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Gary Stuart Joseph, Partner and Firm Chair

Ontario Family Law

Endorsement - Corrick

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Endorsement - Spies

Family Law

Child Support / CPP Benefits

EXPLANATORY NOTE

Domestic Violence in Family Law Cases

Leave to appeal opinion

Tax Treatment of Payments of To and From Non Resident Spouses

von Czieslik v Ayuso

Challenging Arbitration Awards
and/or Removing the Arbitrator under the Arbitration Act, 1991

When Family Courts and Criminal Courts Collide: The Impact of Bail Conditions on the Adjudication of Family Law Matters



Challenging Arbitration Awards
and/or Removing the Arbitrator under the Arbitration Act, 1991

By Gary S. Joseph and Michael Stangarone
MacDonald & Partners LLP1

Parties to a family law matter are increasingly choosing to resolve their disputes outside the court system.  Arbitration is one of the choices frequently used either in its pure form or in combination with mediation. Legislation, procedural rules and court decisions have legitimized this choice.  The court is sanctioning arbitration and mediation/arbitration agreements, and reinforcing the notion that the arbitrator has sole autonomy to render a decision.2   However, the arbitration process, like any decision-making process, can sometimes result in inequitable results and reviewable errors.

In addition to pure arbitration and mediation/arbitration (“med/arb”), there is a third kind of family arbitration, called “secondary arbitration”. It is distinguished from a pure family arbitration by the fact that it is “conducted in accordance with a separation agreement, a court order or a family arbitration award that provides for the arbitration of possible future disputes relating to the ongoing management or implementation of the agreement, order or award”.3   Med/arb is governed by Ontario Regulation 134/07 (“Regulation”), made under the Arbitration Act4 (“the Act”).

In med/arb, if mediation reaches an impasse, the mediator changes hats and is empowered to make a binding decision as the arbitrator at the subsequent arbitration.  In this capacity, s/he must put aside the settlement discussions heard during mediation and decide the outstanding issues on their merits and based on the record before him or her. 
The arbitrator must ensure that the basic rules of evidence and the principles of natural justice are respected throughout the arbitration process.  The arbitration process can sometimes fall off the rails. When it does, the Arbitration Act provides a means by which a party may challenge or remove the arbitrator notwithstanding the parties’ signed arbitration agreement.

1.  LEGISLATIVE FRAMEWORK

A.    Court Intervention

Pursuant to section 6 of the Arbitration Act, a court may intervene in matters relating to the arbitration in the following circumstances:

  1. to assist in the conduct of the arbitrations;
  2. to ensure that arbitrations are conducted in accordance with arbitration agreements;
  3. to prevent unequal or unfair treatment of parties to arbitration agreements; and
  4. to enforce awards.

B.  Challenging the Arbitrator

Bias & Lack of Qualifications

Section 13 of the Arbitration Act provides that a party may challenge an arbitrator where circumstances exist that may give rise to a reasonable apprehension of bias, or where the arbitrator lacks the necessary qualifications.

Section 11 requires that the arbitrator shall be “independent and shall act impartially”. Sections 11(2) and (3) require the arbitrator, either before or after the appointment as arbitrator, to disclose to all parties “…any circumstances of which he or she is aware that may give rise to a reasonable apprehension of bias”.

Procedure

A party may challenge the arbitrator only on grounds that s/he was unaware of at the time the arbitrator was appointed. The challenging party must file a statement of the grounds for the challenge within 15 days of becoming aware of them.  If the challenged arbitrator is not removed by the parties on consent, or if he does not resign voluntarily, the arbitral tribunal, (where there is more than one arbitrator) including the challenged arbitrator is to decide the issue and notify the parties of its decision. Within 10 days of being notified of the arbitral tribunal’s decision, the party dissatisfied with the decision may apply to the court to decide the issue de novo and, if successful, have the arbitrator removed from the proceeding.

2006 Amendments

The Family Statute Law Amendment Act, 2006, which amends the Arbitration Act, 1991 and the Family Law Act, was proclaimed in force as of April 30, 2007.  The new Ontario Regulation 134/07, made under the Arbitration Act 1991, a copy of which is appended to this paper, also came into force on April 30, 2007.  The provisions of the Regulation about the content of family arbitration agreements came into force on September 1, 2007.

