Uhuegbulem v Balbi 2025 ABKB 318 is a factually complex dispute in which the plaintiff brought multiple proceedings before the court, and also before the arbitrator, to have the arbitrator removed for reasonable apprehension of bias based upon serious allegations of misconduct. When both those proceedings were not successful, plaintiff brought a separate action against the arbitrator. The defendant arbitrator brought an application in that action in which he argued that the action should be dismissed because (among other things): (1) the arbitrator was protected by arbitral immunity; and (2) the multiplicity of proceedings brought by the plaintiff was an abuse of process. The court could find no precedent for a separate proceeding brought against an arbitrator to have them removed for alleged reasonable apprehension of bias. Ultimately, the arbitrator resigned and the action and application became moot. The parties did not agree on costs and this decision reviews the relevant principles applied by the court to determine costs in this novel proceeding where the arbitrator actively responded to a bias application against him.
The facts are as follows.
Challenge application in Divorce Action – The plaintiff (“Husband”) was the defendant in a Divorce Action commenced by his spouse (“Wife”). In March, 2023, the parties entered into a med-arb agreement in respect of certain issues arising out of their marriage breakdown.
On August 23, 2023, Husband filed an urgent application (“Application #1”) in the Divorce Action seeking, among other things, an order to terminate all future med/arb sessions due to “perceived bias, undue stress and undue influence” by the arbitrator. The court dismissed the application. Thereafter, Husband filed a separate notice to attend family court docket in the Divorce Action related to his allegations of bias against the Arbitrator. On January 9, 2024, the court adjourned it to allow Husband to follow the proper procedure under section 13(3) of the Alberta Arbitration Act, RSA 2000, c A‑43, by bringing the challenge to the arbitrator first.
Challenge application in arbitration – On January 17, 2024, Husband asked the arbitrator to withdraw on the basis of alleged reasonable apprehension of bias. Husband requested that all meetings with the arbitrator be deferred until the matter was resolved in Application #1.
On January 31, 2024, the arbitrator declined to recuse himself on the basis that there was no reasonable apprehension of bias and ordered that the “matter will proceed as directed” (“Recusal Decision”). This decision was not released to the parties for almost three months because the parties had not paid the arbitrator’s accounts.
On February 16, 2024, the court denied Husband’s request to schedule Application #1 to determine the bias issue and directed that the parties continue to proceed with the arbitration (“the February Decision”). Husband appealed this decision to the Court of Appeal.
Challenge made in new action against the arbitrator– On April 18, 2024, Husband brought a separate action against the Arbitrator (“Action against the Arbitrator”) seeking: (1) a stay of the med/arb; (2) vitiation of Husband’s consent to the med/arb agreement; and, in the alternative, (3) the appointment of a new arbitrator. On April 26, Husband brought an application (“Application #2”) seeking the same relief as in the Action against the Arbitrator. Among other things, Husband argued that the arbitrator had: (1) interfered in the Court of Appeal proceeding to which he was not a party; (2) retaliated and unjustifiably pushed the dispute to arbitration under the med/arb agreement; (3) threatened and intimidated Husband regarding disputed payments; (4) misappropriated retainer funds; (5) was biased in favour of Wife; (6) breached Husband’s equality rights under the Charter; and (7) incorporated unfair contractual terms in the med/arb agreement or created an overwhelming imbalance in bargaining power, economic duress, and coercion.
On April 30, 2024, the arbitrator released his Recusal Decision.
On May 2, 2024, Husband brought an urgent application (“Application #3”) to the court for an interim stay of the med-arb pending the hearing of Application #2
On May 3, 2024, the arbitrator filed an application (“Arbitrator’s Application”) to dismiss Husband’s Action against the Arbitrator (and, therefore, Applications #2 and #3) on the grounds that: (1) the action and applications claimed matters already adjudicated; (2) the Arbitrator was protected by arbitral immunity; and (3) the multiplicity of proceedings was an abuse of process.
On May 8, 2024, on consent of Husband and the arbitrator, the court stayed the arbitration until the outcome of Husband’s appeal of the February Order that had ordered the arbitration to proceed. On June 18, 2024, the Alberta Court of Appeal dismissed Husband’s appeal of the February Order. Therefore, the arbitration was to proceed.
