Ontario Court of Appeal – Judgment Overturns Disqualification of an Arbitrator and Confirms Scope of Arbitrators’ Duties of Disclosure and Impartiality
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On November 19, 2024, the Court of Appeal for Ontario released its decision in Aroma Franchise Company, Inc. v. Aroma Espresso Bar Canada Inc., a leading case on arbitrators’ duty of disclosure and its relationship to their duties of independence and impartiality. The Court reversed the decision of the application judge, who had disqualified an arbitrator in a significant franchise arbitration for his failure to disclose to the parties in that arbitration that he had subsequently been retained in a second arbitration involving one of the same counsel acting in the first arbitration.
The decision addresses the scope of arbitrators’ duty of disclosure, provides guidance as to how that duty applies, and explains the relationship between failure to disclose, reasonable apprehension of bias, and the duty of impartiality. The Court confirmed that the test for reasonable apprehension of bias is objective, and that a presumption of impartiality applies to arbitrators. It also confirmed that while the objective test is context and fact specific, the subjective views of the parties are not relevant. LOLG acted for the interveners ADR Institute of Canada Inc. and the Toronto Commercial Arbitration Society on the appeal. The decision can be found here.