By section 3 of the Regulation, every arbitrator who conducts a family arbitration must receive the training approved by the Attorney General for the arbitrator or class of arbitrators, as set out in the Ministry’s website.  That provision comes into force on April 30, 2008.  The training is required by that date, or before the arbitrator conducts a family arbitration after that date. Family arbitration awards given after that date by arbitrators without this training will likely be unenforceable.

Attached to this paper are printouts from the Ministry’s website detailing the basic rules for arbitrators, the training required to be a family arbitrator, the conduct of a family arbitration and the Family Arbitration Report to be completed by the Arbitrator.5

C.  Removing the Arbitrator

Section 15 of the Arbitration Act provides that the Court may remove an arbitrator on the following grounds:

  1. the arbitrator becomes unable to perform his or her functions;
  2. the arbitrator commits a corrupt or fraudulent act;
  3. the arbitrator delays unduly in conducting the arbitration; or
  4. the arbitrator does not conduct the arbitration in accordance with section 19 of the Act, which provides that parties must be treated equally and fairly in an arbitration.

Section 16 provides the court may appoint a substitute arbitrator and there is no appeal from that decision. When an arbitrator’s mandate terminates, a substitute arbitrator is to be appointed.

D.  Setting Aside or Varying the Arbitration Award

Family arbitrations are governed by the Family Law Act and the Arbitration Act. A conflict between the two acts is resolved in favour of the Family Law Act.6   Any attempt to contract out of the provisions of the Family Law Act relating to family arbitrations is “without effect”.7

Family arbitration agreements are domestic contracts under Part IV of the Family Law Act, and the arbitration award has the same status as a domestic contract.  An agreement to resolve a family dispute by arbitration (except for secondary arbitrations) must be made after the dispute has arisen. Any agreement for an ordinary family arbitration made before the dispute arose, and any award made under such agreement, is unenforceable according to section 59.4 of the Family Law Act. The agreement must be in writing and each of the parties must receive independent legal advice before making the agreement.8   The lawyer who provides the advice is to complete a certificate of independent legal advice, which may be in a form approved by the Attorney General.9

Section 59.5 of the Family Law Act provides that a family arbitration award may be enforced or set aside in the same way as a domestic contract. The award is enforced under the Family Law Act and not the Arbitration Act. To be enforceable, the arbitration award must “be made in writing and, except in the case of an award made on consent, shall state the reasons on which it is based”.  The award is to indicate the place where and the date on which it is made; it must be signed by all members of the arbitral tribunal or by a majority of them if an explanation of the omission of the other signatures is included; a copy of the award is to be delivered to each party; and the arbitrator must comply with any regulations made under the Arbitration Act.10

The award may be set aside if the parties entering into the arbitration agreement did not understand the nature or consequences of the award; if a party failed to produce full financial disclosure; or if the support provisions of the arbitration award or a waiver of support result in unconscionable circumstances. Any provisions of the award or agreement may be set aside if they are deemed contrary to the best interests of children.11

The parties’ right to be protected from violations of the principle of natural justice is enshrined in sections 19 and 46 of the Arbitration Act, which speak to bias, procedural irregularities and fairness. Section 19(1) provides that the parties shall be treated equally and fairly in the arbitration. Section 19(2) states that each party shall be given an opportunity to present his or her case and to respond to the other parties’ case. If the principle of natural justice is violated, the party who has not been treated fairly may move to set aside or vary the arbitration award.

Section 37 of the Arbitration Act provides that an arbitration award binds the parties unless it is set aside or varied under sections 45 and 46 of the Act.  Pursuant to section 46 of the Act, the court may set aside an award on any of the following grounds:

  1. A party entered into the arbitration agreement while under a legal incapacity.
  2. The arbitration agreement is invalid or has ceased to exist.
  1. The award deals with a dispute that the arbitration agreement does not cover or contains a decision on a matter that is beyond the scope of the agreement.
  2. The composition of the tribunal was not in accordance with the arbitration agreement or, if the agreement did not deal with that matter, was not in accordance with this Act.
  1. The subject matter of the dispute is not capable of being the subject of arbitration under Ontario law.
  1. The applicant was not treated equally and fairly, was not given an opportunity to present a case or to respond to another party’s case, or was not given proper notice of the arbitration or of the appointment of an arbitrator.
  1. The procedures followed in the arbitration did not comply with this Act.
  1. An arbitrator has committed a corrupt or fraudulent act or there is a reasonable apprehension of bias.
  1. The award was obtained by fraud.
  1. The award is a family arbitration award that is not enforceable under the Family Law Act.

