In Tourigny v Chabot, 2023 QCCS 1976 (“Tourigny”), the Court homologated an arbitral award for costs, thereby dismissing the Defendants’ challenge based on an application to recuse the arbitrator on grounds of partiality.
The underlying dispute – The case arose from a dispute involving shareholders of a construction company. An action was instituted before the Québec Superior Court, in which Plaintiffs also brought a preliminary application for a safeguard measure requesting that the Court appoint an interim director of the construction company. The Plaintiffs identified a specific nominee for this role. Before the preliminary matter was heard, the Superior Court referred the dispute to arbitration before an arbitrator proposed by Defendants in their application.
After the referral to arbitration, Defendants’ counsel ceased representing them and, during the initial case conference before the arbitrator, Defendants’ new counsel announced that they would seek the arbitrator’s recusal on grounds of partiality.
Defendants supported their application for recusal on three principal grounds, specifically:
- The arbitrator was Facebook friends with the president of a third-party which operated a quarry owned by the construction company;
- The arbitrator had represented the interim director proposed by the Plaintiffs in a previous judicial matter; and
- The arbitrator and one of the lawyers representing Defendants in the arbitration, represented parties with opposing interests in ongoing legal proceedings.
The arbitral award – The arbitrator dismissed the recusal application on all grounds, but nonetheless decided to retire voluntarily from the case for reasons described by the Court as relating to the “superior interest of the arbitral procedure” (author’s translation, para 13).
The arbitrator also granted Plaintiffs’ request for an award of its costs relating to the recusal application.
Plaintiffs brought an application to homologate the cost award in Superior Court. Defendants contested the application for homologation, and raised their recusal application anew before the Superior Court. As described below, the Court treated Defendants’ recusal application as an application for annulment of the costs award.
Decision of the Superior Court – In a brief decision, the Court homologated the award on costs, thereby dismissing the Defendants’ recusal application.
The Court began its reasons by clarifying that the Defendants’ recusal application was in fact moot, since the arbitrator had voluntarily retired from the case. It found that, in effect, Defendants sought annulment of the costs award under arts. 648 and 646 of the Civil Code of Procedure, CQLR, c C-25.01.
This clarification aside, the Court confirmed that arbitrator partiality can constitute a violation of arbitral procedure under art. 646 al. 1 (3) of the Civil Code of Procedure, CQLR, c C-25.01 (“CCP”), which reads in relevant part:
“The court cannot refuse to homologate an arbitration award or a provisional or safeguard measure unless it is proved that:
(3) the procedure for the appointment of an arbitrator or the applicable arbitration procedure was not observed;
The Court therefore analysed the Defendants’ recusal application as though it were an annulment application; to succeed in annulling the costs award on grounds of partiality, Defendants had to demonstrate a reasonable apprehension of bias (or partiality). In analysing the question, the Court applied the test for reasonable apprehension of bias developed in a 1993 Québec Court of Appeal decision in a family law matter, Droit de la famille – 1559, 1993 CanLII 3570 (QC CA). In that decision, the Québec Court of Appeal confirmed that an apprehension of bias must be (author’s translation):
- Reasonable, insofar as it is logical, based on serious reasons, and objective, such that a reasonable person (as described immediately below) placed in similar circumstances would not find the alleged apprehension of bias trivial, frivolous or isolated;
- Raised by a person who can be described as:
- Sensible, not finicky, not scrupulous or anxious, not inclined to worry, or quick to blame;
- Well informed for having studied the question realistically and practically, that is, free from emotion; the application for recusal should not be impulsive, or constitute a means of choosing one’s adjudicator;
- Based on serious reasons; in analysing this criterion, one should be more exacting if there is a recording of the hearing or a right to appeal.
The Court noted that, while Defendants raised three (3) grounds for recusal before the arbitrator (as summarized above), before the Superior Court they rather relied principally on a solicitor-client relationship that existed between the arbitrator and the proposed interim director which ended in 2014, nearly 9 years prior to the commencement of the arbitration.
Applying the test summarized above, the Court found that this relationship did not raise a reasonable apprehension of bias. The Court also found that the Defendants’ description of the existence, nature and intensity of any relationship between the arbitrator and the proposed interim director was cursory, and in any event did not directly impact a party. The Court provided no comment regarding the other two (2) grounds for recusal raised by Defendants during the arbitration, which concerned the fact that the arbitrator was Facebook friends with a person affiliated with the construction company of which both Plaintiffs and Defendants were shareholders and the arbitrator’s role as counsel in unrelated proceedings in which the same lawyer that represented Defendants in the arbitration was involved. These grounds appear to have been abandoned by Defendants before the Superior Court.
