CANADA Trends and Developments Contributed by: Craig A.B. Ferris KC, Michael J. Donaldson KC and Scott Lucyk, Lawson Lundell LLP
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Introduction In this year’s Canada Trends and Developments chapter for the International Arbitration Global Prac - tice Guide, we begin with a discussion of the Ontario Court of Appeal’s highly anticipated decision in Vento Motorcycles, Inc. v Mexico , 2025 ONCA 82 ( Vento ) that set aside a NAFTA arbitration award based on a reasonable apprehension of bias. In setting aside the award, the court reiterated the serious threat to the legitimacy of arbitral proceedings posed by bias and the objective test for bias under the Model Law. Mexico has sought leave to appeal to the Supreme Court of Canada (SCC). It should be interesting to follow this case and see if the SCC has any further comments. We also look at the Alberta Court of Appeal’s deci - sion in Husky Oil Operations Limited v Technip Stone & Webster Process Technology Inc , 2024 ABCA 369 ( Husky Oil ), which provides guidance on when a non- party to an arbitration agreement may be compelled to arbitrate. The court considers whether a benefit con - ferred on a third party (in this case, a warranty) can impose an obligation to arbitrate related disputes, if other parties to the underlying agreement have agreed to arbitrate. The court finds that the consent of an affected party must be expressed in clear and explicit language. Finally, we review NorthStar Earth & Space Inc. v Spire Global Subsidiary, Inc. , 2024 ONSC 5060 ( NorthStar ) where the Ontario Superior Court modified the well- established mandatory injunction test to align with the test that would have applied had the injunction been sought in arbitral proceedings.
Reasonable Apprehension of Bias of One Tribunal Member Results in an Award Being Set Aside In Vento , after the arbitral panel rendered the final award under the North American Free Trade Agree - ment (NAFTA), Vento learned that Mexico’s appointed arbitrator had a series of undisclosed communications during the arbitration with the Mexican government, including Mexico’s lead counsel in the arbitration. Those communications included discussions about the arbitrator’s potential inclusion in two of Mexico’s rosters for trade agreement arbitration panels. In response, Vento applied to set aside the award based on a reasonable apprehension of bias. On initial review, the Ontario Superior Court of Jus - tice found a reasonable apprehension of bias arising from Mexico’s offer of professional opportunities to the arbitrator. An informed person, viewing the mat - ter realistically and practically, would conclude that it was more likely than not that the arbitrator would have “a leaning, inclination bent or predisposition towards” Mexico, or that he could be influenced by factors oth - er than the merits of the case. The arbitrator had a duty to disclose the offers under both the Model Law and the IBA Guidelines. He failed to do so. Despite a finding of bias, the Ontario Superior Court of Justice decided not to set aside the award on the basis that it did not undermine the reliability of the Tribunal’s award, nor did it result in real unfairness or practical injustice. Vento appealed the lower court’s decision not to set aside the award. The Ontario Court of Appeal set aside the judgment. In doing so, the court confirmed
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