Jim Reflects (2023): Browne v Dunn is just a rule of fairness: a comment on the Vento case – #810

I’ll take Vento Motorcycles, Inc. v. United Mexican States 2023 ONSC 5964 (Vento) as my top pick for 2023. It’s a reminder that just because the strict rules of evidence may not apply in an arbitration doesn’t mean the rationale for some of those rules should be ignored. In this case, it was an alleged breach of the rule in Browne v Dunn, the very rule all Commonwealth litigators had beaten into their heads by their professors, their principals, or, for some of the less fortunate among us, a judge. At heart Browne v Dunn is about fairness, and ensuring fairness is a, perhaps the, cornerstone of arbitration.  

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Chris Reflects (2023): Arbitrator Bias and the Unanimous Award – #807

When will a court confirm a unanimous arbitral award issued by a three-person panel where one of those arbitrators was biased? This case note reviews three cases that try to answer that question. In each, the Court applied the Model Law. In one recent casethe Ontario Superior Court of Justice upheld the award, finding that the bias did not cause actual prejudice. The other two cases, one from India, the other from Germany, reached the opposite conclusion, highlighting the pernicious, and often unseen, effect that bias can have on the deliberative process.  

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Ontario – No unfairness despite Browne v Dunn violation and arbitrator reasonable apprehension of bias – #796

In Vento Motorcycles, Inc. v. United Mexican States, 2023 ONSC 5964, the Court dismissed an application to set aside an investor-state arbitration award on the grounds that the arbitral tribunal denied procedural fairness, and that one of the tribunal members was biased. Although the Court found no unfairness, it acknowledged a reasonable apprehension of bias in respect of the impugned arbitrator. The Court nonetheless exercised its discretion under art. 34 of the Model Law to dismiss the set–aside application.

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Quebec – Streamlined procedures do not deny party’s ability to its present case – #792

In Gagnon c. Truchon, 2023 QCCA 1053, the Quebec Court of Appeal declined leave to appeal the Superior Court’s earlier decision to dismiss an application to annul an award and instead to enforce it. The Court of Appeal concluded that the Applicants had failed to establish “questions of principle” arising out of a “purement privé” fee dispute between the Applicants and their former lawyer. After failing to object to streamlined procedures selected by the Arbitration Council appointed by the Bureau du Québec, the Applicants could not later complain that they were denied the opportunity to present their case.

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Ontario – Arbitration procedurally unfair – arbitrator excluded material evidence despite no objection – #750

In Mattamy (Downsview) Limited v KSV Restructuring Inc. (Urbancorp), 2023 ONSC 3013, Justice Kimmel of the Ontario Superior Court of Justice (Commercial List) set aside an arbitral award for violating procedural fairness. She found the Arbitrator acted unfairly in declining to admit relevant evidence on a new issue he himself raised in the arbitration. This decision reminds us that an arbitral tribunal’s procedural discretion, though vast and powerful, is not absolute. 

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B.C. – Inadequate reasons on central issue a breach of natural justice – #740

In Bromley v. Getzie, 2023 BCSC 446 (“Bromley”), Justice Brongers remitted an arbitral award to the Arbitrator for reconsideration as a remedy for the arbitrator’s failure to observe the rules of natural justice, pursuant to s. 30 of the (former) British Columbia Arbitration Act, RSBC 1996, c. 55 (the “Act”). Justice Brongers found that the Arbitrator had breached principles of natural justice because he provided inadequate reasons on a “central issue” in dispute between the parties. This is a rare finding, but one which appears to rely, in part, on principles of natural justice as they relate to applications for judicial review in administrative proceedings. Regrettably, scant reasons are provided regarding the decision of Justice Brongers to order remittance of the matter to the arbitrator, rather than to set aside the award, as a remedy for the breach of natural justice.

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Alberta – No set aside for document disclosure complaints – #633

In ENMAX Energy Corporation v. TransAlta Generation Partnership et al, 2022 ABCA 206, the Alberta Court of Appeal (Paperny, Rowbotham, and Strekaf, JJA) upheld the chambers justice’s decision to refuse to set aside an arbitral award (the “Award”) under section 45(1)(f) of the Alberta Arbitration Act, RSA 2000, c A-43 (the “Act“). It agreed that the (“Tribunal”) document disclosure rulings of the arbitral tribunal (“Tribunal”) in relation to a narrow sub-issue did not prevent the Appellants from making their case, nor did it result in manifest unfairness. Among other things, the Court of Appeal found that the Tribunal did not foreclose the possibility of further document production, but that it was the Appellants who opted not to apply for the records whose absence they now complained about. The Court also held that, when viewed in context, the Tribunal relied on other evidence to reach its conclusion and the absence of the records sought by the Appellants did not preclude them from presenting their case.

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Ontario: Award set aside for “trickery and injustice” – #624

In Campbell v. Toronto Standard Condominium Corp. No. 2600, 2022 ONSC 2805, Justice Perell of the Ontario Super Court of Justice set aside an arbitral award for “constructive fraud” pursuant to s. 46(1), para. 9 of the Ontario Arbitration Act, 1991. The arbitral award ordered the Campbells, who were condominium owners (the “Owners”), to pay $30,641.72 to the Toronto Standard Condominium Corporation No. 2600 (the “Condo Corp.”), which represented the costs of their arbitration. The matter began as a dispute regarding the Owners’ alleged non-compliance with the rules of the Condo Corp, including noise complaints and short-term rentals. However, the Owners were led to believe that the arbitration would be limited to the reasonableness of Condo Corp.’s legal costs in enforcing compliance up to and including the arbitration. Justice Perell held that the Owners were “tricked” intothe arbitration because it was actually an arbitration on the non-compliance issues.While Justice Perell found that the Condo Corp. was not deceitful, he found that “[2] it misled, outmanoeuvred, and outsmarted the [Owners]” such that “[t]he court should not countenance the trickery and the injustice.” As a result, the arbitral award was set aside.

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Ontario – Standard of review: set aside for applicant’s “inability to present his case” – #596

In Nelson v The Government of the United Mexican States, 2022 ONSC 1193, Justice Penny dismissed Nelson’s application to set aside the award of a three-member tribunal constituted under Chapter 11 of the North American Free Trade Agreement (“NAFTA”). Nelson relied upon Article 34(2)(a)(ii) of the Model Law, which allows the court to set aside an award on the basis that the applicant was, “otherwise unable to present his case”. Justice Penny relied upon the Ontario Court of Appeal’s decision of Consolidated Contractors Group S.A.L. (Offshore) v. Ambatovy Minerals S.A., 2017 ONCA 939, at para. 65, leave to appeal refused, 2018 CarswellOnt 17927 (S.C.C), which held that the standard of review for setting aside an award under Article 34(2)(a)(ii) is whether the tribunal’s conduct is “sufficiently serious to offend our most basic notions of morality and justice” and “that it cannot be condoned under the law of the enforcing State”.

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Ontario – Fresh evidence test the same on set aside applications on fairness grounds and judicial review applications – #572

In Vento Motorcycles Inc. v United Mexican States, 2021 ONSC 7913, Justice Vermette set out the test for when fresh evidence may be adduced to support a set aside application on lack of fairness or natural justice grounds. The test is the same as that which applies on a judicial review;  the record is restricted to what was before the decision-maker, except where there are natural justice or fairness issues raised that cannot be proven by reference to the existing record and that could not have been raised before the decision-maker.

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