Arbitration Matters

July 27, 2026July 27, 2026

Ontario – JAMS arbitration clause survives bias and unconscionability challenges – #954

Abouzeid v. eXp Realty of Canada Inc et al., 2026 ONSC 3329 confirms that speculative concerns regarding institutional bias in the administration of an arbitration, absent evidence of actual unfairness or an inability to appoint an independent and unbiased arbitrator, will not render an arbitration agreement invalid, unconscionable, or incapable of performance, and will not prevent a mandatory stay under s. 7(1) of Ontario’s Arbitration Act, 1991, S.O. 1991, c. 17 (the “Arbitration Act”). The Court rejected the plaintiff’s two principal arguments: first, that the administering authority under the relevant arbitration agreement (JAMS) would be unable to administer an unbiased arbitration because the respondent frequently selected JAMS as an administering institution; and second, that the limited size of the Canadian JAMS arbitrator roster rendered the arbitration agreement incapable of performance (an issue for Canadian administering institutions to consider). These arguments failed because the parties were free to select any arbitrator – they were not restricted to the JAMS roster – and because repeat use of an administering authority does not give rise to bias.

July 27, 2026July 27, 2026

Ontario – Award enforced despite parties’ agreed institution and applicable rules changed – #953

InFrontier AF LP v. Rahmani, 2026 ONCA 289, was an appeal from an order enforcing an arbitral award made in Dubai. The primary issue was whether the application judge erred in considering the law of Dubai (the seat) in considering whether the arbitral procedure accorded with the parties’ agreement after the arbitration proceeded under a different institution and Rules regime than the ones specified in the parties’ agreement. The application judge found that the parties had agreed to procedural Rules that contemplated an amendment and that the new Rules were an amendment of the Rules specified by the parties in their agreement. The Court dismissed the appeal and accorded the application judge significant deference, finding that there was no extricable legal error in his interpretation of the parties’ agreed procedure.

July 27, 2026July 27, 2026

Québec – Arbitrator’s use of AI in award undermined arbitral process, justified annulment – #952

In Association des ressources intermédiaires d’hébergement du Québec (ARIHQ) v. Santé Québec – Centre intégré universitaire de santé et de services sociaux du Centre-Sud-de-l’Île-de-Montréal, 2026 QCCS 1360, the Court annulled an arbitral award after concluding that the arbitrator had relied on non-existent doctrine and case law seemingly generated through AI. The Court found that the reliance on hallucinated authorities undermined the integrity of the arbitral process and justifed annulment under articles 646 and 648 of the Code of Civil Procedure of Quebec (C.C.P.) The issue was not whether the use of artificial intelligence was itself a ground for setting aside the arbitral award; the question was whether the arbitral procedure chosen by the parties had been respected. The Court emphasized that its decision should not be understood as prohibiting the use of AI by arbitrators, but rather as requiring that the arbitrator remain personally responsible for the reasoning and authorities supporting the award.

June 29, 2026June 29, 2026

Ontario – Peace River broadened proper parties to arbitration – #951

In Otter Point Properties Nominee Ltd. v GT Mann Contracting Ltd., 2026 BCSC 558, the Court ordered a stay of an action in favour of arbitration where some of the parties were signatories to the arbitration agreement and it was “arguable” that others were also parties. The Court found that Peace River Hydro Partners v. Petrowest Corporation, 2022 SCC 41 broadened the definition of party. Here, it was arguable that a non-signatory could become a party to the arbitration agreement “through its sole shareholder” who was a signatory and so could a non-signatory nominee of a contracting party if agency or a reason to pierce the corporate veil was established. The stay was granted based on the pleadings and the determination of the proper parties referred to the arbitrator under the principle of competence-competence.

June 29, 2026June 30, 2026

Ontario – ISDS award set aside on jurisdictional and bias grounds – #950

In Grace et al v United Mexican States, 2026 ONSC 2104, the Court set aside an arbitral award issued under the NAFTA on the basis that: (i) the tribunal wrongly declined jurisdiction; and (ii) one of the arbitrators had failed to disclose his involvement as counsel for a state in an arbitration involving similar issues, which gave rise to a reasonable apprehension of bias. This case focused, among other things, on the continuing duty of arbitrators to make disclosure.