E.  Appealing the Arbitration Award

A party has the right to request that the arbitrator explain any matter within 30 days after receiving the arbitration award pursuant to section 40 of the Arbitration Act.  If the arbitrator does not give an explanation within 15 days after receiving the request, the court may, on a party’s application, order the arbitrator to do so.

A party may appeal an arbitration award to the court on a question of law with leave, if the arbitration agreement does not deal with appeals on questions of law. The Court will grant leave only if it satisfied that the importance to the parties of the matters at stake in the arbitration justifies an appeal; and the determination of the question of law at issue will significantly affect the rights of the parties.  If the arbitration agreement so provides, a party may appeal an award to the court on a question of law or on a question of fact or mixed fact and law pursuant to section 45(2)(3) of the Arbitration Act.  

Procedure

An appeal from a family arbitration award lies to the Family Court where there is a Superior Court or, otherwise, the Superior Court of Justice.12 The appeal of an arbitration award or an application to set it aside must be commenced within thirty days after the appellant or applicant receives the award, correction, explanation, change or statement of reasons on which the appeal or application is based, pursuant to section 47(1) of the Arbitration Act.  There is no provision in the statute to extend the time for taking those steps.  

F.  Declaring the Arbitration Invalid

At any stage during the arbitration or after the arbitration, upon application by a party who has not participated in the arbitration, the court may grant a declaration that the arbitration is invalid under section 48 of the Act for the following reasons:

  1. a party entered into the agreement while under a legal incapacity;
  2. the arbitration agreement is invalid or has ceased to exist;
  3. the subject matter of the dispute is not capable of being the subject of arbitration under Ontario law; or
  4. the arbitration agreement does not apply to the dispute.

 

G.  Incorporating the terms into a court Order & Unusual Remedies

Pursuant to section 59.8(4) of the Family Law Act, if the family arbitration award satisfies the conditions set out in section 59.6(1), the court “shall make an award in the same terms as the [arbitration] award” provided the requisite 30-day time period for an appeal or setting aside of the award has elapsed, there is no pending appeal or application to set the award aside or application for a declaration of invalidity, or the award has not been set aside or the arbitration declared invalid.

If the family arbitration award gives a remedy that the court does not have jurisdiction to grant or would not grant in a proceeding based on similar circumstances, section 59.8(6) of the Family Law Act provides that the court may make an order granting a different remedy if the applicant requests it, or remit the award to the arbitrator with the court’s opinion in which case the arbitrator may award a different remedy.

2.  CASE LAW:  CHALLENGING THE ARBITRATOR

Violating the Principle of Natural Justice: Unfair and Unequal Treatment

Parties to an arbitration must be treated equally and fairly throughout the arbitration hearing. The fundamental precept of natural justice is that each party know the case to be met and be given a full opportunity to meet it and present his or her own case. Where these elements are not protected or maintained by the arbitrator, the arbitrator leaves him/herself open for attack.  In Hercus v. Hercus13 , Justice Templeton of the Ontario Superior Court wrote the following:

It is settled law that the right to a fair hearing is an independent and unqualified right. Arbitrators must listen fairly to both sides, give parties a fair opportunity to contradict or correct prejudicial statements, not receive evidence from one party behind the back of the other and ensure that the parties know the case they have to meet. An unbiased appearance is, in itself, an essential component of procedural fairness.

In Kainz v. Potter14 , for example, the Wife appealed the arbitration award on various grounds, including lack of jurisdiction, inadequate notice of the hearing, the parties’ failure to complete the mediation phase, and the arbitrator’s failure to conduct the arbitration in accordance with the requirements of equality and fairness and natural justice. The parties had agreed to mediation/arbitration and named a psychologist, who was not legally trained, as the mediator/arbitrator. The husband pre-empted mediation by heading straight to arbitration. The wife waived the right to mediation by taking part in the arbitration without objecting that it was premature. (As confirmed in the Acimovic case below, a party who participates in the arbitration will be hard pressed to argue about the process after the award is released).

