Arbitration
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<strong>Arbitration</strong> Place<br />
CANADA<br />
13 Groups of companies<br />
Do courts and arbitral tribunals in your jurisdiction extend<br />
an arbitration agreement to non-signatory parent or<br />
subsidiary companies of a signatory company, provided that<br />
the non-signatory was somehow involved in the conclusion,<br />
performance or termination of the contract in dispute, under<br />
the ‘group of companies’ doctrine?<br />
The ‘group of companies’ doctrine has been recognised in a small body of<br />
Canadian jurisprudence where a non-signatory company has been bound<br />
by and allowed to participate in arbitral proceedings alongside a signatory<br />
parent or subsidiary (eg, the Ontario Superior Court’s decision in Xerox<br />
Canada Ltd v MPI Technologies Inc, 2006 CanLII 41006, where the court<br />
upheld a tribunal’s decision to allow a non-signatory parent company to<br />
participate as a claimant based on that parent’s involvement in the overall<br />
dispute resolution process).<br />
14 Multiparty arbitration agreements<br />
What are the requirements for a valid multiparty arbitration<br />
agreement?<br />
The International <strong>Arbitration</strong> Acts do not specifically address multiparty<br />
arbitration agreements, although such arbitrations are reasonably common<br />
in Canada under express contractual terms.<br />
Under Ontario’s International Commercial <strong>Arbitration</strong> Act, parties<br />
may make an application to the Superior Court of Justice for an order consolidating<br />
two or more arbitration proceedings, the result of which may be<br />
a multiparty arbitration. Where the court orders such a consolidation, the<br />
statute also provides that arbitrator selection for the consolidated tribunal<br />
will remain in the hands of the parties, if they can agree, failing which the<br />
court may appoint the arbitrators. A court order is not necessary, however,<br />
to effect such a consolidation: it may still be done by private agreement of<br />
the parties.<br />
Constitution of arbitral tribunal<br />
15 Eligibility of arbitrators<br />
Are there any restrictions as to who may act as an arbitrator?<br />
Would any contractually stipulated requirement for arbitrators<br />
based on nationality, religion or gender be recognised by the<br />
courts in your jurisdiction?<br />
There are no formal qualifications or restrictions imposed by law for arbitrators<br />
in either domestic or international arbitrations, other than basic<br />
tenets of natural justice requiring independence and impartiality.<br />
Sitting judges may serve as arbitrators, albeit without remuneration<br />
other than reasonable compensation for related expenses. However it is<br />
the accepted policy of the judiciary that sitting judges should not serve as<br />
arbitrators. Retired judges frequently act as arbitrators.<br />
The International Commercial <strong>Arbitration</strong> Acts of Ontario and British<br />
Columbia incorporate a modified version of article 11(1) of the Model Law<br />
in such a way as to eliminate a party’s right to restrict the choice of arbitrator<br />
according to nationality. No Canadian court has yet considered the<br />
Jivraj v Haswani case, though any efforts to limit arbitrator selection based<br />
on religion or ethnicity may intersect with the anti-discrimination provisions<br />
of various human rights statutes in force across Canada.<br />
16 Default appointment of arbitrators<br />
Failing prior agreement of the parties, what is the default<br />
mechanism for the appointment of arbitrators?<br />
Pursuant to articles 10 and 11 of the Model Law, in the absence of an agreement<br />
between the parties, the International <strong>Arbitration</strong> Acts set the default<br />
number of arbitrators at three, with each party selecting one arbitrator and<br />
those two appointees then selecting the presiding arbitrator.<br />
In circumstances of a default in the appointment of a sole arbitrator<br />
or a three-person panel, a party may apply to the court or to an agreed<br />
appointment authority. The leading Canadian arbitral institutions provide<br />
for similar procedural rules dealing with default appointments.<br />
In ad hoc arbitrations, or where neither the arbitration agreement<br />
nor the applicable arbitration rules provide for an appointing authority,<br />
the courts will assume the role of resolving defaults in the appointment of<br />
arbitrators.<br />
17 Challenge and replacement of arbitrators<br />
On what grounds and how can an arbitrator be challenged and<br />
