Canadian Lawyer

LEGAL REPORT/INSOLVENCY "One of the great things about court-ordered mediation is that while you can take a horse to water you can't make it drink, but a thirsty horse will often drink." EDWARD SELLERS, OSLER HARCOURT & HOSKIN LLP table will tell them why their position is not tenable or needs to be adjusted. the trouble began four years ago. Many say mediation is the only way Nortel could be dealt with due to the number of com- panies involved and the multiple juris- dictions it plays across. Mediation was ordered for Nortel last June and it went through several delays. Now the $8 bil- lion in proceeds are in limbo waiting for distribution. "Many people are anxious to see it be successful and given the time delay and the fact negotiations have been occurring between these same parties for over a year, the hope is a more structured, court-ordered process will encourage set- tlement," says Milly Chow of Blake Cassels & Graydon LLP. When it works, mediation encourages Tay has been working with Nortel since " parties to come to a negotiated resolution in which it' each party comes out thinking they won something in the process, says Chow. "It has been used over the years primar- ily in larger cases such as Air Canada and Algoma Steel because of the complexity of the cases and complexity factors into costs and delays in the court process." While considered preferable to litiga- s not about who wins, but that tion, mediation is still a tough slog, says Sellers. "Mediation involves a lot of nights spent at hotels, bad food, and sleepless nights. It can be worse than court litigation because you really can't leave the table. As Sellers puts it, the resolution of an " insolvency is very much a human process. "The more you put a person in a situation where they need to articulate their view and advance or defend or modify their view based on what some other skilled and respected person has to say the greater the likelihood is they are actually going to adopt a view that gets to a collective result." Court-ordered mediation has had a have been pushing it forward. Sellers remembers a pilot project that took place in the early 1990s in Ontario that may have sown the seeds of future media- tion cases. "The Commercial List of the Superior Court in Ontario had a routine stream where they would refer matters up to a special mediation centre that was a pilot project known to lawyers as '77 Granville, housed in," recalls Sellers. "Essentially you knew as counsel that when you were directed to appear at 77 Granville you knew the morning wasn't going to be about going through your motion record. The morning was going to be about sit- ting in front of the supervising judge and essentially having to explain to him or her why it was you hadn't been able to settle your case. People became familiar with the way in which judges of the day were approaching resolution of cases including Justice Farley, who was supervising the Commercial List and was instrumental in driving it as a pilot project." After a period, the ' named for the building it was Granville was no longer available and those court-ordered mediations or "case conferences" were discontinued but the seeds had been sown. Steven Dvorak, facility at 77 Tupper LLP, says British Columbia isn't accustomed to seeing files of the mag- nitude of Nortel or Canwest Global Communications Corp., but says there are cases that need to be resolved in a time- and cost-effective way. "We haven't seen any formal calls for mediation but you can certainly see that alternative dispute resolution is playing a major role in the process. I think it' of Bull Housser slow evolution in Ontario but advocates such as Chief Justice Warren Winkler and justices James Farley and Colin Campbell intuitively prepared to use the informal processes of achieving the goal of getting to a speedy resolution," says Dvorak, who adds that mediation is "definitely a place where insolvency practitioners live as a matter of course. s fair to say lawyers are "You've got to get to the answers soon- " 40 JUNE 2012 www. CANADIAN Lawyermag.com er rather than later. It's in everyone's inter- est without recourse of the usual litigation protocols. There are so many issues that pop out on the failure of a business they simply can't be resolved through the usual processes." Dvorak points out that while many may take their lead in a mediation process from the monitor appointed to the case, that could be problematic depending on what side you're on. "I find quite often you end up using the monitor as your sound- ing board because they play such a big role in the determination the court makes. I'm guilty of it as much as anyone because although they are technically independent they can be perceived as identifying with the cause. They have a vested interest in the restructuring and it may or may not leave them in a neutral position or be viewed by your client as neutral, says shareholders may not receive the satis- faction they are looking for in terms of transparency of the deals cut behind closed doors. "In terms of some court-ordered mediations there is concern sometimes they are confidential and there is a lack of transparency in that process. They are not done in open court and the ultimate settle- ment is as a result of extensive negotiations behind closed doors. Some have been con- cerned if mediation is used too extensively the transparency of court process is lost. That was the complaint of shareholders in Canwest. They felt they weren't part of the negotiations and they were complaining about that particular process," says Chow. Others say by nature mediation has to Are there negatives to mediation? Chow " he says. be away from the public eye and under a cloak of confidentiality, otherwise a deal would never be reached. Parties are also more likely to acquiesce if they can com- promise behind closed doors. But is court-ordered mediation only being applied in large commercial cases such as Nortel? It' smaller cases where lawyers try to work s happening less so with

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