Set aside/Annulment Archives - Arbitration Matters

January 10, 2025January 10, 2025

Colin’s 2024 Hot Topic: ONCA weighs in on Bias in Aroma – #888

In Aroma Franchise Company, Inc. v Aroma Espresso Bar Canada Inc., 2024 ONCA 839, the Court overturned a decision of the Ontario Superior Court of Justice, which had set aside two international arbitration awards on the basis of the existence of a reasonable apprehension of bias on the part of the Arbitrator. Undoubtedly, this was the arbitration case of 2024. The first instance decision and related proceedings have previously been canvassed by Arbitration Matters (see Ontario – Multiple arbitral appointments give rise to reasonable apprehension of bias – #734 – Arbitration Matters, Lisa Reflects (2023): Aroma – the blockbuster case of 2023? – #804 – Arbitration Matters, and Ontario – Arbitrator no jurisdiction to hear challenge for bias after partial final award – #691 – Arbitration Matters). It is a multiple appointments case. It arose out of a decision by the Arbitrator to take on a second appointment by the same counsel acting in the Aroma arbitration that was only disclosed by accident with the issuance of the final award. The first Instance decision generated buzz in the arbitration community for, among other things: (1) the Judge below finding it was a “bad look” for the Arbitrator to have accepted an appointment in another arbitration part way through the Aroma arbitration by the same lead counsel in both matters; (2) the Judge considering relevant the parties’ pre-appointment communications on the criteria for the arbitrator to be appointed; and (3) the unresolved question of the impact, if any, of an arbitrator’s financial interest in appointments. It is the second issue that has received the most commentary on this decision.

January 10, 2025January 10, 2025

Philippe’s 2024 Hot Topic – Québec courts rejected creative challenges to arbitral awards – #887

In 2024, parties raised various novel and creative grounds (and also some more traditional grounds) to seek annulment or resist the homologation of arbitral awards in Québec.

December 18, 2024December 13, 2024

B.C. – Arbitrator Properly Appointed Despite No Signed Agreement – #881

In Pomerleau Inc. v 4HD Construction Ltd., 2024 BCSC 1973, the Court addressed two petitions. The first, by 4HD (the claimant/respondent by counterclaim in the arbitration), sought a ruling that the arbitrator had not, in fact, been appointed and declaring the award to be void or, alternatively, an order that the arbitrator be removed as arbitrator and the award set aside on the basis of a reasonable apprehension of bias. The second, by Pomerleau (the respondent/counterclaimant in the arbitration), sought recognition and enforcement of the award. The Court dismissed the first petition and granted the second. The arbitrator ruled that he had been appointed based on an email sent to him by 4HD advising him that he had been jointly selected as arbitrator and the had parties participated in the arbitration, even though no arbitration agreement was ever signed. The arbitrator issued an award dismissing the claims based on the claimant’s failure to prosecute the arbitration. The Court found that the arbitrator was correct that he had been properly appointed. The fact that the arbitrator was owed outstanding fees (only a few thousand dollars) by the claimant at the time he ruled on his appointment was insufficient to give rise to a reasonable apprehension of bias to justify setting aside the award.

October 21, 2024October 18, 2024

B.C. – Court adopts award-centric review for questions of law – #869

In Desert Properties Inc. v. G&T Martini Holdings Ltd, 2024 BCCA 320, the Court rejected challenges to a liability award and an interest award in disputes stemming from a major property development. The Court dismissed applications for leave to appeal and cross-appeal for failure to demonstrate extricable errors of law in the liability award. The Court also ruled there was insufficient merit in a proposed appeal from a BCSC decision which had declined to set aside the interest award. Both parties have kept the B.C. courts busy with multiple challenges to these arbitral awards, generating three Case Comments in recent months. It can be argued that the Court’s mode of analysing extricable errors of law for the purposes of appeal has changed (perhaps ever so slightly) since its decision in Escape 101 Ventures Inc. v. March of Dimes Canada, 2022 BCCA 294, in which it found that misapprehensions of evidence that go the core of the outcome of a case are extricable errors of law.

