Freshly ground look at whether arbitrator had shown bias: Ontario Court of Appeal reinstates award 

In ReSolution Issue 36, we covered a finding in the Ontario Supreme Court that an arbitrator had caused a reasonable impression of bias. The Supreme Court had found that such an impression was caused by its failure to disclose a previous appointment. Consequently, the Supreme Court set aside the award.  

The Court of Appeal in Aroma Franchise Company, Inc. v. Aroma Espresso Bar Canada Inc., 2024 ONCA 839, has now addressed the matter, finding that the arbitrator did not create such an impression. It has reinstated the award.   

The dispute between Aroma Franchise Inc. (Aroma Franchise) and Aroma Espresso Bar Canada Inc. (Aroma Espresso Bar) involved an allegation of breach of contract and wrongful termination of their franchise agreement.  

Their contract contained a dispute resolution clause for arbitration. One of these requirements was that no arbitrator could have a prior social, business or professional relationship with either party.  

At the conclusion of the arbitration, the arbitrator accidentally made it known that he had accepted an appointment by the lawyers of Aroma Espresso Bar. This omission spurred on the Supreme Court decision, which reaffirmed the principle that the appearance of bias is just as fatal as actual bias.    

The Court of Appeal (the Court) has disagreed with the Supreme Court. In the Court’s view, the action did not create an apprehension of bias. The Court framed the situation as being one where the arbitrator received income from the parties to a second, but unrelated, arbitration. It just so happened to be that one of the parties shared counsel with Aroma Espresso Bar. Aroma Franchise’s big concern in relation to this, had been over the lack of disclosure about the arrangement. However, leading cases on apparent bias had not considered payment from a party to be a reason for disclosure in and of itself.  

The Court held that the context did not give a reasonable apprehension of bias: 

In my view, neither the familiarity concern nor the financial aspect of a second appointment is, on its own, objectively likely to give rise to justifiable doubts about impartiality.  

The Court reinstated the award.