The Winter 2009 edition of Dispute Resolution included Stephen Antle’s article on “Common Sense Dispute Resolution”. In Quebec, as elsewhere in Canada, common sense is one of the most important tools for avoiding and resolving litigation. However, as in other aspects of life, in Quebec common sense dispute resolution is a little bit different.

Perhaps most importantly, business people doing business in Quebec should understand that the Quebec Civil Code expressly provides that “the parties shall conduct themselves in good faith both at the time the obligation is created and at the time it is performed or extinguished”. So, unlike elsewhere in Canada, in Quebec parties must act in good faith in both entering into contracts and performing them.

Another very important dispute resolution tool, along with common sense, is a written contract. As elsewhere in Canada, a contract does not need to be written to be enforceable. Nor does a written contract have to be long, complex or full of defined terms or Legalese. It just has to accurately record the parties’ agreement. In essence, the drafting of a contract is a question of balance between being simple and exhaustive, a balance your legal counsel can help you achieve.

Once the parties have entered into a contract, not only will they be bound by what they have expressly agreed in it, but under the Civil Code they will also have to respect the rules of equity, the usages pertinent to the nature of the contract and the law. In other words, the object of the contract cannot contravene Quebec’s public order laws, which are fundamental principles that no one can derogate from.

Ideally, the parties’ contract will express all points of their agreement, as well as their concessions and admissions, therefore precluding any doubts as to the contract’s meaning. It is particularly important that the parties expressly choose the law which is to govern the contract. In Quebec, if they do not do so, the Quebec Civil Code will be that law. If the parties do not agree in their contract on an alternative dispute resolution process for disputes arising under it, those disputes will be tried by a judge within the traditional judicial system. If the parties wish to resolve their disputes by arbitration instead, their agreement to do so, and the arbitration procedure, must be clear.

If the contract’s arbitration provisions are not sufficiently explicit as to how the arbitration should take place, the Quebec Code of Civil Procedure will apply. This stipulates procedural ground rules, such as a notification process, the confidentiality of the arbitrator’s award and the enforcement of the arbitration award.

Business people should understand that a Quebec arbitration award is final and not subject to appeal, unless certain specific situations arise. For instance, if a party claims the arbitrator violated the rules of natural justice, such as the requirement to hear both parties’ cases before making the award, they can apply for annulment of the award.

It is therefore of the utmost importance for those doing business in Quebec to use common sense in both their choice of business partners and entering into contracts, including agreeing on provisions for arbitration. This could save them from costly litigation and ensure the timely and cost effective resolution of disputes.