June 29, 2026June 29, 2026

Ontario – Counsel disqualified in action and arbitration over access to privileged documents in arbitration – #949

In Specialty Life Inc. v. Daumier Financial Services Inc., 2026 ONSC 1869, the Court ordered the disqualification of plaintiffs’ counsel because it had requested, received, and reviewed some of the defendants’ privileged documents as counsel for the plaintiffs in a related arbitration, albeit for a legitimate purpose in that arbitration. The Court found that there were no steps, short of disqualifying plaintiffs’ counsel in both the action and the arbitration that would “avoid the mischief resulting from use of the [defendants’] privileged information”.

June 1, 2026

Ontario – A med-arb agreement is a multi-tier agreement – #948

In Friel v HUB International Limited, 2026 ONCA 313, the Appellant signed an employment agreement with a med-arb clause and an option agreement for shares with a forum selection clause that stated that the Courts of Delaware had jurisdiction over any disputes. When a dispute arose, the Appellant sought an order appointing an arbitrator and a declaration that the option agreement was unconscionable and invalid. Ultimately, the motion judge and the Ontario Court of Appeal found that the employment agreement did not apply and that the Courts of Delaware had jurisdiction. This case note considers the unique aspects of a med-arbitration agreement as compared to a standard arbitration in a jurisdiction analysis. A med-arb agreement is best understood as a variety of stepped arbitration agreement.

June 1, 2026

Newfoundland and Labrador – Model Law applied to domestic commercial dispute – #947

In 55104 Newfoundland and Labrador Inc. v. Wärtsilä Canada Incorporated, 2026 NLSC 29, the Court granted a stay and referred a warranty dispute to arbitration before the ICC in Paris. The Court held that the province’s International Commercial Arbitration Act, RSNL 1990, c. I15 (“ICAA”), not the domestic Arbitration Act, RSNL 1990, c. A14 (the “AA”), governed the dispute, even though all the parties and the subject of the contract were in Newfoundland. That mattered, as under the ICAA, a stay was mandatory unless a narrow exception applied (which it didn’t). Under the AA, the Court would have had discretion to refuse a stay, as the Plaintiffs urged. The decision highlights Newfoundland’s outlier status among common law provinces. While its domestic statute still permits discretionary stays, other common law provincial statutes provide for mandatory stays.

June 1, 2026June 1, 2026

Québec – Arbitrator appointed despite separate action challenging arbitration clause’s validity – #946

In Investissements Cleary inc. v. 9324-4465 Québec inc., 2026 QCCQ 1321, the Court of Québec granted the Plaintiff’s application to appoint an arbitrator in a case involving a claim for unpaid rent under a commercial lease. Following service of the notice of arbitration, the Defendants refused to participate in the process, including in appointing the arbitrator, because their position was that the lease containing the arbitration clause was a nullity. Instead, they initiated an action in the Superior Court of Québec, in which they sought to have the lease declared null and void. The Defendants argued before the Court of Québec that: it had no jurisdiction to make the appointment in light of its action; that there should be priority given to court proceedings over arbitrations to avoid multiplicity of proceedings; and that making the appointment could give rise to inconsistent orders because the issues in the two actions overlapped. The Court dismissed these arguments and made the arbitrator appointment, finding that the arbitrator should be the first to rule on his own jurisdiction in light of the challenge to the arbitration agreement, in conformity with competence-competence. The other court proceeding was not relevant.

May 6, 2026May 6, 2026

Ontario – Aroma Round 2: no set-aside where procedural breach on non-material issue – #945

In Aroma Franchise Company, Inc. et al v. Aroma Espresso Bar Canada Inc. et al, 2026 ONSC 768, the Court dismissed a second application to set aside two arbitral awards in the “Aroma saga”, this time on various grounds pursuant to Article 34 of the Model Law (procedural breach relating to inability to present one’s case on an issue, jurisdiction, and sufficiency of reasons – the ground relating to jurisdiction was straightforward and is not addressed in this case summary). Although the Court found that the Applicants were unable to present their case on one issue (whether one individual was a proper party to the arbitration), such that Article 34(2)(ii) of the Model Law was met, it concluded that this issue was superfluous and accordingly did not exercise its discretion to set aside the award because the issue was not material.