Executive Summary: Key Legal and Evidentiary Issues

• Appeal focused on whether an arbitrator should be removed for alleged bias due to undisclosed involvement in another arbitration.

• Court found the allegation of reasonable apprehension of bias lacked merit because the arbitrator’s other involvement was unrelated and non-prejudicial.

• Appellants’ motion to disqualify the arbitrator was brought years too late under the Arbitration Act’s strict 15-day limit.

• Allegations of actual bias failed as the arbitrator’s comment on false affidavit statements was within his adjudicative role.

• Court emphasized that negative credibility findings alone do not establish bias in arbitration or litigation.

• Appeal dismissed with costs of $20,000 awarded to the respondents as agreed.

Background and procedural history

In 2018, the parties—Jagtar Dhaliwal and Voxx Sports Inc. on one side, and multiple corporate and individual respondents including Richter International Ltd. on the other—became embroiled in a commercial dispute. Due to court delays during the COVID-19 pandemic, both sides agreed in 2020 to resolve their matters through private arbitration. An arbitrator was appointed, and the parties entered into a formal arbitration agreement in October 2020.

Despite this alternative dispute resolution path, the arbitration remained unresolved nearly five years later due largely to numerous procedural motions brought by the appellants. One such motion, and the focus of this case, was the appellants’ effort to remove the arbitrator on the grounds of bias.

Bias challenge during arbitration

The appellants argued that the arbitrator had a conflict of interest because he failed to disclose that he was simultaneously involved in another arbitration with the respondents’ legal counsel. They alleged this omission gave rise to a reasonable apprehension of bias and, later, actual bias. They further claimed that the arbitrator’s comment—stating that Mr. Dhaliwal had made “false statements” in an affidavit—crossed a line into improper and prejudicial conduct.

The arbitrator dismissed the motion. He ruled it was untimely under section 13(3) of Ontario’s Arbitration Act, 1991, which imposes a 15-day deadline for raising bias concerns. He also found no reasonable basis for the bias allegations, stating that the separate arbitration had no bearing on the current proceedings and did not create a conflict. He maintained that the challenged comments were simply credibility assessments and fell within the scope of his responsibilities as arbitrator.

Application and appeal in court

The appellants then applied to the Ontario Superior Court to have the arbitrator removed, repeating their arguments about both reasonable apprehension of bias and actual bias. The application judge rejected both claims and upheld the arbitrator’s decision. She ruled that the bias challenge was indeed time-barred and that no evidence demonstrated that the arbitrator’s prior involvement with the respondents’ lawyer compromised his impartiality. She also found that the arbitrator’s remarks about Mr. Dhaliwal’s credibility did not amount to bias, emphasizing that arbitrators are entitled to assess evidence and make credibility determinations.

The appellants appealed that decision to the Ontario Court of Appeal.

Court of Appeal decision

The Court of Appeal agreed with the application judge on all fronts. The court held there was no reasonable apprehension of bias stemming from the arbitrator’s participation in an unrelated arbitration with the respondents’ counsel. It found that arbitrators are not obligated to disclose every prior engagement, especially when it does not compromise their independence or create a legitimate concern about impartiality. The court also rejected the suggestion that the arbitrator’s finding that Mr. Dhaliwal made false statements reflected actual bias, noting that arbitrators and judges routinely make credibility assessments that do not amount to prejudice or misconduct.

In closing, the Court of Appeal emphasized that allowing disqualification motions based on unfounded claims or adverse findings would undermine the efficiency of arbitration. The appeal was dismissed, and the respondents were awarded $20,000 in costs, as agreed by the parties.