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May 12, 2021 Practice Points

British Columbia Allows Recovery of Legal Fees in Arbitration

A Canadian court has held that the recovery of legal fees is not only a feature of British Columbia’s arbitration statute, but a positive trait of arbitration.

By Daniel Urbas

In Allard v. The University of British Columbia, 2021 BCSC 60 (January 14, 2021), relying on provisions of the arbitration act, RSBC 1996, c 55 (the BC Arbitration Act) and the British Columbia International Commercial Arbitration Centre’s rules, Madam Justice Karen F. Douglas held that the “normal rule” in arbitration is that successful parties are entitled to recover indemnification costs, including legal fees, unless special circumstances warrant some other type of costs.

When a party is “wholly successful,” an arbitrator is not required to make a finding of misconduct against the other party as a prerequisite to awarding actual reasonable legal costs. Justice Douglas excerpted comments made in the legislature when British Columbia introduced amendments to the BC Arbitration Act to clarify that an arbitrator has the authority to award actual reasonable legal fees. British Columbia anticipated that authority would “preserve a desirable feature of arbitration: namely, the ability of a party to recover its actual costs.” Justice Douglas observed that the legislature’s stated intent “undermines” concern for any alleged unintended “chilling effect” of awarding such costs because “parties are more likely to pursue commercial arbitration precisely because doing so permits them to recover their actual costs.”

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Daniel Urbas

Urbas Arbitral

Daniel Urbas is an arbitrator and mediator at Urbas Arbitral in Montreal, Quebec, Canada.

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