Québec – residence of arbitrator in same region as parties not a criteria for deciding neutrality – #499

In Madysta Constructions Ltée v. Maskicom Inc., 2021 QCCS 2101, Mr. Justice Jocelyn Geoffroy dismissed as unfounded and subjective the concern voiced by defendant that plaintiff’s proposed arbitrator resided in the same region of the province as the parties and the municipalities involved in the dispute.  [informal translation] ‘If such a criteria regarding the residence of an arbitrator or a judge was retained, virtually no arbitrator or judge could sit in a judicial district in which they lived because it is generally in that same district in which the parties they will hear also reside’.  Geoffroy J. also dismissed defendant’s concern that plaintiff’s counsel had alone contacted the arbitrator prior to proposing him.  Geoffroy J. reproduced the brief response from the arbitrator which confirmed his acceptance of the nomination and the absence of conflict.

Madysta Constructions Ltée (“Plaintiff”) and Maskicom Inc. (“Defendant”) entered into a contract in which they agreed to submit their dispute to arbitration but could not agree on the sole arbitrator.  Plaintiff proposed R, a retired judge and Defendant proposed V, also a retired judge.  Plaintiff also proposed J as an alternative nominee to which Defendant responded by proposing D.

Geoffroy J. readily confirmed that neither of the parties contested the credentials of any of those four (4).  Defendant’s only reason to resist Plaintiff’s first choice was that the nominee resided in the same region of Québec in which the parties and the ten (10) municipalities involved in the file were located. Defendant argued that residing in the same geographical area of the province might affect R’s neutrality.

Plaintiff disagreed. It submitted that it had ensured that its two (2) nominees had no conflict and, in addition, that R’s costs were the lowest, not only due to reduced transit fees, incurring virtually no costs because he was already in the area, but also that his hourly rate was lower than the other three (3).

Geoffroy J. observed that because (i) the qualities and skills of the proposed individuals were not in issue and (ii) the costs savings R would provide vis-à-vis the others – it appeared ‘obvious’ to Geoffroy J. that R should be the candidate confirmed.  

Having said that, Geoffroy J. then considered whether Defendant’s submissions on R’s neutrality were justified.

Defendant argued that R’s neutrality was undermined because Defendant’s attorney had alone contacted R to ‘talk about the file’.  Geoffroy J. readily dismissed this submission, noting that Plaintiff’s counsel’s contact was limited to confirming whether R would accept to serve as arbitrator in the matter.  Geoffroy J. excerpted two (2) brief passages from R’s letter to Plaintiff’s counsel in which R merely confirmed his acceptance and  confirmed he knew neither the parties nor their representatives.

[informal translation] ‘[10] From the evidence adduced, the Court can only conclude that the concern regarding R’s neutrality proves to be unfounded. It involves a purely subjective concern without any objective basis.  If such a criteria regarding the residence of an arbitrator or a judge was retained, virtually no arbitrator or judge could sit in a judicial district in which they lived because it is generally in that same district in which the parties they will hear also reside’.

Geoffroy J. confirmed R as the arbitrator and dispensed Plaintiff from the thirty (30) day delay in article 625 al. 2 of the Code of Civil Procedure, CQLR c C-25.01 (“C.C.P.”).

Article 625 C.C.P. If the appointment of an arbitrator proves difficult, the court, on a party’s request, may take any necessary measure to see to the appointment.

For example, if a party fails to appoint an arbitrator within 30 days after having been required by another party to do so, the court may make the appointment. As well, the court may appoint an arbitrator if, 30 days after two arbitrators are appointed, they cannot agree on the choice of the third arbitrator”.

urbitral notes – First, for other decisions involving recusals, see the earlier Arbitration Matters notes:

(i) “Québec – Court of Appeal rules that test for impartiality of judges applies equally to arbitrator – #006” regarding Canadian Royalties inc. v. Mines de nickel Nearctic inc., 2017 QCCA 1287. Québec’s Court of Appeal in held that the test for deciding an arbitrator’s impartiality is the same test as for judges.  The Court of Appeal overturned a Superior Court decision which granted a motion to retract an earlier court decision which homologated a final arbitral award.  

(ii) “Québec – arbitrator has jurisdiction/obligation to decide recusal even absent express grant of authority to do so – #451” regarding Syndicat des employés du CISSSMO, section locale 3247 v. Murray, 2021 QCCS 459. Madam Justice Suzanne Courchesne annulled an award rendered by a physician arbitrator appointed by a third party pursuant to a process set out in the parties’ agreement to arbitrate but who, despite demands to recuse himself, issued a decision on the merits of the dispute without addressing the demands for recusal. The parties’ agreement omitted any express mention of the physician arbitrator’s authority to recuse himself or any grant of such authority to another.  Courchesne J. observed that the physician arbitrator, performing a quasi-judicial function, was subject to the impartiality and independence obligation and rules of procedural fairness and had both the jurisdiction and obligation to decide first on the grounds of his recusal.  Courchesne J. held that the parties ought to have instructed the physician arbitrator on the rules governing a motion for recusal but did not. Despite that omission, by refusing to decide on the motion for recusal or by implicitly dismissing it without reasons, the physician arbitrator omitted to exercise his jurisdiction and breached the rules of procedural fairness.  Courchesne J. annulled the award and ordered the parties to resume the arbitration before another physician arbitrator.

(iii) “Alberta – communication of privileged offers after award but before clarification/costs insufficient to raise bias – #328” regarding Clark v. Unterschultz, 2020 ABQB 338. Madam Justice June M. Ross dismissed a challenge to an award on the merits, holding that one party’s communication of privileged settlement offers after the award and before the costs award were insufficient to meet the high threshold required to find real or perceived bias.  Ross J. determined that a reasonable person, viewing the matter realistically and practically, and knowing that the hearing had concluded and the substantive award had issued, would be unlikely to conclude that the arbitrator would not decide the remaining matters fairly.

Second, comprising over 35,000 square km, the Mauricie is home to over 260,000 residents and several communities including La Tuque, Louiseville, Maskinongé, Notre-Dame-du-Mont-Carmel, Obedjiwan, Saint-Alexis-des-Monts, Sainte-Anne-de-la-Pérade, Saint-Boniface, Saint-Élie-de-Caxton, Saint-Étienne-des-Grès, Saint-Maurice, Sainte-Thècle, Saint-Tite, Shawinigan, Trois-Rivières and Yamachiche.