The Court allowed the appeal on the ground that the Wife was denied equality and fairness as a result of flagrant procedural and evidentiary flaws permitted by the arbitrator. The wife was self-represented and the arbitrator allowed the husband’s counsel to dictate the process. He did not enforce the rules of evidence; he allowed the husband (rather than his lawyer) to cross-examine the wife; and he allowed the husband to act as counsel during the process. The process was fundamentally flawed.  In the circumstances, the Court found that the arbitration hearing breached section 19 of the Arbitration Act and should be set aside. The Court returned the parties to arbitration with a different arbitrator to begin the process anew.

In Duguay v. Thompson-Duguay15 , one of the reasons for setting aside the arbitrator’s award was that he proceeded with the arbitration in the absence of the mother after she refused to take part. In pushing ahead knowing the mother would not be a willing participant (and awarding the father everything he requested in the process), the arbitrator compromised his ability to decide the issues impartiality. Other reasons given by the court for setting aside the award included that the dispute resolution agreement was never signed by the parties and so was not enforceable, and the father, who was asking for enforcement of the award, was in breach of the settlement agreement by having reduced support unilaterally. He did not have clean hands to insist on the arbitration provisions of the agreement.  

In Webster v. Wendt16 , Justice Kiteley of the Ontario Superior Court found that the arbitrator had exceeded his jurisdiction by failing to ensure a fair hearing to the parties and set aside his award. The arbitrator erred in ruling evidence inadmissible that was material to the outcome of the case. He did not treat the applicants equally and fairly. The applicants did not have an opportunity to present their case or to respond to the respondent’s case; they were not given proper notice of the arbitration date to which their consent was required; and their multiple requests for adjournments were denied by the arbitrator.

The arbitrator did not balance the right of the respondent to proceed to a hearing on a date to which she had consented and for which she had a witness prepared, against the right of the applicants to consent to the hearing date in accordance with the arbitration agreement, and to be prepared for it. The arbitrator exceeded his jurisdiction in failing to give paramount consideration to the right of the applicant to a fair hearing. The Court found that he failed to comply with section 19 of the Arbitration Act to treat the parties equally and fairly and that his decision amounted to a denial of natural justice.  As a result of these errors, Justice Kiteley set aside the arbitrator’s award and ordered a new hearing with a different arbitrator as this was the only way to secure fair and equal treatment.

As discussed above, the court may disregard or set aside any provision within an arbitration agreement or award contrary to the best interests of a child pursuant to section 56.4(b) of the Family Law Act. In Hercus v. Hercus, the Superior Court confirmed that the Court is free to disregard provisions of an arbitration award or agreement if those provisions are found to be contrary to the best interests of the child, though on other matters the agreement or award may prevail.17

The case of K.M v. C.M.18 raised the issue of what access, if any, ought to be ordered by the Court to the applicant father pending a resolution of the dispute by a mediator or arbitrator.  The respondents were lesbian partners and the child’s primary caregivers. The applicant sought a temporary order for access together with an order referring the matter to mediation/arbitration. The respondents sought an order dismissing the applicant’s motion, or an order staying the applicant’s application so that the matter could proceed by way of mediation/arbitration. The respondent mother relied on section 6 of the Act as an absolute bar by the court to intervene in matters covered by the Act. However, Justice Spence invoked section 6(3) to exercise its jurisdiction to intervene, ordering access to restore the status quo pending the mediation or further order by the arbitrator to prevent unfair and unequal treatment. The respondent had attempted to impose a unilateral change in the access arrangements without first obtaining an order from a mediator, arbitrator or the court.

In Magee v. Olsheski19 , the arbitration dealt with issues that were not part of the arbitration or raised in the pleadings or submissions before the arbitrator. A consent order directed the arbitrator to determine only the issues raised in the pleadings, including costs. The respondent had sued the applicant for $20,000, which both agreed was owing under their separation agreement. The applicant defended by arguing that he had received a release from the respondent for that amount. The arbitrator was not impressed with the appellant. He called his defence worthless and censured him with a high cost award. The Court found that the arbitrator was without jurisdiction to deal with issues not raised in the pleadings, including rescission, and allowed the appeal and set aside the award.

