In Groupe Marsan inc. c. Centre Canadien d’Arbitrage Commercial (CCAC), 2024 QCCS 1838, the Court dismissed the application of Groupe Marsan (“Marsan”), which sought review of a decision by the Arbitrator, who refused to recuse himself (the “Arbitrator’s Decision”). Concurrent with the ongoing arbitrations, the Arbitrator was also acting as counsel in a parallel proceeding before the Court involving different parties, in which Marsan’s counsel in the arbitrations acted for the opposing party. According to Marsan, this situation raised a reasonable apprehension of bias and the Arbitrator’s refusal to recuse himself violated procedural fairness. The Court found that the Arbitrator rightly concluded that the situation of concurrent representation was created by Marsan’s counsel and that the Arbitrator’s Decision met the standard of procedural fairness.
Backround to dispute: On December 13, 2021, and February 25, 2022, the Arbitrator was appointed to preside over two construction matters involving Marsan (the “two arbitrations”). Multiple case management conferences and hearings were heard by the Arbitrator and the two arbitrations were set for a three-day hearing together starting on June 19, 2023.
The Arbitrator was also a litigator in private practice. On March 15, 2023, as counsel, the Arbitrator brought an action on behalf of his clients against Normand Charlebois (“Charlebois”) claiming commissions following a sale of property (the “Court Action”). On March 17, 2023, Marsan’s counsel in the two arbitrations appeared for Charlebois in the Court Action.
On March 20, 2023, the Arbitrator informed counsel for all parties in the two arbitrations and the Court Action that the law firm representing Marsan had placed itself in a conflict of interest by also representing the defendant in the Court Action, despite knowing that the Arbitrator was acting the opposing counsel in the Court Action. The Arbitrator reassured the parties, that if Marsan’s counsel continued to act in the two arbitrations and the Court Action, he would respect his ethical obligations and remain impartial.
Marsan’s counsel replied that their involvement in the Court Action predated that of the Arbitrator (as counsel) as they had previously acted for Charlebois in another unrelated matter, and that it was the Arbitrator (as counsel) who had created the conflict of interest by accepting a mandate adverse to Charlebois in the Court Action.
Within days, Marsan’s counsel informed the Arbitrator that their client, Marsan, had given them instructions to seek recuse him in the two arbitrations, arguing that: (a) a person reasonably well informed of the situation would have reasonable grounds to believe that there was an appearance of conflict of interest arising from the concurrent representation, and (b) the Arbitrator was “clearly antagonistic” toward Marsan.
The Arbitrator’s Decision – The Arbitrator dismissed Marsan’s request and refused to recuse himself. He concluded the following:
- There was no evidence that established any animosity or antagonism between the lawyers and the Arbitrator, in the two arbitrations and the Court of Action;
- There was no appearance of bias as the Arbitrator appeared first in the Court Action, and Marsan’s counsel had created the situation of which Marsan now complained.
Decision of the Superior Court – Dissatisfied with the Arbitrator’s Decision, Marsan filed an application before the Superior Court to review the Arbitrator’s Decision on the grounds that it violated procedural fairness. Marsan argued that, from the perspective of the reasonable person, there was a reasonable apprehension of bias. Further, the Arbitrator should recuse himself, as the defendant in the Court Action had the right to be represented by the counsel of its choice.
Applying the standard of review of correctness, the Superior Court recognized that its task was to determine whether the Arbitrator, by refusing to recuse himself, had violated procedural fairness because the circumstances gave rise to a reasonable apprehension of bias.
The Court identified the leading test for bias established in Wewaykum Indian Band v. Canada, 2003 SCC 45: “What would an informed person, viewing the matter realistically and practically — and having thought the matter through — conclude. Would he think that it is more likely than not that [the decision-maker], whether consciously or unconsciously, would not decide fairly” (at para 60). This led the Court to examine the circumstances of Charlebois’s representation by Marsan’s counsel in the Court Action.
The Court noted that, since Marsan’s counsel in the two arbitrations had conducted a conflict check before appearing for Charlebois in the Court Action it could only assume that Marsan’s counsel had concluded that, in accepting the mandate, there were no ethical issues that would prevent it from acting in both matters.
The Court found that there was no evidence that the Arbitrator was aware of Marsan’s counsel’s prior representation of Charlebois before instituting the Court Action. The Court decided instead that it was Marsan’s counsel in the two arbitratons who, in accepting the mandate to defend Charlebois in the Court Action created the situation in which they found themselves. As such, they could not now raise the issue of impartiality of the Arbitrator.
Since, prior to the appearance of Marsan’s counsel for Charlebois in the Court Action, (i) Marsan’s counsel accepted the mandate to act in both instances, suggesting that there were no reasons that raised concerns regarding the Arbitrator’s impartiality; and (ii) since Marsan’s counsel was at the root of the situation of which they complained, the Court concluded that a reasonable person analyzing this specific situation would not conclude that there was any apprehension of bias on the part of the Arbitrator.
Accordingly, the Court held that granting an application for recusal could set a dangerous precedent as it would constitute an invitation to allow a party to remove arbitrators at its own will.
Contributor’s Notes:
Above all, this decision sends a clear message that parties to an arbitration cannot orchestrate or otherwise manoeuvre to have a sitting arbitrator removed. Here, both the Arbitrator and the Court recognized that the concurrent representation as counsel in the Court Action and as Arbitrator in the two arbitrations created a potential for a conflict of interest, but, since it was the result of a party’s choice and not the decision of the Arbitrator himself, the conflict of interest did not create a reasonable apprehension of bias. That said, the Court was silent on how it would have decided the issue had it been the Arbitrator who knowingly accepted a mandate that placed him adverse to the counsel of one of the parties before him in the two arbitrations.
Additionally, the tension at the heart of this case is the result of the Arbitrator’s dual practice – both as an arbitrator and a litigator in private practice. Cited by the Court in an early footnote, in R. v. Lippé, [1991] 2 SCR 114, the Supreme Court of Canada recognized this issue in the context of a municipal court system with part-time judges who also acted as part-time lawyers.
In Lippé, however, the Supreme Court of Canada recognized that the per se incompatibility of practising law and being a judge at the same time could be alleviated by the legislative safeguards in place, including the oath sworn by judges and codes of ethics. Otherwise, the dual role can give rise to a reasonable apprehension of bias in the mind of the reasonable person. In this case, there was no direct discussion of what, if any, safeguards were applicable here to eliminate the reasonable apprehension of bias to which the Supreme Court pointed in Lippé. The only reference to potential safeguards was the assurance of the Arbitrator to the parties that he would respect his ethical obligations.
On a practical level, guidance can be drawn from the Arbitrator’s reference to his ethical obligations and the Court’s discussion concerning conflict checks, which serve as a reminder of the importance of this exercise for practitioners and arbitrators alike. Practitioners should ensure that their arbitrators’ names are included in their conflict searches, to avoid placing themselves in situations of conflict with the arbitrator, particularly where counsel practice in large, multi-office firms. Further, to avoid jeopardizing their impartiality, arbitrators should ensure that they do not accept appointments in matters that would place them in this position. Should an arbitrator find themselves in a situation of conflict, by error or oversight, they should disclose the potential conflict to the parties, just like the Arbitrator did in this case.