After that, Husband brought Application #2 back on.
On June 24, 2024, the arbitrator advised the parties to the med/arb agreement that he would step down if they both agreed. Wife did not. The court adjourned Application #2 to see if Husband and Wife could resolve their dispute.
At a September 6, 2024, case conference, they and the arbitrator agreed to attend a full-day mediation before him on October 30, 2024, on the basis that it was without prejudice to their positions on the various applications. The presiding judge incorporated this into a consent order (“the Consent Order”). It also provided that if the mediation failed to resolve all issues in the Divorce Action, the Arbitrator’s Application to dismiss Husband’s Action Against the Arbitrator would proceed and then Husband’s Application #2 would proceed and the arbitration would be stayed.
On October 10, 2024, the arbitrator sent his accounts to the parties to the Divorce Action and stated that he required payment before the mediation would proceed. The accounts included the arbitrator’s time in responding to Husband’s Action Against the Arbitrator. Husband objected to the accounts. He then made an appointment with a Review Officer to address the accounts under section 55 of the Alberta Arbitration Act, RSA 2000, c A‑43.
On October 16, 2024, Husband wrote to the presiding judge advising that he was rescinding his consent to the October 30 mediation, as recorded in the Consent Order. On October 24, the presiding judge issued an endorsement that stated that no substantive relief would be granted on the basis of a letter and that the parties must comply with the Consent Order.
One October 22, 2024, the arbitrator advised that the mediation would not proceed unless he was paid.
On October 25, 2024, Husband filed an application (Application #4) to stay or adjourn the October 30 mediation and set aside or vary the Consent Order and, finally, to have the arbitrator return funds already paid to him.
On October 29, 2024, the arbitrator advised that the arbitration would proceed.
On October 30, 2024, only Wife attended the mediation.
That day, the arbitrator resigned.
On November 1, 2024, the arbitrator provided to the court a “Mediation Report” that stated that Husband had not attended and the parties had not paid his accounts, as a result of which he had resigned.
Husband and arbitrator did not resolve Husband’s Action against the Arbitrator or Arbitrator’s Application.
On November 19, 2024, the arbitrator provided his reply to Husband’s response to the Arbitrator’s Application. The arbitrator argued that the Action Against the Arbitrator should be struck because, inter alia: (1) the principle of arbitral immunity is a complete defence to the Action against Arbitrator; (2) the Action against the Arbitrator was a collateral attack on the February Order, which he asserted was “confirmed” by the Court of Appeal; (4) the Action against the Arbitrator was a collateral attack on the Recusal Decision; (5) Husband failed to follow court process and directions in the Action against the Arbitrator and in the Divorce Action; (6) Husband sought financial relief against the arbitrator but also scheduled an appointment before a Review Officer; and (7) the issues in the Action against the Arbitrator were moot because of the arbitrator’s resignation.
On December 11, 2024, the court dismissed Husband’s Action against the Arbitrator under Rule 3.68 of the Alberta Rules of Court on the basis that: (1) it was frivolous, vexatious, and an abuse of process (Alberta Rules of Court); and (2) because the arbitrator had resigned, all claims were moot, and it was not necessary to hear the Arbitrator’s Application.
On January 10, 2025, Husband started a new action against the arbitrator to challenge the accounts.
On January 16, 2025, the Arbitrator issued further accounts and on January 27, made an appointment before a Review Officer, which was held on April 8, 2025. Husband challenged the process and did not attend. On May 1, 2025, Husband filed a Notice of Appeal of the Review Officer’s decision.
Costs – The parties were not able to agree on costs of the Action against the Arbitrator and the Arbitrator’s Application. After reviewing general costs principles, the court made an order that the parties shall bear their own costs for reasons, including the following:
- Cost principles in arbitrator challenges – Public policy promotes and facilitates private arbitration, and arbitrators should not face personal financial risk in responding to court proceedings without good reason. Otherwise, there will be a chill in those willing to act as arbitrators. However, this is not a rigid rule but rather a factor to consider.