The Arbitrator’s Delay:  Justice Delayed may be Justice Denied

An arbitrator may lose his jurisdiction to make a binding decision where he delays in releasing the arbitration award, in breach of the parties’ arbitration agreement and the Arbitration Act. In Flock v. Flock20 , the parties engaged in arbitration to resolve the outstanding issues arising from their marriage breakdown. The arbitrator released his decision thirty-three months after the arbitration concluded, failing to comply with his obligation to deliver his Award within sixty days of the Hearing pursuant Article IX of Alberta’s Arbitration Act.  The Wife was granted significant contested exemptions for property that the arbitrator traced back to the date of marriage. Between the end of the hearing and the release of the arbitration award, there was a significant increase in value of four pieces of property which were major assets involved in the arbitration.

The Husband applied to set aside or vary the Award, arguing essentially that justice delayed is justice denied.  He relied on Petro-Canada v. Alberta Gas Ethylene Co.21 in arguing that the arbitrator no longer had jurisdiction over the dispute given that the time to release his report had expired under the Act.  The Applicant had objected to the resulting prejudice of his financial interest as a result of the delay, relying, in part, on the intended purpose of the arbitration which was to achieve an efficient and fair resolution of the dispute between the parties.  The Court found that the delay of the Arbitrator took him outside the scope of his jurisdiction. By exceeding the allowable time in the Agreement for delivery of the Award, the Arbitrator lost the jurisdiction granted to him under the Agreement.

Evidentiary Issues – the appearance of unfairness

Further, in Flock, the Husband objected to the fact that the Arbitrator had re-opened the arbitration hearing for the purpose of requesting additional evidence from the Wife.  However, the Court found that it was within the Arbitrator’s powers to request additional evidence after the conclusion of the Hearing, but before the delivery of the Award in the absence of a restriction in the arbitration agreement. However, the exercise of that discretion was subject to the limits of fairness, compliance with the rules of natural justice, and any other constraints imposed by the Agreement.

The Court of Appeal found that the Arbitrator had the authority to request and accept additional evidence, but that his discretion was subject to the principles of natural justice. The Court found that those principles were violated not by the request for the evidence itself, but by the Arbitrator’s actions in obtaining the evidence for the following reasons:

  1. the Arbitrator waited over 15 months after the conclusion of the Hearing to request the additional evidence after the Husband’s first two letters protesting the delay;
  2. the evidence that was accepted by the Arbitrator was unsworn and he provided the Wife with specific details of what he had already and might further conclude if certain evidence was made available to him, unfairly leading the Wife to identify exactly what information was to be produced in order to establish her claim; and
  3. the Arbitrator failed to give proper consideration to the Husband’s analysis of the additional evidence and to adhere to procedures he himself put in place when requesting the new evidence. While he acknowledged that the Husband was the more qualified party to advise on the accuracy and completeness of the tracing of the exemptions, he proceeded to accept the Wife’s submission despite the Husband’s detailed analysis which pointed out that certain important receipts and records were missing. The Arbitrator denied the Husband the procedural step which would have enabled him to present his analysis and make clear exactly what the differing positions of the parties were with respect to the exemptions.

The Court found that the mere appearance of unfairness is sufficient to justify court intervention. In this case, the failure by the Arbitrator to properly consider and manage the impact of the delay and the manner in which the additional evidence was requested, accepted and considered goes beyond the point at which the process merely appears unfair to the Husband.  The arbitrator’s actions resulted in actual prejudice to the financial position of the Husband and a corresponding enrichment to the Wife.  Having found that the principles of natural justice had been violated after evidence had been heard and findings of credibility and fact made, the Court ordered that a new arbitration be conducted before a new arbitrator as the only way to ensure fair treatment of the parties.

