Canadian Automobile Dealers Association urges dealers to support program
After months of negotiation, the Canadian Automobile Dealers Association (CADA) announced that all parties agreed to support the National Automobile Dealer Arbitration Program (NADAP) for another five-year term until January 2017.
“It is our sincere belief that going forward, all Canadian dealers who choose to adhere to this program will be well served and protected,” says the association in a briefing document issued to it members in April by Rick Gauthier, CADA’s President and CEO. “CADA maintains that NADAP is the most effective dispute resolution mechanism currently available to dealers and we believe that its renewal is a sign that it is working.”
CADA also recommended a number of changes to beef up the program and to better protect the interests of dealers.
Third program review
It was CADA’s third review of the program since it first launched in 1996. NADAP serves as a mediation/arbitration program developed by the automobile industry to help resolve disputes between a dealer and its manufacturer arising under the terms of the Dealer Sales and Service Agreement.
The parties involved are CADA, OEMs represented by the Canadian Vehicle Manufacturers’ Association (CVMA) and the Association of International Automobile Manufacturers of Canada (AIAMC).
The program launched with almost 95 per cent of Canadian dealers signing implementation agreements with their manufacturers that committed them to NADAP for an initial five-year term during which neither the dealer nor the manufacturer could terminate its application to them. The parties agreed, however, to review the program every five years to ensure the program functioned as it was intended to.
The first review in 2001 resulted in enhancements to the program, as did a second review in 2006. For the 2011 review that just concluded, CADA created a committee made up of dealers, CADA provincial association representatives and CADA staff who met regularly to determine whether the program continued to meet dealers’ needs. Dealers were also surveyed for their input, and the committee studied the results of disputes that went to mediation and arbitration.
Recommended changes:
After reviewing this, and other comparable provincial and U.S. state franchise laws, the committee recommended a renewal of the agreement, but with some suggested enhancements. These included:
1 ) Ensuring NADAP is offered to all dealers by getting a letter from the manufacturer associations committing to this principle and altering language in the NADAP Principles to enshrine it;
2 ) Ensuring CADA got an updated list of all dealers signed onto NADAP (this is an issue that has caused uncertainty amongst dealers particularly when they are contemplating using the program);
3 ) Ensuring the arbitration program administrators ADR Chambers, the body responsible for mediating and arbitrating NADAP proceedings, know which cases have been made public;
4 ) Extending the notice period that a party must provide to the other that a NADAP decision will be made public from 48 hours to 5 days;
5 ) Resolving a Cost Award language ambiguity between Rules 24 and 74 by eliminating the last line of Rule 24 to eliminate the ambiguity/conflict between the two rules;
6 ) Reviewing the arbitration appeal process and standard to ensure it is still appropriate for the program and following this review agreeing to make no changes to the arbitration appeal process and standard;
7 ) Ensuring that French rules translation better reflect the English text;
8 ) Further review that any settlement agreement parties enter into does not truncate a party’s right to use NADAP by discussing the insertion of clarification language in the NADAP Principles;
9 ) Reviewing the timeline for bringing a complaint and initiating an arbitration pursuant to Rule 21 and agreeing to make no changes.
CADA says that while it does not seek to foster an environment of disagreement between dealers and their respective manufacturers, it recognizes that, at times, disputes will occur.
CADA maintains that since its inception, NADAP has served Canadian dealers well and that the vast majority of disputes brought under NADAP have been resolved at the mediation level.
The fact that most disputes under NADAP are resolved at the mediation stage, means that dealers save money in legal fees, are not engaged in protracted legal disputes and most importantly, can return to the operation of their business much sooner, says CADA.
What happens now?
Dealers can now expect their manufacturers to send them information on the renewed NADAP agreement and NADAP rules and principles.
