By-Law Dispute Resolution Clauses

Many non-profits already have a mediation and arbitration clause in their by-laws and have never used it. Used properly, it keeps disputes private and out of court.

Start My Enquiry →

By-LawsMediation ClauseArbitrationFederal Non-ProfitsONCA

The right time to agree how disputes will be resolved is before there is one.

The Short Answer

Do non-profit by-laws usually include a dispute resolution clause?

Many do. Corporations Canada’s model by-law for federal not-for-profit corporations provides that disputes among members, directors, officers, committee members and volunteers are, as far as possible, to be resolved by mediation and, if that fails, arbitration, using a panel in which each side appoints a mediator and the two appoint a third. Ontario organisations can adopt a similar clause.

USING YOURS

If Your By-Laws Already Have One

Read the clause before anything else: what disputes it covers, whether mediation is a precondition to court, how the mediators or arbitrator are chosen, who pays, and what time limits apply. A party who ignores a binding clause may find their court case stayed while the process runs.

DRAFTING ONE

What a Good Clause Contains

Scope: which disputes it covers and which it deliberately excludes, such as urgent matters.
Steps: discussion, then mediation, then arbitration, with time limits for each.
Choosing the neutral: a workable method that does not depend on the two sides agreeing on everything.
Costs: who pays, so that the process is not beyond an individual member.
Confidentiality and how the outcome is reported to members.

ADOPTING ONE

Adding It Properly

A by-law amendment has to be made and confirmed in the way the governing statute and the existing by-laws require. We draft the clause and the resolutions, and can review the rest of your by-laws for the gaps that tend to cause disputes in the first place.

STRUCTURE

How a Typical Clause Works

Well-drafted clauses move a dispute through escalating steps, each with a time limit:

Direct discussion between the people involved, often within a set number of days.
Internal review by a committee or officer who is not involved in the dispute.
Mediation by an independent mediator or a small panel, as the Corporations Canada model provides.
Arbitration if mediation fails, with the arbitrator’s decision final and binding to the extent the clause says.

The clause should also say what happens while the process is under way, for example whether a disputed decision is paused, so that one side cannot win simply by acting first.

LIMITS

When a Clause Will Not Help

A dispute clause binds the people it is written to cover. It does not bind regulators such as the Canada Revenue Agency or the Public Guardian and Trustee, outsiders such as landlords or funders, or employees whose rights come from employment law. Urgent situations, such as protecting property from being sold, may still require a court.

Clauses that are too rigid can also backfire. Requiring a three-person arbitration panel for a small disagreement can make the process more expensive than the dispute is worth.

COVERAGE

Disputes a Clause Should Cover

Membership: admission, discipline, suspension and expulsion.
Elections and meetings: the validity of a vote, a meeting or a requisition.
Governance: disagreements between directors, or between the board and members, about the by-laws.
Volunteers and committees: disputes about roles and conduct.
Interpretation: what the by-laws or policies actually mean.

Many organisations deliberately exclude urgent matters, claims involving outside parties, and employment disputes, which have their own rules. Stating the exclusions clearly avoids an argument about whether the clause applies.

COMMON MISTAKES

Where Clauses Go Wrong

No time limits, so one side can delay indefinitely by refusing to move to the next step.
No way to appoint the neutral when the parties cannot agree, which stalls the process at the start.
Silence on costs, which puts the process beyond an individual member’s means or drains the organisation.
Unclear scope, leading to an argument about whether the clause applies before the real dispute is even discussed.
Copying a model clause without adapting it to the organisation’s size, statute and membership.

AN EXAMPLE

A Clause That Worked

Two directors of a federal non-profit disagree about whether the executive director’s contract was properly renewed. The by-laws contain the Corporations Canada model dispute clause, which neither had read.

Following the clause, each side appoints a mediator and the two appoint a third. The panel meets both directors in a single afternoon, and they agree that the renewal will be confirmed at the next board meeting with a new review process for the future. The dispute is resolved privately, without cost to the organisation beyond the mediators’ modest fees.

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, because in a close-knit organisation the other side may be someone the firm already knows. Once that is clear, an initial consultation lets us understand what has happened and what you need.

We then agree the scope of the work and the fees in writing before anything else is done. For many non-profit disputes, the first step is a defined piece of work: a review of the governing documents and a written opinion on what they require. That often shows whether the dispute can be resolved quickly or needs mediation, arbitration or court.

We meet clients at our Toronto, North York, Mississauga and Oakville offices or by video, and we work in 13 languages. Boards often prefer video meetings so that several directors can attend together.

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.

Non-profit and charity disputes

Common Questions

Frequently Asked Questions

Is a by-law mediation clause binding?

It can be, depending on its wording and on the statute. Courts generally respect agreed dispute processes.

We are an Ontario non-profit. Can we use the federal model clause?

You can adopt a similar clause, adjusted to ONCA and to your organisation.

Who pays for mediation under the clause?

Whatever the clause says. Many are silent, which is itself a cause of dispute.

Can the clause cover staff and volunteers?

Yes, if drafted to, though employment matters also have their own legal framework.

Can we require arbitration of all member disputes?

A clause can require it for many disputes, but not for everything, and it cannot override statutory rights. Scope should be drafted carefully.

Does arbitration keep disputes private?

Arbitration hearings and awards are generally private, unless an award must later be enforced or challenged in court.

How often should we review our by-laws?

Whenever the law changes and at least every few years. Many Ontario non-profits last reviewed theirs when transitioning to ONCA.

Start My Enquiry

Non-Profit By-Law Dispute Resolution Clauses: Start My Enquiry

Our lawyers offer an initial consultation for most matters. Call, email, or book online. Do not sign anything before speaking with us.

Your name

Email address

Phone

Best time to reach you

Briefly, what is happening?

A few questions about your civil litigation matter optional

None of these are required and your enquiry sends without them. They let the lawyer read your situation before the call rather than during it.

Has a claim been issued or served? optional

Is there a deadline you know of? optionalLimitation periods can end a claim entirely, so tell us any date you have been given.

Roughly how much is in dispute? optionalThis decides which court, so a rough figure is enough.

Please do not send confidential documents or details through this form. We will ask for what we need once we have spoken and confirmed we can act for you.

Confidential and no obligation. We reply within 2 business days. You can call +1 416 333 6200 instead if you would rather speak to someone now.

Lexaltico LLP

Downtown Toronto

55 University Ave, Suite 1100
Toronto, ON M5J 2H7

North York

2 Sheppard Ave East, Suite 303, Toronto, ON M2N 5Y7

Phone

+1 416 333 6200

Hours

Monday to Friday: 9:00 AM to 5:00 PM
Evenings & weekends by appointment

Call to Discuss Your Matter →

Related Pages & Guides

Non-Profit & Charity Dispute Resolution Faith & Cultural Organisation Disputes AGM & Election Disputes Member Discipline & Expulsion Board Deadlock & Director Removal Charitable Property & Donor Gifts

Start My Enquiry

Ready to Talk? Start My Enquiry

No obligation. We will tell you honestly whether we can help, and what it would cost, before you commit to anything.

A lawyer replies within 2 business days. Urgent? Call +1 416 333 6200, answered 24/7. Submitting this form does not create a solicitor-client relationship.

Start My Enquiry

Call Message