replaced? Please discuss in particular the grounds for challenge<br />
and replacement, and the procedure, including challenge<br />
in court. Is there a tendency to apply or seek guidance from<br />
the IBA Guidelines on Conflicts of Interest in International<br />
<strong>Arbitration</strong>?<br />
The International <strong>Arbitration</strong> Acts implement articles 12 to 15 of the Model<br />
Law that address the challenge and replacement of arbitrators.<br />
The available grounds for challenge under article 12 of the Model Law<br />
are: (i) where there are justifiable doubts as to the arbitrator’s impartiality<br />
or independence; or (ii) where the arbitrator lacks the qualifications agreed<br />
to by the parties.<br />
In Canada, a challenge to an arbitrator’s impartiality or independence<br />
is assessed based on the ‘reasonable apprehension of bias’ test. The<br />
Supreme Court of Canada held in Wewaykum Indian Band v Canada, 2003<br />
SCC 45, that the applicable standard asks whether the apprehension of bias<br />
could arise in the mind of a reasonably informed person, viewing the matter<br />
realistically and practically, and having thought the matter through.<br />
The IBA Guidelines on Conflicts of Interest in International <strong>Arbitration</strong><br />
have not been the subject of significant judicial consideration. However,<br />
in Telesat Canada v Boeing Satellite Systems International Inc, 2010 ONSC<br />
4023, the Ontario Superior Court of Justice removed an arbitrator because<br />
of a reasonable apprehension of bias; in so doing, the court referred to the<br />
IBA Guidelines, which had not been formally incorporated by reference<br />
into the arbitration. The court nevertheless found that the IBA Guidelines<br />
represent the view of the ‘arbitration community’.<br />
Absent any agreement establishing a different challenge procedure,<br />
article 13(2) of the Model Law will apply, whereby a party must make its<br />
claim in writing to the tribunal within 15 days of discovering the ground for<br />
challenge. The arbitral tribunal shall then decide on the challenge, unless<br />
the challenged arbitrator first withdraws. If the challenge is rejected, the<br />
challenging party then has 30 days to raise the challenge with the courts<br />
(or another appointed authority such as an arbitral institution). The court’s<br />
decision on the challenge is not subject to an appeal.<br />
Pursuant to article 14 of the Model Law, an arbitrator may also be challenged<br />
where he or she is unable to carry out his or her functions without<br />
undue delay. In such a situation, which can arise for example when an arbitrator<br />
falls seriously ill, the Model Law provides that the arbitrator’s mandate<br />
terminates when he or she resigns or when the parties agree on the<br />
termination. A party may also ask the court to remove the arbitrator.<br />
In Ontario, if an arbitrator is replaced or removed, and unless the parties<br />
agree otherwise, all proceedings that have already taken place will start<br />
afresh.<br />
18 Relationship between parties and arbitrators<br />
What is the relationship between parties and arbitrators?<br />
Please elaborate on the contractual relationship between<br />
parties and arbitrators, neutrality of party-appointed<br />
arbitrators, remuneration, and expenses of arbitrators.<br />
Arbitrators are bound contractually to all parties to an arbitration agreement,<br />
and are held to the same standards of neutrality, impartiality and<br />
independence, regardless of who appointed them.<br />
In an ad hoc arbitration, arbitrators are typically remunerated on an<br />
hourly or daily basis, plus related expenses. Deposits and cancellations<br />
fees are common. In institutional arbitrations, fees are typically paid<br />
through the institution in accordance with its rules and policies.<br />
19 Immunity of arbitrators from liability<br />
To what extent are arbitrators immune from liability for their<br />
conduct in the course of the arbitration?<br />
Generally, arbitrators in Canada enjoy immunity from actions in negligence<br />
or breach of contract, similar to the judiciary. An arbitrator will benefit<br />
from this immunity where:<br />
• there is an existing dispute that the parties have submitted to the<br />
arbitrator;<br />
• the arbitrator is acting in a judicial or quasi-judicial capacity; and<br />
• the arbitrator is fulfilling his or her function in compliance with the<br />
provisions of the applicable legislation.<br />
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