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Removal of an Arbitrator in British Columbia

Section 18(1) of the British Columbia Commercial Arbitration Act[1] (the “Act”) provides two grounds upon which a party may apply to a court to remove an arbitrator: arbitral error and undue delay. Arbitral error replaced the previous concept of misconduct and is defined in section 1 of the Act as “(a) corrupt or fraudulent conduct; (b) bias; (c) exceeding the arbitrator’s powers; (d) failure to observe the rules of natural justice”.Section 18(2) enables the court to deprive an arbitrator of his or her fees and direct the arbitrator to pay some or all of the costs if removed under Section 18(1). The intent of this section is to avoid burdening the parties with the cost of the first hearing in addition to expenses incurred for a second proceeding before a replacement arbitrator.Pursuant to section 18(3) of the Act, a court may appoint an arbitrator to replace one removed under section 18(1) and the effect of an appointment of an arbitrator under subsection (3) is as if the appointment had been made pursuant to the initial arbitration agreement

The Supreme Court of British Columbia in considering section 18 has held that the words “corrupt” and “fraudulent” were to be given their ordinary meaning.[2] “Corrupt conduct” is conduct so immoral that the injustice of the action would be evident such as activities undertaken with an evil purpose in mind or willfully immoral or dishonest which would impact the matter on which an arbitrator has been requested to adjudicate. “Fraudulent conduct” is conduct that is deceitful, dishonest, and deceptive. To succeed in an accusation of fraudulent conduct the litigant must show that the arbitrator knew or ought to have known that he or she was following a course of action that was deceitful, dishonest, and deceptive.

[1] Commercial Arbitration Act, R.S.B.C. 1996, c. 55
[2] Zaleschuk Pubs Ltd. v. Barop Construction Ltd., (1992) 68 B.C.L.R. (2d) 340 (B.C.S.C.)
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