Arbitration Matters

May 8, 2023May 8, 2023

Ontario – Multiple arbitral appointments give rise to reasonable apprehension of bias – #734

In Aroma Franchise Company Inc. et al. v Aroma Espresso Bar Canada Inc. et al., 2023 ONSC 1827, Justice Steele set aside two international awards (on the merits and as to costs and interest) arising out of a franchise dispute on the basis of a reasonable apprehension of bias on the part of the Arbitrator for failure to disclose that during the arbitration he had been appointed by counsel for one of the parties to serve as sole arbitrator on another matter even though it did not involve a franchise dispute and was in a different industry.

April 27, 2023April 24, 2023

Ontario –Arbitrator erred by allowing surrounding circumstances to overwhelm written agreement – #733

In Burwell v. Wozniak, 2023 ONSC 1685, Justice Jensen of found that the Arbitrator erred in law by allowing a promise in an email to overwhelm the words of a subsequent formal trust agreement. The Court varied the Arbitrator’s decision about the formation of a trust, holding that the Arbitrator’s reliance on surrounding circumstances while downplaying the words of the subsequently formalized agreement, gave rise to an extricable error of law.

April 26, 2023April 24, 2023

Ontario – Challenge to award for procedural unfairness and insufficient reasons dismissed – #732

In Orion Travel Insurance Co. v. CMN Global Inc., 2023 ONSC 1527, Justice Morgan dismissed an application under sections 45 and 46(1) of Ontario’s Arbitration Act, 1991, SO 1991, c. 17 for leave to appeal and to set aside an arbitral award. Among other things, Justice Morgan rejected the applicant’s argument that it did was denied its “right to be heard” based on the record, finding that this right only affords a party the opportunity to make one’s case—not to re-make one’s case after shortcomings. He also found that the Arbitrator was at liberty to borrow language from the successful party’s written brief, finding that there was no evidence that the Arbitrator lacked independent thought in doing so. In totality, Justice Morgan found the Arbitrator’s reasons intelligible and concise, and that there were no grounds to set aside the award or to grant leave to appeal.

April 25, 2023April 21, 2023

B.C. – No power to stay arbitration under Model Law – #731

In Johnston v Octaform Inc., 2023 BCSC 311, Justice Giaschi refused to stay an arbitration, finding he had no authority to do so under the International Commercial Arbitration Act, R.S.B.C. 1996, c. 233 [ICAA]. In so doing, he distinguished case law in which courts exercised inherent jurisdiction to stay domestic arbitration proceedings in various circumstances.

April 24, 2023May 1, 2023

Alberta – Former arbitrator, now judge/facilitator in same matter not biased – #730

In Shannon v Shannon, 2023 ABCA 79, the Appellant appealed the final consent order of a judge of the Alberta Court of Queen’s Bench (as it then was), which was made after a Binding Judicial Dispute Resolution (“BJDR”) process under the Alberta Rules of Court, AR 124/2010 and AR 194/202. The parties signed a Resolution Agreement dated February 16, 2021, which disposed of all the issues in dispute and whose terms were incorporated into a consent order. Both parties had counsel during the BJDR process, but not on the appeal. The Appellant challenged the consent order on the bases that: (1) there was a reasonable apprehension of bias on the part of the judge who facilitated the BJDR process because she had previously acted as arbitrator in the same matter before she was appointed to the Bench; and (2) the Appellant was not competent to enter into the Resolution Agreement that led to the consent order, which should be set aside as null and void. The Court of Appeal dismissed the appeal because it found that the Appellant had consented to having the judge who had previously sat as arbitrator facilitate the BJDR process, but also that a reasonable apprehension of bias allegation could not be established – there is a high burden to show that a superior court judge would not disabuse her mind of anything learned on a prior occasion and there is also a strong presumption that a judge will act judicially.

April 13, 2023April 13, 2023

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.

April 12, 2023April 10, 2023

B.C. – Court of Appeal finds extricable error in contract interpretation (again) – #728

In Mann v. Grewal, 2023 BCCA 88, the BC Court of Appeal upheld the judgment below (1) finding an extricable error of law in the sole arbitrator’s interpretation of a settlement agreement, and (2) amending the award rather than remitting it to the arbitrator. The Arbitrator’s error of law was that he failed to interpret the agreement at the center of the dispute and – in effect – re-wrote the parties’ agreement.

April 11, 2023April 10, 2023

B.C. – Arbitrator’s findings binding in subsequent court proceeding – #727

In his judgment from the trial in Betts v. Zienowicz, 2023 BCSC 328, Justice Macintosh considered, as a preliminary matter, the admissibility of findings of fact made in an earlier arbitration between the same individual parties and regarding the same issues. As no appeal had been taken from the Arbitrator’s award and given the deference owed to arbitral findings, Justice Macintosh adopted the facts as found by the Arbitrator in considering the issues before him. He then went on to find in favour of the plaintiffs, as had the Arbitrator.

April 10, 2023April 4, 2023

BC – Court determines arbitrator jurisdiction, exercising exception to competence-competence – #726

In Isagenix International LLC v. Harris, 2023 BCCA 96, Justice Griffin, for the British Columbia Court of Appeal, upheld an order dismissing the Appellant’s application made pursuant to section 8 of the International Commercial Arbitration Act, RSBC 1996, c 233 (the “ICCA”) for a stay of proceedings in favour of arbitration. In particular, she rejected the Appellant’s argument that the chambers justice had misapplied the principle of competence-competence by deciding the question about whether the underlying negligence claim fell within the scope of the arbitration clause, rather than referring the jurisdictional matter to the arbitrator. Justice Griffin found that the chambers justice did not err in law because he came within one of the well-established exceptions to the competence-competence rule.

March 30, 2023March 27, 2023

Québec – Interpretation of two shareholder agreements requires more than a superficial analysis – #725

In Gifran inc. c. 9225-2071 Québec inc., 2023 QCCA 311, the Québec Court of Appeal (the “Court”) recalled the principles governing an exception to the compétence-compétence principle and ordered a stay in favor of arbitration, overturning the Superior Court Judge’s decision. The Court commented on the scope of the exception relating to questions of mixed fact and law that require only superficial consideration of the evidence in the record, in the context of a shareholder dispute. It noted that the Superior Court Judge had not provided reasons as to why the exception applied in this case and found that the exception did not in fact apply, because an in-depth analysis of the respective scopes of two separate shareholder agreements (one with an arbitration clause and one without) was required. The Court also held that the mere presence of related third parties in the dispute was not sufficient to deny the stay application.