ONTARIO – Arbitration – Principles of Natural Justice – The principles of natural justice and sections 19 and 46(1) of the Arbitration Act, 1991 require parties to be given the opportunity to make submissions. They do not require that parties be afforded a second opportunity to make submissions after they expressly declined the first opportunity to do so.

ONTARIO – Arbitration – Re-Opening A Decision – Invoking, applying and enforcing a prior award does not unfairly re-open an arbitrator’s prior award.

ONTARIO – Arbitration – Bias – To support a claim that the arbitrator was biased, a party must provide real grounds and evidence and not just argue that the arbitrator’s substantive findings were biased.

ONTARIO – Arbitration – Leave to Appeal Arbitrator’s Award – Where the arbitration agreement ousts all rights of appeal by use of unequivocal language of finality that does not allow any appeal of any issue, an application for leave to appeal will be denied. The language that any decision of the Arbitrator “shall be final and binding upon all of the parties” to the dispute and “there shall be no appeal therefrom” is unequivocal.

Edenrock Holdings Inc. v. Moscone
2025 ONSC 32 (January 3, 2025)
Ontario Superior Court of Justice (Parghi J.)

The Applications sought to set aside two arbitral decisions – the substantive decision and a related costs decision. Alternatively, they sought leave to appeal both decisions on questions of law. In the further alternative, the Applicants asked that the matter be remitted to a new arbitrator and that the court provide its opinion on questions of law as well as directions for re-determination. The Respondents brought their own application to enforce the decisions (paras. 1-2)

The Court held that there was no basis to set aside the decision or to grant leave to appeal, holding that “the arbitration agreement extinguishes all rights of appeal, the orders sought to be appealed do not raise questions of law, and in any event the test for leave to appeal on a question of law is not met.” (para. 3) Accordingly, the Applicants’ application was dismissed and the Respondent’s application to enforce the decisions was granted. (para. 38)

Background

Since 2020, the parties had conducted several arbitrations before the Arbitrator on a variety of issues, including allocation of rent in respect of a commercial property, allocation of display space in a showroom, allocation of charges for water use and certain costs of repairs. (para. 4)

The Applicants’ relied on section 46(1) of the Arbitration Act, 1991, S.O. 1991, c. 17 (“Act”), and in particular, the grounds that: “6. The applicant was not treated equally and fairly, [or] was not given an opportunity to present a case or to respond to another party’s case”; and “8. An arbitrator has committed a corrupt or fraudulent act or there is a reasonable apprehension of bias.” They also relied on s. 19 of the Act, which provides that there is a failure of natural justice when a party is not given the opportunity to present their case and respond to the other party’s case. (paras. 7-8)

The Applicants argued that where was a violation of their rights to procedural fairness and natural justice in three ways:

1. They were treated unfairly when the Arbitrator did not allow them to make submissions on the claims related to exterior water charges and the elbow pipe. There was no dispute that the Applicants had advised that they would not make substantive arguments on the exterior water claims because they did not attorn to the Arbitrator’s jurisdiction on those claims. The Arbitrator thus decided the claims based on the materials and not on any submissions from the Applicants, which the Applicants argued was improper. They argued that “once the Arbitrator decided he had jurisdiction over the exterior water claim, he should have gone back to them and invited them to make submissions before rendering the Decision. By not doing so, he denied them natural justice.” (paras. 10-12)
2. They were treated unfairly when the Arbitrator re-opened and re-interpreted their earlier awards when the display wall and rent adjustment awards were made. The Applicants argued that the Arbitrator unfairly re-opened the December 2021 award when they found that the Applicants had violated the “purpose, spirit, and intention” of the award, arguing that “this finding represents an unfair re-opening of the December 2021 award that introduced new, and subjective, criteria, resulting in prejudice to them.” (paras. 16-17)
3. The Applicants’ submitted that the Arbitrator’s conduct gave rise to a reasonable apprehension of bias against them, which justified setting aside the decision under s. 46(1)8 of the Act. The conduct upon which they relied was: “the Arbitrator’s assumption of jurisdiction over the exterior water claim, his making a decision on that issue in the absence of submissions from the Moscone Parties, his approach to the rent adjustment issue, his alleged reliance on the Moscone Parties’ violation of the ‘purpose, spirit, and intention’ of a previous decision, and his ‘attempting to re-design’ the showroom leaving ‘no other place for [the Moscone Parties] to put their displays.’” (para. 23)

The Applicants’ submitted in the alternative that they should be granted leave to appeal the decisions under section 45(1) of the Act because the Arbitrator had made errors of law. (para. 27)

Analysis

Motion to Set Aside the Decisions

The Court found against the Applicants on all three grounds they argued, holding as follows:

1. The principles of natural justice and sections 19 and 46(1) of the Act required that the Applicants have the opportunity to make submissions, which they were given through the timetable the Arbitrator established. The Applicants chose not to make submission and by doing so, “they declined the opportunity afforded to them by the Arbitrator.” The Court found that the Applicant had made a choice of how to proceed and did not choose to make substantive submissions. They also had not asked that the jurisdiction issue be determined first and reserved the right to make substantive submissions if the Arbitrator decided they had jurisdiction. The Court held that the Arbitrator did not have an obligation to give the Applicants a second opportunity to make submissions after they had expressly declined the first one. (paras. 13-15)
2. The Applicants’ argument about re-opening earlier decisions was “grounded in a selective and incorrect reading” of the Arbitrator’s decision. The Arbitrator had found that the Applicant’s erection of the display wall was contrary to the terms of the December 2021 award – not just the “purpose, spirit, and intention” of the award. The Court held that the Applicants’ assertion was “predicated on a partial reading of this sentence. It is untenable.” The Court also held that the Arbitrator did not establish a “new and unsupported, bright line cutoff of October 1, 2020” in the impugned decision. The Arbitrator referred to and reiterated that date in their October 2020 decision and relied on it to find that the decision disposed of the Applicant’s request, thereby invoking, applying and enforcing that award. (paras. 18-22)
3. The Court found no reasonable apprehension of bias based on its rejection of the Applicants’ substantive arguments about the Arbitrator’s substantive findings. The Court held that the Applicants had offered no “real grounds and no real evidence for the claim of bias”. (paras. 24-25)

Application for Leave to Appeal

The Court held that the there was no right of appeal from the Arbitrator’s final and binding decision based on the language of the arbitration agreement. The arbitration agreement provided that any decision of the Arbitrator “shall be final and binding upon all of the parties” to the dispute and “there shall be no appeal therefrom”. The Court held that “this language of finality is unequivocal and does not allow for any appeal of any issue, including a question of law.” (para. 28)

The Court also found that the issues the Applicants sought to appeal were not questions of law, holding that all three orders the Applicants attacked were “enforcement orders” that mandated compliance with the Arbitrator’s prior orders. “They cannot reasonably be characterized as determinations on questions of law.” (paras. 29-33)

In the alternative, the Court held that the Applicants had not made out the test for granting leave to appeal. (para. 34)

Application to Remit to a New Arbitrator

The Court dismissed the Applicants’ further alternative submission that the matter be remitted to a new arbitrator for consideration under s. 45(5) of the Act on the basis that there were no questions of law raised in the matter. (paras. 36-37)