Publication

Thirty days to trigger mediation: A deadline or a minimum waiting period?

Philip Holdsworth
Share

This story was originally published by Law360 Canada, (www.law360.ca) a division of LexisNexis Canada.

Law360 Canada (July 10, 2025, 2:51 PM EDT) -- Multitiered dispute resolution clauses — also known as “step clauses” — are common in commercial contracts containing agreements to arbitrate. Especially in sectors like construction, architecture, engineering and professional services, parties often agree that disputes must first go through informal negotiation, then mediation, before finally proceeding to arbitration.

These clauses promote efficiency and preserve commercial relationships. By sequencing the escalation of conflict, they encourage parties to resolve issues early, before costs and positions harden. But step clauses can also complicate matters. When poorly drafted or rigidly interpreted, they risk becoming procedural traps — creating uncertainty about when arbitration rights crystallize or expire and whether an arbitrator has jurisdiction to hear the dispute at all.

In J.P. Thomson Architects Ltd. v. Greater Essex County District School Board, 2025 ONCA 378, the Court of Appeal recently addressed precisely the procedural tension created by a dispute clause requiring the parties to refer their disputes to mediation (before arbitration), if they could not be resolved within 30 days of the dispute arising.

In determining the issue, the Court of Appeal underscored that interpreting the contractual requirements as setting a minimum waiting period, not a time limit to seek mediation (before unlocking the right to arbitrate), is consistent with the business sense intent of such clauses, to give the parties space to resolve their disputes.

From trusted partner to procedural roadblock

J.P. Thomson Architects served the Greater Essex County District School Board for nearly 50 years. In 2016, it secured new work through contracts that incorporated the Ontario Association of Architects’  standard form language, including a multitiered dispute resolution clause (GC18) that required negotiation, then mediation and finally arbitration if disputes could not be resolved.

When performance issues and a fee dispute arose in 2020 and 2021, Thomson attempted to initiate mediation under GC18. The board refused, arguing that any disputes were too old — beyond the “30-day window” — and therefore no longer eligible for mediation or arbitration. The application judge agreed, interpreting the clause as requiring mediation to be requested within 30 days of the dispute arising. Because Thomson’s request came later, the court held that its right to arbitrate had been extinguished.

Deadline or waiting period?

On appeal, the Court of Appeal unanimously overturned the lower court’s ruling, holding that GC18 did not contain a hard deadline. Rather, the clause provided that if a dispute “cannot be resolved by the parties within thirty (30) days of the dispute arising,” it “shall be referred to mediation, upon the request of either party.”

While the clause required parties to attempt to resolve disputes for “thirty (30) days” before moving to mediation, it said nothing about losing the right to mediate after that period. The court found that this phrasing sets a minimum waiting period, not an expiry. It gives the parties at least 30 days to resolve the matter informally before one can escalate it to mediation — not a ticking clock that cuts off rights if mediation isn’t requested in time. Interpreting it otherwise, the court said, would read in language that simply isn’t there.

This interpretation reflects commercial logic. In long-term professional relationships, disputes rarely crystallize in a moment. Requiring immediate formalization or legal action undermines the very purpose of step clauses — to encourage early, flexible resolution without litigation.

Let arbitrators decide

Equally important, the court held that the application judge had overstepped in making factual findings about whether a dispute still existed. Under well-established jurisprudence, including Patel v. Kanbay, 2008 ONCA 867, if it is arguable that a dispute falls within an arbitration clause, any questions about arbitrability, including whether procedural steps were satisfied, should be left to the arbitrator.

The judge erred by parsing correspondence between the parties to determine whether disputes had been resolved or whether the mediation request was timely. In doing so, she effectively decided the jurisdiction of the arbitrator — a decision that belongs to the arbitrator when the parties have agreed to a staged process culminating in arbitration.

Implications for contract disputes
This decision offers important guidance for both contract drafters and those managing disputes under
existing agreements:

1. Step clauses must be clear. If the intention is to impose a hard deadline to initiate mediation or arbitration, the contract must say so explicitly. Courts will not infer such limits from vague or ambiguous timing language.

2. Procedural flexibility supports commercial relationships. A step clause that penalizes parties for not initiating formal ADR within 30 days discourages the kind of informal dialogue these clauses are meant to promote.

3. Arbitrators, not courts, determine arbitrability where it’s arguable. Courts should not short-circuit the arbitration process by making premature findings about dispute resolution steps. If arbitration may apply, it is for the arbitrator to decide whether it does.

For architects, engineers, consultants and institutional clients alike, the lesson is not just about timing — it’s about preserving the right forum for resolving disputes. Step clauses should be carefully drafted and applied with an understanding of how they function in real-world relationships. And when a dispute arises, counsel should be cautious not to treat procedural hurdles as jurisdictional cliffs.

The court’s decision in J.P. Thomson Architects rightly restores balance to the interpretation of step clauses. By treating the 30-day reference as a minimum waiting period, not a deadline, and by reaffirming that arbitrators decide their own jurisdiction, the court prevented procedural formalism from undermining contractual rights to dispute resolution.
Multitiered dispute clauses are meant to serve parties — not stifle them. But that only works when the language is clear and the process is respected. When in doubt, step carefully, but don’t mistake the wait for a wall.

Lawyers

Expertise