The Challenging Party’s Delay:  Acquiescing to the Arbitration Award

Section 4(1) of the Arbitration Act provides that a party who does not object to non-compliance with a provision of the Act, (excepting section 3), within the time limit prescribed or within a reasonable time shall be deemed to have waived that right to object.  While section 4(2) purports to exempt this waiver from family arbitrations, the case law suggests that there is no exemption. A party’s failure to object to procedural irregularities in an arbitration proceeding may well amount to a waiver of that irregularity. A party who fails to object at an appropriate time early on in the process runs the risk of being foreclosed from objecting later on.22

In Metcalfe v. Metcalfe23 , the arbitrator’s award was delivered three months late. An application to set aside the award was brought on the ground that the arbitrator had no authority to issue an award as the decision was delivered much longer than the 30 days allowed after the close of the arbitration, and on the ground that the arbitrator made errors of law. Unlike the applicant in the Flock case, the applicant did not object to the delay until after the award was made, and the Court found that he had waived his right to have the award set aside.

However, the Alberta Court in Metcalfe did find that the arbitrator had made four errors of law with respect to averaging the payor’s income for child and spousal support purposes. Three of the four errors of law could not be properly addressed without a detailed knowledge of the factual evidence. In the circumstances, the Court held that the most appropriate remedy was to remit the errors back to the arbitrator for re-determination, employing Alberta’s equivalent to section 59.8(6) of the Family Law Act. Justice Nation ordered that a copy of her decision identifying the errors be provided to the Arbitrator.

The case of Acimovic v. Acimovic24 is a study in how not to attempt to challenge the arbitrator and his award, which dealt with the custodial and access arrangements concerning the parties’ only child.  The mother waited 8 months to move to set aside the arbitral award, well beyond the requisite 30-day time limit pursuant to the Arbitration Act. She argued that the arbitrator was biased, acted inappropriately, and that the court should invoke its parens patriae jurisdiction to set aside the award. The mother made serious allegations, but continued in the mediation/arbitration process without complaint. Justice Fragomeni dismissed her motion as her allegations were inconsistent with her allegations of bias. Had she proven bias, the award would have been set aside.  Her argument would have been stronger had she withdrawn from the process and immediately launched her application to set the award aside. Remaining in the arbitration in the face of allegations of bias will weaken one’s attempt to challenge the arbitrator. 

In Shoval v. Shoval25 the parties entered into two separation agreements as a result of mediation/arbitration agreements. The first agreement provided that the child would live with his mother in Israel and would visit his father in Canada for a period of two to three weeks. After the visit, the child disclosed that he had been sexually abused by his father. Consequently, the Wife refused to allow the child to visit his father in Canada. Following the disclosure, the father requested an arbitration hearing and the arbitrators assumed jurisdiction. The arbitrators ordered the mother and child to return to Canada, and suspended the father’s access pending an investigation and report from Jewish Family and Child Service.

Prior to an application for judicial review, the father brought a motion under section 50 of the Arbitration Act to incorporate the terms of the arbitrators’ award into a court order. The mother did nothing to challenge the arbitration award by way of appeal under the Act or by way of judicial review. Given that there was no pending appeal or application to set aside the award, or application for declaration of invalidity, Justice Nelson issued judgment incorporating the arbitration award into an Order of the Superior Court. The mother subsequently appealed that order to the Court of Appeal. The mother also issued and served an application for judicial review of the award. However, she did not perfect the application within the requisite time period under the Rules and her application was dismissed. She sought to set aside the Order of the Registrar dismissing the Application. Her motion to set aside that Order was dismissed without prejudice to renewing the motion once the Court of Appeal rendered its decision.

Coming to court with clean hands

A party seeking to challenge or remove an arbitrator must come to court with clean hands. In Ensandoost v. Akhavi26 , the applicant applied to set aside certain interim arbitral awards, to stay the continuing Arbitration Hearing scheduled within weeks of the application, and to remove the arbitrator. The Applicant brought his application outside the requisite 30-day time period. He relied on the exception to the 30-day time period contained in section 47(2) of the Arbitration Act, alleging fraud and corruption on the part of the arbitrator.  Justice Marchand found no evidence of corruption or fraud as the applicant, who had been dissipating his assets, had consented to a temporary award vesting the matrimonial home in the arbitrator’s name in trust for the benefit of the parties’ child pending a further arbitration award. The Applicant did not come to court with clean hands as he had not complied with earlier interim arbitral awards. The mediation/arbitration agreement signed by the parties permitted the arbitrator to make certain interim and final awards. The applicant’s Notice of Application was struck with costs.

