Natural justice Archives - Arbitration Matters

July 22, 2024July 25, 2024

B.C. – Insufficiency of Reasons Breached Due Process – #848

In Sound Contracting Ltd. v Campbell River (City), 2024 BCSC 933, the court allowed the set- aside challenge of an arbitral award and remitted the matter to the arbitrator on the basis that the arbitrator had failed in his duty under natural justice to provide adequate reasons. The arbitrator concluded that the arbitration was time-barred but did not explain why he had reached that conclusion. In so doing, the court treated the set-aside challenge as akin to an appeal, where insufficient reasons amount to an error of law. In so doing, the court applied principles in the civil (appeal) and administrative (judicial review) contexts to the set aside of an arbitral award. This stands in contrast to how this issue has been treated internationally, where the matter of whether insufficiency of reasons is a breach of procedural fairness is not well-settled.

April 22, 2024April 19, 2024

Ontario –“Fraud” does not include “constructive fraud” for set-aside application deadline – #829

Campbell v Toronto Standard Condominium Corporation No. 2600, 2024 ONCA 218, considered the meaning of “fraud” under section 46(1)9 of the Ontario Arbitration Act, 1991, SO 1991, c, 17. It provides that a court may set aside an award on the ground that, “the award was obtained by fraud.” The first issue before the Court was whether “fraud” includes “constructive fraud.” The main issue, however, was the interpretation to be given to sections 47(1) and (2), which provide that an application to set aside an award shall be commenced within 30 days after the applicant has received the award – except if the applicant alleges corruption or “fraud”. The Court found that “fraud” does not include “constructive fraud, which means that the Respondents were out of time to bring their set-aside application. It found that a broadening of the definition of fraud is not consistent with the statutory objectives to narrow the grounds for court interference in arbitrations. The Court expressed the view that the allegation of constructive fraud was made for the purpose of circumventing the statutory time limit for bringing a set-aside application. (This case is also useful for its summary of basic arbitration law principles. If you need a quick update or refresher of these, see my Editor’s Notes below for a “cheat sheet”.)

January 18, 2024April 30, 2024

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.

January 15, 2024April 30, 2024

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.

December 4, 2023December 14, 2023

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.

November 20, 2023November 17, 2023

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.

July 4, 2023July 4, 2023

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.

May 25, 2023June 13, 2023

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.

July 5, 2022July 5, 2022

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.

June 7, 2022May 27, 2022

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.