Case information

Arbitration — Arbitrator — Bias — Reasonable apprehension of bias — During the arbitration, counsel for one party engaged arbitrator for subsequent arbitration — Engagement not disclosed to other party — Whether arbitrator should have disclosed engagement — If so, whether failure to disclose created reasonable apprehension of bias — consequences of failure to disclose.

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The applicants and the respondents engaged in a lengthy international commercial arbitration addressing disputes that arose under a Master Franchise Agreement. About 15 months before the final award was released, the respondents’ lead lawyer asked the arbitrator if he would serve as arbitrator in another arbitration that did not involve any of the parties to the Aroma arbitration, nor did it involve issues that significantly overlapped with those in the Aroma arbitration. The arbitrator accepted the engagement without disclosing that he had been approached or that he had agreed to take it on to the applicants.

The applicants applied to the Superior Court to set the final award and ancillary awards concerning interest and costs aside.

The application judge set the arbitrator’s awards aside and directed that a new arbitration be conducted by a new arbitrator, in part because the correspondence between counsel made it clear that counsel for the applicants were concerned that the arbitrator did not have a prior relationship with the other counsel. The Court of Appeal allowed the appeal, set aside the judgment of the application judge, and returned the matter to the Superior Court to address the other grounds raised by the applicants. Viewed objectively, the arbitrator’s failure to disclose his engagement in a second, unrelated arbitration which had no common party and no overlapping issues of significance was not a breach of the legal duty of disclosure. The failure to disclose according to a party’s expectation does not displace the presumption of impartiality where the concerns are not shared with the arbitrator.