Québec – Multiple arbitrator challenges res judicata and abuse of process – #859

In B Smart Technology Inc. v Norstan Communications Inc., 2024 QCCS 2416 (“B Smart”), the Court considered an application by Norstan Communications Inc. (“Norstan”) to dismiss originating applications of B Smart, in which B Smart sought an order to replace the arbitrator who was appointed to resolve their dispute. B Smart alleged that the arbitrator was biased and that his appointment was improper. What was important to the Court’s analysis was that B Smart had brought an earlier application before the Court to challenge this same arbitrator’s appointment. That judge held that the arbitrator was impartial and that his appointment was proper. Given those findings, the Court found that res judicata applied as a full answer to B Smart’s allegations and the application was dismissed. The Court also found that B Smart’s multiple attempts to challenge the arbitrator were an abuse of process.

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Ontario – Arbitrator’s relationship with party’s lender not sufficient for bias – #842

In Ballantry Construction Management Inc. v GR (CAN) Investment Co. Ltd., 2024 ONSC 2129 (“Ballantry”), the applicant, Ballantry Construction Management Inc. (“Applicant”), brought a motion for (among other things) an interlocutory injunction to restrain the Respondent from transferring or encumbering its assets pending the hearing of: (1) the Applicant’s application to enforce two arbitral awards; and (2) the Respondent’s application to set aside the  awards on the grounds of a reasonable apprehension of bias on the part of the Arbitrator. On the second issue, the Court concluded that while a “business relationship” between a party and the Arbitrator may create a reasonable apprehension of bias, here, the fact that the Arbitrator was a director and shareholder of the parent of a company that had provided a  loan to the Respondent did not support a finding of bias. This case considers how close a relationship between an arbitrator and a party is “too close” if a party seeks to set aside an award based on alleged arbitrator bias.

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B.C.  – Leave to appeal interim award premature until arbitration concludes – #825

Brown v Smithwick, 2024 BCCA 83 is about an application for leave to appeal an interim award brought pursuant to section 59 of the British Columbia Arbitration Act, SBC 2020 c 2 (“Arbitration Act”). The Applicant sought leave to appeal on the ground that the arbitrator had erred in law by concluding that a debt that the Applicant owed to the Respondent was a debt within section 178(1)(e) of the Bankruptcy and Insolvency Act, RSC 1985, c B03 (the “BIA”), as a debt that arises out of fraud, embezzlement, misappropriation or defalcation while acting in a fiduciary capacity. The reasons of the Court focused on the issue of whether the leave application was premature because the arbitration had not yet ended. The Court held that while it has the discretion to grant leave to appeal from an interim arbitral award, the circumstances of the case weighed against exercising that discretion, including: (1) early judicial intervention would interfere with the arbitration process that the parties had agreed to; (2) the Applicant had not demonstrated that it would be prejudiced by the adjournment; and (3) there could be multiple leave applications to the Court arising from the same arbitration. The Court adjourned the leave application pending the conclusion of the arbitration. 

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Lindsay Reflects (2023): Enforcement of International Awards: The Procedural Fairness Exception – #808

In this commentary, I provide key takeaways for parties that seek to bring or oppose an application to enforce an international arbitration award in Canada. I focus on three decisions issued by the Ontario Superior Court of Justice in 2023: Costco Wholesale Corporation v TicketOps Corporation, 2023 ONSC 573 (“Costco”), Prospector PTE Ltd. v CGX Energy Inc, 2023 ONSC 4207 (“Prospector”), and Xiamen International Trade Group Co Ltd. v LinkGlobal Food inc., 2023 ONSC 6491 (“Xiamen”). What is the procedural fairness exception and how does it work?

