Written By Melanie Teetaert, Jennifer K. Choi, Maruska Giacchetto and Jackson Spencer
Multi-step dispute resolution (MSDR) clauses introduce escalating stages of conflict resolution, which are aimed at promoting settlement prior to engaging in full scale litigation or arbitration. MSDR clauses typically contemplate three steps—negotiation, mediation and arbitration—each with specific timelines that govern when a party can proceed to the next step.
The Canadian Construction Documents Committee's CCDC 2 – 2020 Stipulated Price Contract contains an example of a MSDR clause that outlines a three-step dispute resolution process: (1) a mandatory period of negotiations, (2) a period of mediation and (3) ultimately, a binding arbitration.
Ambiguous drafting of MSDR timelines can lead to confusion about whether the times specified are deadlines or minimum waiting periods.
The Court of Appeal for Ontario (ONCA) considered an imprecisely drafted MSDR clause in the recent decision, J.P. Thomson Architects Ltd. v Greater Essex County District School Board, 2025 ONCA 378. The ONCA emphasized that the court should interpret a dispute resolution clause in a way that does not unnecessarily terminate a party's right to engage in the dispute resolution process. The ONCA clarified that the phrase "within thirty (30) days" sets a minimum time for the parties to attempt to resolve their dispute before escalating to the next MSDR-step—not a deadline. Consequently, the ONCA found that the appellant architect had not lost the right to engage in the MSDR process by failing to serve a request to mediate within 30 days of the parties' disputes arising.
Background
In 2016, the appellant J.P. Thomson Architects Ltd. (Thomson) successfully bid on a Greater Essex Country District School Board (the School Board) contract to provide architectural services for two new schools.1 This contract contained a MSDR clause that was in the then-standard form Ontario Association of Architects contract (GC18), which stated, in part:
- Any dispute between the parties arising out of or relevant to this Agreement which cannot be resolved by the parties within thirty (30) days of the dispute arising, shall be referred to mediation, upon the request of either party. […]2
In August 2020, the School Board advised Thomson that it was dissatisfied with Thomson's performance. Subsequently, the parties' relationship broke down, resulting in two disputes, which Thomson attempted to refer to mediation by letter dated October 12, 2021.3 The School Board refused to appoint a mediator on the basis that there was no dispute to refer to mediation, since both disputes had arisen more than 30 days before Thomson had requested the mediation.4 The School Board took the same position when Thomson served a notice to arbitrate. On March 7, 2022, Thomson applied for a court order to appoint an arbitrator pursuant to GC18 and s. 10(1) of the Arbitration Act, 1991, S.O. 1991, c. 17.5
The Application Judge's Decision
The application judge found that GC18 imposed a strict deadline on the parties to seek mediation, requiring a party to request mediation within 30 days of a dispute arising.6 She found that the 30-day window was a condition precedent to arbitration, and that Thomson's failure to request mediation within that window concluded the dispute and barred Thomson from applying for a court order appointing an arbitrator.
Thomson appealed the decision.
The Court of Appeals' Decision
The ONCA allowed the appeal and granted Thomson's application, ordering mediation to proceed within 60 days of the date of the order, with Thomson retaining the right to seek arbitration pursuant to GC18.
The ONCA held that, "on its face" the first sentence of GC18 did not impose a deadline on a party to seek mediation, but set a minimum time to attempt to resolve the dispute before seeking mediation.7 The ONCA noted that this interpretation makes sense within the overall scheme of GC18, which also required the parties to attempt to mediate for at least 30 days after the selection of a mediator before commencing arbitration.8
Thomson, therefore, did not lose the right to arbitrate by failing to serve a request to mediate within 30 days of either of the disputes arising.
Key Takeaways
Dispute resolution clauses can be overlooked during the drafting of commercial contracts. When drafting an MSDR clause, parties should be cautious and critically evaluate each step of the dispute resolution process, the associated timelines and whether completing a step is a condition precedent for the next.
Obtaining legal advice can help clarify ambiguities when including any dispute clause, MSDR or otherwise, in parties' complex commercial agreements, and can ultimately save time and costs if a dispute arises.
To discuss your specific needs and to receive tailor-made advice, please contact one of the authors, or contact the Bennett Jones Litigation group.
2 JP Thomson, supra note 1 at para 5.
3 JP Thomson, supra note 1 at para 6.
4 JP Thomson, supra note 1 at para 7.
5 JP Thomson, supra note 1 at para 7.
6 JP Thomson, supra note 1 at paras 8-9.
7 JP Thomson, supra note 1 at para 19.
Please note that this publication presents an overview of notable legal trends and related updates. It is intended for informational purposes and not as a replacement for detailed legal advice. If you need guidance tailored to your specific circumstances, please contact one of the authors to explore how we can help you navigate your legal needs.
For permission to republish this or any other publication, contact Amrita Kochhar at kochhara@bennettjones.com.
Bennett Jones