There is often a misconception about the role of the arbitrator appointed to an arbitration panel by one of the parties. Where there is a three person panel called for under an Arbitration Agreement, most often the two arbitrators appointed by the opposite parties appoint the third arbitrator, who will act as the Chair.
The misconception arises as to whom the “loyalty” of an arbitrator appointed by a party lies- to-the party appointing, or the process. The answer clearly under Canadian law is the latter-the process. All of the appointed arbitrators, regardless of who appoints them, owe a duty of impartiality to all of the parties’ He or she must be not only be unbiased, but must be seen to be unbiased. The Arbitration Panel being seen as a mirror of a judicial process requires the same degree of independence and impartiality as one would expect of a judge.
In a recent decision of the BC Court of Appeal, Hunt v, The Owners of Strata Plan LMS25561 it was determined that an ex parte communication (i.e. an undisclosed communication made in the absence of the other party) between a party and its appointee that did not go to the merits of the case, but merely a strategic consideration, was sufficient to give rise to a reasonable apprehension of bias resulting in the quashing of the arbitration award. The premise of this is that both evidence and representations (which this communication fell into) are not permissible. “Whoever is to adjudicate must not hear evidence or receive representations from one side behind the back of the other…”2
It has been a long held belief that the arbitrator appointed by a party, while required to be unbiased and impartial, can still be predisposed to the perspective of the party who appointed them. As an example, on a lease rent renewal, one would expect the Landlord to appoint an arbitrator who has a history of being more sympathetic to Landlords. The conventional wisdom is that there is nothing wrong with that per se, so along as the appointee is not an advocate or partisan for the party appointing that person. They can seek to explain their understanding of the position advanced by the party appointing them, but must not compromise their independence, even if it means coming to a conclusion that does not advance the interests of the party appointing them. The Hunt case makes it clear that the person appointed as an “arbitrator” is not the “nominee” of the person appointing them. The duty of arbitrators once appointed is not to act as advocates but as ‘free, independent and impartial minds.’”3
In the result it can be a very tricky path to navigate when dealing with an arbitrator appointed by a party. Given the admonitions from the Hunt case and the major consequences for going “offside”, it is the course of prudence once the appointment has occurred to deal with that person no differently than one would with a sole arbitrator appointed by both parties or a judge. Communications on an ex parte basis of a strictly procedural nature may be permissible but anything beyond that is perilous.
If you have any questions, please contact our office.
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1 Hunt v. The Owners, Strata Plan LMS 2556, 2018 BCCA 159
2 Hunt, supra, at para. 87, p. 18
3 Hunt, supra, at para. 115, p. 22