September 9, 2024September 9, 2024

Québec – First consideration of test for stay application for annulment application – #860

In ADRAQ (CSD) Laurentides c. Hamelin, 2024 QCCS 2324, the Court dismissed a motion brought pursuant to section 648 CCP to stay an application for annulment of an award to give the arbitrator the opportunity to correct it to eliminate the grounds for annulment. This is the first case to consider section 648 CCP. The Court developed the list of factors to be considered on such a motion. It also ruled that it has broad discretion in deciding a motion for a stay under section 648. In light of the preceding, the Court ruled that the judge deciding the merits of the application for annulment should decide the stay motion. That judge would have a better understanding of the case to determine whether a stay is appropriate considering the allegations, including alleged bias against the arbitrator, which the Court found were serious, and the respondent’s denial of the very existence of any grounds for annulment, leaving no place at this stage, for the arbitrator to correct his award. Therefore, the Court dismissed the respondent’s demand to stay the application for annulment.

July 29, 2024July 25, 2024

Ontario – Missed Opportunity re Implications of Set-Aside Test for Procedural Unfairness? – #850

In Vento Motorcycles, Inc. v. United Mexican States, 2024 ONCA 480 (CanLII) (for ease of reference, “Vento-CIPPIC“), the Court addressed The Samuelson-Glushko Canadian Internet Policy and Public Interest Clinic’s (“CIPPIC’s”) application to intervene in Vento’s appeal of last year’s Ontario Superior Court of Justice’s dismissal of Vento’s application to set aside a 2020 international arbitration award [Vento Motorcycles, Inc. v. United Mexican States, 2023 ONSC 5964 (CanLII), (“Vento”)]. That and related decisions were discussed in several Arbitration Matters previous blogs, including 810, 796, 572, and 807. CIPPIC’s application was unsuccessful. The Court rejected its application for three reasons: (1) it hadn’t shown a sufficient link between its expertise and the issues in the appeal or its unique perspective; (2) the higher threshold to be granted leave to intervene in a private dispute; and (3) the risk CIPPIC’s intervention would unjustifiably expand the scope of the appeal.

July 5, 2024July 2, 2024

B.C. – Danger of Bifurcated Proceedings – #846

In G & T Martini Holdings Ltd. v. Desert Properties Inc., 2024 BCSC 828, the Court dismissed a petition under s. 58(1)(c) of the Arbitration Act, S.B.C. 2020, c. 2 (“Arbitration Act”) to set aside an arbitral award after a bifurcated arbitration. The Petitioner claimed that the Arbitrator had changed the rationale of the earlier liability award and was precluded from calculating damages in the manner it did at the damages stage after the Arbitrator’s earlier award on liability. The Court found that the Arbitrator did not improperly change his decision on liability in the damages award, but instead merely elucidated upon his rationale for the decision he made in the liability award.

June 19, 2024June 25, 2024

Ontario – Arbitrator’s relationship with party’s lender not sufficient for bias – #842

In Ballantry Construction Management Inc. v GR (CAN) Investment Co. Ltd., 2024 ONSC 2129 (“Ballantry”), the applicant, Ballantry Construction Management Inc. (“Applicant”), brought a motion for (among other things) an interlocutory injunction to restrain the Respondent from transferring or encumbering its assets pending the hearing of: (1) the Applicant’s application to enforce two arbitral awards; and (2) the Respondent’s application to set aside the awards on the grounds of a reasonable apprehension of bias on the part of the Arbitrator. On the second issue, the Court concluded that while a “business relationship” between a party and the Arbitrator may create a reasonable apprehension of bias, here, the fact that the Arbitrator was a director and shareholder of the parent of a company that had provided a loan to the Respondent did not support a finding of bias. This case considers how close a relationship between an arbitrator and a party is “too close” if a party seeks to set aside an award based on alleged arbitrator bias.

May 24, 2024May 24, 2024

Ontario – Court can hear set aside despite NY forum selection clause – #837

In Tehama Group Inc v Pythian Services Inc, 2024 ONSC 1819, the Court declined to stay an application to set aside an arbitration award. The stay application was based on a forum selection clause in favour of the courts of New York. In denying the stay, the Ontario court applied an exception in that forum selection clause regarding certain types of disputes under the parties’ agreement that were to be referred to arbitration. The key issue in the case concerned establishing the “place” of the arbitration, which had not been expressly set out by the parties or determined by the arbitrator. Applying the International Commercial Arbitration Act, RSO 1990, c I.9 (“ICAA”) and UNCITRAL Model Law on International Commercial Arbitration (“Model Law“) the Court determined that Toronto, Ontario, was the place of arbitration and that the Ontario Superior Court of Justice was therefore the only competent forum to decide the set-aside application.

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”.)