became known to the company’s customers or investors.

An illustration only. The organisation, people and details are invented, and every real dispute turns on its own documents and facts.

WORKING WITH US

How an Engagement Works

We start with a conflict check, then an initial consultation to understand the dispute, any agreement or clause that governs it, and the deadlines that apply.

Scope and fees are agreed in writing before work starts. Preparing for and attending a single mediation is often a defined piece of work, which makes the cost predictable. Arbitration and litigation are harder to predict, and we explain the likely stages and costs at the outset.

We meet clients at our Toronto, North York, Mississauga and Oakville offices or by video, and many mediations and arbitrations now run online. The firm works in 13 languages.

Sources

Where This Comes From

Last updated September 2026. Published by Lexaltico LLP, Toronto.

General information

This page is general information about Ontario and Canadian law published by Lexaltico LLP. It is not legal advice, it does not account for the facts of any particular situation, and reading it does not create a solicitor-client relationship. Rules change, and whether any option is available to you depends on your own circumstances.

Mediation and arbitration

Common Questions

Frequently Asked Questions

Can we arbitrate if our contract has no arbitration clause?

Yes, if both sides agree after the dispute arises.

Is an arbitration award public?

Generally no, unless it has to be enforced or challenged in court.

Can we appeal an arbitration award?

Only on limited grounds, largely set by the arbitration agreement.

How is the arbitrator chosen?

By the method in the agreement; if that fails, the court can appoint one.

Can a small business afford arbitration?

Often, with a single arbitrator, a streamlined procedure and a document-based or short hearing. The clause should allow for that.

Who can act as an arbitrator?

Anyone the parties agree on, commonly an experienced lawyer, a retired judge or an industry professional.

Is an Ontario award enforceable abroad?

Generally yes in countries that are party to the New York Convention, subject to limited grounds for refusal.

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