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.

Continue reading “B.C. – Danger of Bifurcated Proceedings – #846”

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.

Continue reading “Ontario – Arbitrator’s relationship with party’s lender not sufficient for bias – #842”

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. 

Continue reading “Ontario – Court can hear set aside despite NY forum selection clause – #837”

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”.)

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

Ontario – Arbitrator’s stand-alone jurisdiction decision a preliminary “ruling” open to de novo review – #820

In Clost v Rennie, 2023 ONSC 6998, the Court ruled that an arbitration agreement was invalid after  a de novo hearing to “decide the matter” of the arbitrator’s jurisdiction under section 17(8) of the Ontario Arbitration Act, 1991, SO 1991, c. 17 (the “Act”). The Applicant (also referred to in the decision and herein as “Norm”) contended that the arbitration agreement was invalid because it was contained in a lease agreement which he alleged was fraudulent because his signature was forged. The parties first submitted the jurisdictional issue to a sole arbitrator, who found the arbitration agreement to be valid. The Court accepted that a de novo hearing under s. 17(8) of the Act was required, finding that the Arbitrator had rendered a “ruling” on a preliminary question of jurisdiction rather than an “award”, even though the sole question he was asked to determine was jurisdiction. There was an extensive evidentiary record before the arbitrator relative to the jurisdictional issue.  This raised for debate the difference between an “award” and a “ruling” on a preliminary question which can be decided by the Court on a hearing de novo. The Court completed its own review of the extensive evidentiary record and ultimately concluded that the lease (and therefore the arbitration agreement) was fraudulent and invalid and the arbitrator had no jurisdiction  

Continue reading “Ontario – Arbitrator’s stand-alone jurisdiction decision a preliminary “ruling” open to de novo review – #820”

Quebec – No abuse of process where parallel arbitration and court proceedings – #815

In Gaston Gagné inc. c. Gagné, 2023 QCCS 4552, the Court confirmed that arbitration clauses should receive a broad and liberal interpretation, dismissed an application to annul a final arbitral award, homologated the award, and dismissed a claim in damages based on an alleged abuse of process by the party opposing homologation. Even though one party decided to bring court proceedings on the same issue he put before the arbitrator, there was no abuse of process because his court proceeding did not impede the arbitration.

Continue reading “Quebec – No abuse of process where parallel arbitration and court proceedings – #815”

Québec – No revocation of a homologated award without the prior revocation of the judgment – #812

In Investissements Immobiliers MB inc. v. SMP Direct inc., 2023 QCCS 4526, the Superior Court dismissed the application of Investissements Immobiliers MB inc (“Plaintiff”) to partially revoke a judgment homologating an arbitration award. In her decision, the Judge ruled that the Plaintiff had delayed acting without justifying the delay and that the application for revocation of the homologating judgment had no reasonable chance of success. The background is complicated. The application followed multiple proceedings between the court and the Arbitrator. The Plaintiff (Claimant in the Arbitration) applied to the court to annul the arbitration award on the basis that the Arbitrator had exceeded his jurisdiction. Then, before that application was decided, the Plaintiff returned to the Arbitrator for revocation of the award based on the fact that there was subsequent information that he had not considered that would affect the result. The Arbitrator refused to hear Plaintiff’s demand before the Court ruled on the Plaintiff’s annulment application. The Court homologated the award. Plaintiff’s application for leave to appeal was dismissed. The Arbitrator then dismissed the application for revocation. He found that the Court must revoke the homologating judgment first, which made the issues ruled in the arbitration award revocation issue because the homologating judgment give the award the force of res judicata. The Plaintiff’s later return to the court to revoke the homologating judgment was too late – five months later. The lesson? An arbitrator has no jurisdiction to revoke an award that has been homologated in a court judgment.

Continue reading “Québec – No revocation of a homologated award without the prior revocation of the judgment – #812”

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.  

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

Timothy Reflects (2023): Are arbitral tribunals soft targets for bad actors? – #809

This case note reflects on emerging procedural and systemic vulnerabilities of arbitration, a timely and important topic in light of the recent decision of the High Court of England and Wales in  Process & Industrial Development v Federal Republic of Nigeria, [2023] EWHC 2638 (Comm) (“P&ID v Nigeria”). In that case, Justice Robin Knowles remarked: 

Continue reading “Timothy Reflects (2023): Are arbitral tribunals soft targets for bad actors? – #809”

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.  

Continue reading “Chris Reflects (2023): Arbitrator Bias and the Unanimous Award – #807”