Chris Reflects (2023): Arbitrator Bias and the Unanimous Award – #807

When will a court confirm a unanimous arbitral award issued by a three-person panel where one of those arbitrators was biased? This case note reviews three cases that try to answer that question. In each, the Court applied the Model Law. In one recent casethe Ontario Superior Court of Justice upheld the award, finding that the bias did not cause actual prejudice. The other two cases, one from India, the other from Germany, reached the opposite conclusion, highlighting the pernicious, and often unseen, effect that bias can have on the deliberative process.  

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Québec – Arbitrator has jurisdiction to determine lien entitlement; only court has jurisdiction to enforce – #794

Santé Montréal Collectif CJV c. Veolia Health Services Montreal 2023 QCCS 3817 concerned a dispute relating to the construction of a hospital complex. The Respondent, Veolia Health Services Montreal sec (“Veolia”), alleged it was due money for repair work as part of its contractual obligation to perform maintenance after construction of the hospital complex was complete. It filed a notice of arbitration and at the same time a hypothec, or lien, against the subject property (the “Mortgage Notice”) with the court. The Applicant, Sante Montreal CJV Collective sec (“CJV”) built the hospital complex. It, had separate obligations to ensure the property was clear of encumbrances and applied to strike the Mortgage Notice (the “Request to Strike”). Even though only the Court had authority to discharge the Mortgage Notice, it nonetheless suspended CJV’s application, pending the determination of the arbitration, and ruled that the Veolia’s entitlement to relief pursuant to the Mortgage Notice was an issue for an arbitrator to decide.

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B.C. – Court articulates principles on fixing conditions in leave applications – #778

In Kingsgate Property Ltd. v The Board of Education of School District No. 39, 2023 BCSC 1266, the Court considered the text, context and purpose of s. 31(3) of the (former) Arbitration Act R.S.B.C. 1996 c. 55 (the “Arbitration Act”). (Comparable language appears in s. 59(5) of the current B.C. domestic Act.) That section allowed a court to attach such conditions to an order granting leave to appeal an arbitration award as it considers just. The Court determined that s. 31(3) empowered the Court to impose conditions on granting leave to appeal that will prevent miscarriages of justice. Here, the Court made two such orders sought by the petitioner Kingsgate Property Ltd. (the “Tenant”). Firstly, the Court settled the terms of security with respect to the Tenant’s appeal of an award made in a rent review arbitration (the “Award”). Secondly, the Court ordered a stay of the Award and a default notice the Board of Education of School District No. 39 School Board (the “Landlord ”) had issued for arrears of rent (the “Default Notice”). 

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Ontario – Courts will also enforce agreements in favour of court proceedings – #758

In Eurofins Experchem Laboratories, Inc. v BevCanna Operating Corp., 2023 ONSC 4015, the Court dismissed an application by Defendant BevCanna Operating Corp (“BevCanna”) for a permanent stay of the action or alternatively, a permanent stay of any claims caught by the arbitration clause in the agreement between BevCanna and the Plaintiff, Eurofins Experchem Laboratories, Inc. (“Eurofins”). The Court found that Eurofins’s claim sought recovery of unpaid fees under the parties’ contract, even though it also included claims for breach of fiduciary duty and unjust enrichment. Claims for unpaid fees fell within an exception to the mandatory arbitration clause. It permitted (but did not require) claims for unpaid fees to be brought in the courts. In reaching this conclusion, the Court considered whether the essential character, or pith and substance of the dispute, was covered by the arbitration clause. This focus ensures that parties are held to their agreement and avoids attempts by clever counsel to plead their way around an arbitration clause. 

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Alberta – “Participating in” not same as “taking a step in” an arbitration – #745

In Dow Chemical Canada ULC v NOVA Chemicals Corporation, 2023 ABKB 215,  Justice Wooley dismissed an application by Dow Chemical Canada ULC (“Dow”) for an order declaring the invalidity of the arbitration pursuant to Section 47 of the Arbitration Act to enjoin an arbitration between the parties. That provision requires that the  party seeking the order has “not participated in the arbitration.”  The Court found that Dow did participate in the arbitration and the case provides a useful framework for what it means to “participate” in an arbitration.

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Ontario – Court affirms narrow jurisdiction to set aside an arbitral award – #729

In Canada Soccer Association Incorporated v. Association de Soccer de Brossard, 2023 ONSC 1367, Bell J. dismissed a motion to stay an arbitral award and granted a cross-motion to enforce the award. The case is a reminder that applications to set aside arbitral awards which merely quarrel with the merits of a decision, even when dressed up as  procedural grievances, attract little judicial sympathy.

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B.C. – Appeal requires legal errors to affect outcome – #713

In Spirit Bay Developments Limited Partnership v. Scala Developments Consultants Ltd., 2022 BCCA 407 (“Spirit Bay”) the Court affirmed the principle that courts should be reluctant to intrude in arbitral proceedings – even in cases where the award contains unhelpful discursions into irrelevant legal principles and legal errors that don’t affect the outcome. 

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