- Degree of success – Neither party was substantially successful; the issues were moot once the arbitrator resigned.
- Importance of Issues – The issues were important to both sides. The proceedings engaged both Husband’s right to procedural protections by not having a biased arbitrator and the arbitrator’s reputation, finances, and personal integrity. The arbitrator also sought to protect the integrity of the arbitration process.
- Conduct of the parties.
- Husband’s approach caused “complication and inefficiencies”.
- The arbitrator’s approach was “problematic and based on fundamental misconceptions that, unfortunately, did not further his goals”. His position that he was unable to resign was not consistent with the law. He may have had laudable reasons for not doing so without accepting the validity of the allegations against him, but “they are not the same as a legal obligation to carry on at all costs to protect the process or one or both of the parties.”
- The court found no precedent for this situation in which an arbitrator is a named defendant. In such a case it is reasonable for the arbitrator to participate and defend themself. An arbitrator’s right to be heard and participate must be guided by the quasi-judicial nature of their role, with the overriding concern being the preservation of the arbitrator’s integrity and impartiality. This means that any position taken by the arbitrator should be fair and balanced. If an arbitrator takes an unreasonable position, or is overly aggressive or adversarial in their participation, then the very nature and tone of their participation risks giving rise to a reasonable apprehension of bias. Here the court had concerns about the arbitrator’s approach. It complicated and delayed resolution of the reasonable apprehension of bias issue raised by Husband.
- Although the arbitrator’s accounts with respect to the arbitration were before the Review Officer, the court found that they were relevant to the costs in the Action against the Arbitrator because they were inextricably linked. The court applied the general cost principles that apply to court proceedings. Here the med/arb agreement provided the scope of the arbitrator’s right to charge fees and to require a retainer. Based upon public policy and contract interpretation principles, the arbitrator was entitled to charge, in the arbitration, for the work to prepare the Recusal Decision, but not for time spent responding to Husband’s challenge in this action. These costs were to be determined in this proceeding.
There were additional factors that I have not listed in this case note. Ultimately the court ordered each side to bear their own costs.
Editor’s Notes:
First, the court found that the arbitrator’s claim to arbitral immunity was without merit. The Action against the arbitrator did not seek any monetary relief from, or liability of, the arbitrator to which a claim to immunity might respond. In substance, the Action against the Arbitrator was Husband’s attempt to engage the court’s jurisdiction under section section 13(6) of the Act. It provides that, “within 10 days of being notified of the arbitral tribunal’s decision, a party may make an application to the court to decide the issue”. The court stated that an arbitrator does not have immunity from the court considering an application under section 13(6) of the Act. It appears that this arbitration agreement did not included a standard term of appointment that the arbitrator cannot be sued and has the same immunity as a judge of a provincial trial court.
Second, this case highlights a little-known provision in some provincial arbitration legislation that allows a party to review an arbitrator’s accounts in the same way that a client may review a lawyer’s accounts. In Alberta, Manitoba, and Ontario, for example, that review is to be done by the court. The fees and expenses of an arbitrator are not to exceed, “the fair and reasonable value of the services performed and the necessary and reasonable expenses already incurred”. (See s. 55 of the Alberta Arbitration Act, s. 55 of the Ontario Arbitration Act, 1991, S.O. 1991, c. 17, and s. 54 of the Manitoba Arbitration Act, CCSM cA120. Under the British Columbia Arbitration Act, SBC 2020, c2, the review of the arbitrator’s accounts is designated to the Vancouver International Arbitration Centre (VanIAC). (See s. 55.)
The court in this matter found that, to further the policy of arbitration agreements, when determining the arbitrator’s reasonable fees the scope must be interpreted liberally; an arbitrator’s mandate should include all matters connected to the arbitration agreement or the questions in dispute. It is possible that an arbitrator’s entitlement to fees may also be subject to principles of quantum meruit where the arbitration agreement does not specifically address fees and it has been established that the services provided are encompassed by or performed under the applicable arbitration agreement. In any case, if an arbitrator is entitled to charge for the services they are performing, the charges shall not exceed the fair and reasonable value of the services performed and the necessary and reasonable expenses actually incurred.