Appealing the Arbitration Award

Appeals of arbitration awards lie to the Superior Court, and not the Divisional Court. In Kucyi v. Kucyi27 , the applicant brought an application to the Divisional Court seeking to set aside or quash the arbitration award, alleging that the arbitrator did not treat her equally and fairly, and did not give her sufficient opportunity to present her case, or to respond to the respondent’s case. She further contended that he erred in refusing to enforce the undertakings of the respondent, he erred in allowing the respondent to submit documents before and during arbitration, and in limiting the applicant to a ten minute adjournment. Finally, the applicant alleged that he erred in his decision on the merits and on costs.

The parties had signed a mediation/arbitration agreement which provided that the arbitrator’s award was final and binding on the parties subject to the right of judicial review.  In characterizing the arbitrator’s award as ‘final and binding upon the parties’, the Superior Court found that they intended to exclude the right of appeal. The phrase ‘subject to the right of judicial review’ could require the exercise of discretion to hear an application for judicial review unless it was otherwise appropriate.  The Court interpreted the phrase to reflect the ability of either party regardless of the content of the arbitration agreement to apply under section 46 of the Arbitration Act to set aside the award within 30 days after the release of the award pursuant to section 47.  The applicant brought her application within 30 days, but brought it before the wrong court. In the circumstances, the Court exercised its jurisdiction to adjourn the application based on section 46 of the Act to a judge of the Superior Court as the matter affected the welfare of a child. The other respects of the arbitration were stayed.

Interpreting the Arbitration Award

In Haratsis v. Haratsis28 , the Wife brought a motion for summary judgment, contending that the arbitrator’s decision was clear, while the Husband requested that the matter be referred back to the arbitrator for clarification pursuant to section 45(4) of the Arbitration Act. Justice Thorburn dismissed the Wife’s motion, stating that the interpretation of the arbitrator’s clause had to be referred back to the arbitrator for a determination. Her Honour held that the Court had no jurisdiction to interpret the arbitrator’s decision, but rather could only enforce the award pursuant to section 6 of the Act.

Meeting the test for reasonable apprehension of bias

In Kay v. Korakianitis29 , the Wife brought a motion under section 6 of the Arbitration Act to confirm the parties’ arbitrator pursuant to section 6(2). The parties’ interim separation agreement stated that a lawyer, who was named, would mediate the outstanding issues, and if the matter proceeded to arbitration, that another lawyer in his office, also named in the agreement, would act as an arbitrator. The Husband sought to remove the arbitrator alleging that he had had unilateral discussions with the Wife’s counsel and had discussed the merits of the case with the mediator at their law office.  The Husband argued that the mediator and arbitrator were designed to be separate to ensure that no bias could be claimed by either party. He claimed that the roles had been blurred and intertwined, and that the blurring was fatal to the arbitrator’s ability to be impartial.

While the Court held that it was preferable in the two-step process that there be no communication between the mediator and the arbitrator except to confirm whether the mediation had concluded, the Court was not satisfied that there was any basis to conclude that the Husband had an objective basis on which he could assert a real or a reasonable apprehension of bias on the part of the arbitrator. To be successful in challenging the arbitrator, the moving party must meet the test for reasonable apprehension of bias as set out in Committee for Justice and Liberty v. National Energy Board30 . The Court confirmed that if a mediator discloses to an arbitrator the contents of the mediation, that is, the positions taken by the parties with respect to the outstanding issues and her views on the reasonableness of those positions, which was not the case in Kay v. Korakianitis, then the purpose of the mediation/arbitration is defeated, the reasonable apprehension of bias test is met and the arbitrator may removed.

3.  CONCLUSION

While the legislature has provided the Courts with clear instructions to exercise the highest deference to arbitration awards and arbitration clauses generally, an arbitrator must ensure that the basic rules of evidence and the principles of natural justice are not violated at any time during the arbitration process, otherwise the arbitrator may be challenged and his or her award set aside pursuant to the Family Law Act and Arbitration Act.

