As an arbitrator, it is a nerve-wracking and somewhat fearful experience to have an award challenged in court. I’m glad to say it isn’t a common experience for me (knock on wood), but it happened recently.
I was relieved to read the judgement – skipping straight to the last page to see whether I had got things right or not. (Do judges do that, I wonder.) The court said I had – big sigh of relief – but it prompted me to think about what what courts expect from us as arbitrators. It was a reminder of some essential things we should remember at all times.
I won’t comment on the case itself or on the court judgement. Interested readers can find it here. But I want to offer some thoughts on broad issues raised by this and other legal challenges to the arbitration process.
Most of the cases do center on process, I think, because arbitration statutes and rules set out very limited grounds to appeal an arbitration award or to have it set aside.
Courts generally avoid second-guessing arbitrators on questions of fact (though they are known to find errors of law in situations where it appears the tribunal simply got things wrong…).
Under Section 45 of the Arbitration Act in Ontario, appeals are allowed on a question of law or mixed fact and law, if the the arbitration agreement expressly provides for such appeals. Otherwise, appeals are only permitted on questions of law, and only with the leave of the court, which must be satisfied that the matters at stake in the arbitration justify an appeal or the question of law at issue significantly affects the rights of the parties. This is a fairly high threshold to obtain leave.
The Arbitration Act (section 46) also lays out a number of grounds on which a court may set aside an award. Broadly speaking, those grounds go to the very existence or validity of the arbitration agreement; whether the arbitration has gone outside the scope of the arbitration agreement or the jurisdiction of the arbitrator; whether the procedures followed in the arbitration complied with the Act; fraud or misconduct by the parties or the arbitrator.
But perhaps the most common grounds to seek to have an award set aside is “reasonable apprehension of bias” by the arbitrator and whether the parties were treated equally and fairly.
It’s human nature, I think, to believe a decision that does not go our way is unfair. Every parent must learn to deal with the universal appeal of the aggrieved child: “But that’s not fair!” Eventually, we learn that life is not fair.
In arbitration or adjudication, courts have consistently said allegations of bias, or unfairness, must be raised in a timely manner. Such claims seem to be quite common in decisions involving labour relations and human rights tribunals. Both the tribunals themselves (ruling on their own impartiality) and supervising courts have said the failure to raise these issues immediately amounts to a waiver.
For example, in Eckervogt v. British Columbia, 2004 BCCA 398 (CanLII), the BC Court of Appeal said:
I do not think it is proper for a party to hold in reserve a ground of disqualification for use only if the outcome turns out badly. Bias allegations have serious implications for the reputation of the tribunal and in fairness they should be made directly and promptly, not held back as a tactic in the litigation. Such a tactic should, I think, carry the risk of a finding of waiver. Furthermore, the genuineness of the apprehension becomes suspect when it is not acted on right away. (at 48)
And in the context of a labour mediation/arbitration, the BC Labour Relations Board said:
“… it is especially important that a party put its objection … at the relevant time, rather than putting it in its back pocket and relying on [it] much later (after it receives what it perceives as an unfavourable decision).”
PCL Constructors Canada Inc v International Association of Bridge, Structural, Ornamental and Reinforcing Iron Workers, Local No 97, 2012 CanLII 1509 (BC LRB), at 113.
I must say that It has always seemed odd to me that arbitrators are charged with determining their own impartiality or qualifications. But that’s the way it is. And parties have very little time to make a challenge.
For example, section 13 of the Arbitration Act requires the parties to challenge within 15 days of becoming aware of the facts giving rise to the challenge, and to make an application to court within 10 days of being notified of the tribunal’s decision if the arbitrator does not resign or is not removed.
Similarly, the ADR Institute of Canada Arbitration Rules allow only seven says after becoming aware of circumstances giving rise to “justifiable doubts about the Arbitrator’s independence or impartiality” to challenge the arbitrator. And in the case of a single arbitrator, it is the arbitrator who decides the challenge.
Procedural issues can’t simply be dismissed out-of-hand, either, even if the arbitrator thinks they aren’t appropriate for arbitration (for example, issues related to the scope of the arbitration, broad document production and witness discovery requests, evidence and hearing procedures, repeated missed deadlines or requests for more time).
Judges, who live by the rules of civil procedure, may expect a certain level of procedural correctness, even if those rules of procedure do not apply to arbitration. And there is lots of room for interpretation in the arbitration statutes and rules.
The tribunal must make the reasons for its procedural orders as clear as possible. It must also balance the goals of “a just, speedy, and cost-effective determination” (ADRIC Rule 1.1) and the obligation to “treat each party fairly and give each party a fair opportunity to present its case.” (ADRIC Rule 4.7.2)
This is especially important in the case of the self-represented party, who may not understand all of the procedural rules or the implications of their actions.
The arbitrator must not only strive to treat the parties equally and fairly; he or she must also strive to make it clear that this is the case in all procedural orders and in the final award.
Careful, detailed reasons serve both the interests of the parties and of the arbitration process. First, for the benefit of the losing party, who may not agree with the decision, but may accept it if it clearly explained. Secondly, to establish a clear record, if the decision is challenged.