In the result, the Court homologated the costs award.
First, it is unfortunate that the Defendants did not pursue, and the Court did not address, the alleged reasonable apprehension of bias based on the arbitrator’s role as counsel in an unrelated matter in which he acted as counsel in a matter in which the same lawyers as those who represented the interests of the Defendants in the arbitration represented an opposing party. Such a scenario can give rise to perplexing issues that are difficult to navigate for all sides involved in the arbitration. They are moreover likely to arise fairly frequently, especially in smaller markets such as Québec, where demand for arbitration (and therefore arbitrators) is on the rise and perhaps on a steeper rise than the supply of arbitrators. Judicial comment on the means of addressing potential conflicts in such cases may help parties and arbitrators navigate perplexing and delicate issues that arise in these circumstances. In addition, as described in greater detail below, resources such as the IBA Guidelines on Conflicts of Interest, can help orient judicial intervention in such circumstances.
Second, this case provides yet another reminder that jurisprudence on arbitration matters is still evolving in Québec and is indeed slow to evolve. The test applied by the Court for reasonable apprehension of bias was set out by the Québec Court of Appeal over thirty years ago, and was based on still older Supreme Court of Canada case law, for example in Justice and Liberty v National Energy Board, 1976 CanLII 2 (SCC). These authorities, which pre-date game-changing Supreme Court of Canada jurisprudence on arbitration such as Dell Computer Corp v Union des consommateurs, 2007 SCC 34 , Desputeaux v Editions Chouette (1987) inc, 2003 SCC 17, may not be adapted to modern commercial arbitration practice. Similarly, the test applied in Tourigny was set out by the Québec Court of Appeal in the context of a particularly acrimonious and heated divorce proceeding, which arguably has little in common with private, commercial arbitration.
Private, commercial arbitration brings into play a broader – or at least different – spectrum of circumstances which may reasonably raise doubts about an adjudicator’s impartiality or independence. Most obviously, contemporaneous professional relationships between arbitrators and counsel or other key players such as witnesses involved in an arbitration can give rise to legitimate questions regarding arbitrator impartiality, as was the case in Tourigny. Such a scenario simply does not arise in the context of applications for the recusal of a justice of the court in the course, for example, of an acrimonious divorce proceeding.
Jurisprudence should evolve to adapt to the unique circumstances that arise in the private, commercial arbitration context. As mentioned above, helpful tools already exist, for example, in the IBA Guidelines on Conflicts of Interest. These guidelines propose practical red, orange, and green categories that outline different situations that potentially give rise to conflicts of interest. The IBA’s orange list, which denotes situations that “may give rise to doubts as to the arbitrator’s impartiality or independence”, includes scenarios where there is a relationship between an arbitrator and counsel. More specifically, the IBA describes potential conflicts of interest where:
“3.3.7 Enmity exists between an arbitrator and counsel appearing in the arbitration.
3.3.9 The arbitrator and another arbitrator, or counsel for one of the parties in the arbitration, currently act or have acted together within the past three years as co-counsel”.
Based on these situations, the guidelines provide certain good practice recommendations. Moreover, using the IBA Guidelines as a common denominator may help courts and counsel compare how similar circumstances are treated in different jurisdictions and thereby reduce, or altogether obviate, the need for litigation regarding conflicts issues. Given the clear influence of international soft law, such as the UNCITRAL Model Law on Québec’s procedural law regarding arbitration (see e.g. Coderre c Coderre, 2008 QCCA 888, at para 48), it is unfortunate that Québec jurisprudence does not more often refer to international instruments when faced with arbitration-specific issues that have not been clearly dealt with by existing authorities. Judicial reference to instruments that are well-known in the arbitration community may help bring jurisprudence in line with a more modern arbitration practice, and provide judicial guidance on perplexing, arbitration-specific issues. This is a laudable endeavour given especially the Québec Legislature’s clear call to promote alternative forms of dispute resolution, including arbitration, in the 2016 overhaul of the CCP (see e.g. the Preliminary Provision and art. 1 of the CCP).