The challenging party who believes that the arbitrator has not treated him or her equally and fairly, in breach of section 19 of the Arbitration Act, should object to the arbitrator or the process at the first opportunity, and comply with the requisite time periods set out in the Act in bringing his or her application to challenge or remove the arbitrator, and to set aside or appeal the award.  A party who delays in stating his objections may waive his right to challenge the arbitrator or the award by acquiescing to it.

Courts are increasingly sanctioning arbitration and mediation/arbitration agreements and encouraging parties to settle their disputes outside the crowded court system. However, the Family Law Act and Arbitration Act are clear that the Court may intervene where the arbitration has run afoul and the integrity of the impartial process has been violated by the arbitrator.  

 

1 We are grateful to Jim MacDonald for his contributions to this paper.

2 See the Ontario Court of Appeal decision in Marchese v. Marchese 2007 CarswellOnt 248 (Ont. C.A.) in which the Court reinforced the notion that the mediator/arbitrator has the jurisdiction to resolve disputes between the parties where the parties have signed a written mediation/arbitration agreement. In Cedrone v. Quartarone (April 19, 2007, Perkins J, unreported) and Sawatzky v. Sawatzky (March 7, 2007, Rogers J., unreported), the Ontario Superior Court stayed the Court’s jurisdiction and ordered the parties to deal with the outstanding issues in mediation/arbitration where there was a written agreement to mediate/arbitrate the dispute.  

3 Family Law Act, R.S.O. 1990,c. F.3 as am. (“Family Law Act”), section 59.7(2) Some of the rules governing ordinary family arbitrations and the enforceability of ordinary family arbitrations are modified for secondary arbitrations as outlined in section 59.7(1) of the Act.

4 1991 S.O. 1991, c.17, as amended by 2006, c.1, s.1; 2006, c.19, Schedule C, s.1(1) (“the Act”)

5 For more information, please visit the Ministry’s website at: http://www.attorneygeneral.jus.gov.on.ca/english/family/arbitration/ 

6 Family Law Act, section 59.1(1) & 59.1(2)

7 Family Law Act, section 59.3

8 Family Law Act, section 59.6(1)(a)

9 Family Law Act, section 59.6(2). See section 59.7(1) of the Family Law Act for a review of the special rules that apply to a secondary arbitration and to an award made as a result of a secondary arbitration.  In particular, it is not necessary for the parties to receive independent legal advice before participating in the secondary arbitration; the requirements of section 38 of the Arbitration Act need not be met; and the award is not enforceable for the sole reason that the separation agreement was entered into or the court order or earlier award was made before the dispute to be arbitrated in the secondary arbitration had arisen.

10 Family Law Act, section 59.6(1), Arbitration Act, s.38.

11 Family Law Act, sections 33(4), 56(1)(4)

12 Arbitration Act, section 45(6)

13 2001 CarswellOnt 452 (Ont.S.C.J.) at 75

14 2006 CarswellOnt 3703 (Ont.S.C.J.)

15 2000 CarswellOnt 1462 (Ont.S.C.J.)

16 2001 CarswellOnt 519 (Ont.S.C.J.)

17 See also Duguay v. Thompson-Duguay, 2000 CarswellOnt 1462 (Ont.S.C.J.)

18 2007 CarswellOnt 6462 (O.C.J.)

19 1995 CarswellOnt 101 (O.C.J.)

20 2007 CarswellAlta 736 (Alta.Q.B.)

21 (1991), 121 A.R. (Alta Q.B.)

22 Mullins v. Mullins, 1983 CarswellOnt 912 (Ont.S.C.)

23 2006 ABQB 798 (Alta. Q.B.)

24 2006 CarswellOnt 6228 (Ont.S.C.J.)

25 2005 CarswellOnt 2383 (Ont.S.C.J.); 2005 CarswellOnt 7453 (Ont. Div. Ct.)

26 2007 CarswellOnt 2076 (Ont.S.C.J.)

27 2005 CarswellOnt 7579 (Ont.S.C.J.)

28 2007 CarswellOnt 625 (Ont.S.C.J)

29 2007 CarswellOnt 4748 (Ont. S.C.J.)

30 [1978] 1 S.C.R. 369 (S.C.C.)