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Newfoundland and Labrador – Set-aside application denied where  award meets Vavilov reasonableness test – #793

In Zenda Mount Pearl Square Enterprises Limited Partnership v MP TEI Realty Limited Partnership, 2023 NLSC 142, the Applicant/Respondent in the arbitration applied to set aside an arbitral award arising from a dispute involving the contractual entitlement to refinancing proceeds that the Applicant/Respondent received as a result of a rogue transfer of funds. Section 14 of the Newfoundland and Labrador Arbitration Act, RSNL 1990, c A-14 (the “Arbitration Act”) gives the Court the authority to set aside an arbitral award if it finds that there was Arbitrator misconduct or the award was improperly procured. The Court held that the burden is on the applicant to show that the award is improper as a matter of fact, law, or mixed fact and law, and that the award falls outside out any potential reasonable outcome. The Court’s analysis and reasons looked at whether the decision of the Arbitrator was reasonable, applying Layman v Layman Estate, 2016 NLCA 13 (“Layman”). Focusing, in part, on the Arbitrator’s application of the principles of contract interpretation set out in Creston Moly Corp. v Sattva Capital Corp., 2014 SCC 53 (“Sattva”), the Court concluded that the Arbitrator’s decision to divide the proceeds equally between the parties was reasonable based on the terms of the parties’ agreements. The Court dismissed the set-aside application on the basis that the decision of the Arbitrator, in respect of all of the grounds reviewed by the Court, was reasonable. This case has application to the review (including on set-asides) of arbitration decisions on the basis of reasonableness and the contractual interpretation of commercial agreements. 

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Ontario – High bar to oppose enforcement of international arbitral award – #777

In Prospector PTE Ltd v CGX Energy Inc, 2023 ONSC 4207, the Court considered an application by Prospector PTE Ltd. (“Prospector”) for the enforcement of an international arbitration award issued in an ICC arbitration. Prospector brought the application pursuant to the International Commercial Arbitration Act, 2017, SO 2017, c 2, Sched 5 (“ICAA”), which incorporates the UNCITRAL Model Law on International Commercial Arbitration (“Model Law”). CGX Energy Inc. (“CGX”) opposed the application based on the procedural fairness exception in Article 34(2)(ii)(a) of the Model Law. CGX argued that it was denied the opportunity to fully present its case. However, based on the arbitral award, CGX failed to adduce sufficient evidence to prove its counterclaim. The Court granted the enforcement application. Prospector, together with the Ontario Court of Appeal decision in Consolidated Contractors Group S.A.L. (Offshore) v. Ambatovy Minerals S.A., 2017 ONCA 939, leave to appeal to the SCC refused, 2018 CanLII 99661 (“Consolidated Contractors”), make clear that the procedural fairness exception in Article 34(2)(ii)(a) is very narrow. A court is not likely to intervene for process or public policy reasons unless the conduct or decision of the tribunal offends the principals of justice and fairness in a fundamental way. 

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Alberta – No discretion under Rules to correct procedurally flawed appeal of award – #759

In Kwadrans v Kwadrans, 2023 ABCA 203, the Alberta Court of Appeal considered the appeal of a chambers judge’s order that struck the appeal of an arbitration award in a family law dispute. The chambers judge held that the appellant, by filing a Notice to Attend Family Docket Court instead of an originating application, did not properly commence his appeal of the arbitral award within 30 days as required by the Alberta Arbitration Act, RSA 2000, c A-43 (“Arbitration Act”). The chambers judge issued an order striking the appeal. The Court of Appeal upheld the chambers judge’s finding and dismissed the appeal. Kwadrans makes clear that although the Arbitration Act is silent about how an appeal is to be commenced, rule 3.2(5) of the Alberta Rules of Court, Alta Reg 124/2010 (“Rules of Court”) fills that gap and requires that an appeal be made by originating application. Further, based on the authority of the Alberta Court of Appeal in Kwadrans and Allen v Renouf, 2019 ABCA 250, the Court does not have discretion to cure a procedural deficiency if the effect would be to extend a limitation period under the Arbitration Act. Kwadrans addresses issues that may arise as a result of the interplay between the Rules of Court and the Arbitration Act generally and has application to appeals of commercial arbitral awards.

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