THE AUTHORS:
Andrew Kalamut, Partner at McCarthy Tétrault.
Jocelyn Turnbull Wallace, Partner at McCarthy Tétrault
Kyle R. McMillan, Associate at McCarthy Tétrault
This article was featured in Jus Mundi‘s 2025 Arbitration Year in Review, an annual publication analyzing arbitration developments across 40+ jurisdictions on 6 continents. This edition brings together young practitioners and senior experts to capture the year’s most significant legislative reforms, enforcement trends, and institutional innovations.
Courts Consider the Interplay of Court Proceedings and Arbitration
Several decisions from various jurisdictions in Canada considered the circumstances in which court proceedings ought to be stayed in favour of arbitration.
In Sivitilli v PesoRama Inc. (2025 ABCA 56), the Court of Appeal of Alberta (“ABCA”) examined whether a chambers justice failed to consider section 6(c) of Alberta’s Arbitration Act (RSA 2000, c A-43) which permits the court “to prevent manifestly unfair or unequal treatment of a party to an arbitration agreement” in a decision not to enjoin an arbitration. The first instance judge allowed a wrongful dismissal dispute to proceed to arbitration despite ongoing related oppression litigation, finding the matters sufficiently separable. The appellant had argued that the arbitration duplicated the court proceeding and should be stayed. However, the first instance judge found that the overlapping facts and the use of the oppression litigation as leverage in the arbitration claim did not warrant staying the arbitration. The ABCA determined that although the chambers justice did not expressly reference section 6(c) of the Arbitration Act, it found the judge’s decision was well reasoned and entitled to deference.
In Halton Healthcare Services Corporation v. Plenary Health Milton LP (2025 ONSC 2223), the Ontario Superior Court of Justice (“ONSC”) considered a party’s application seeking to stay litigation in favour of arbitration. The Court denied the stay and permitted the litigation to proceed. The ONSC found that there was no valid arbitration agreement; it also determined that the party seeking the stay had taken steps in the same litigation and that it had unduly delayed bringing the stay application. The Court was clear that it would respect agreements to arbitrate, but would not allow a matter that was never subject to an arbitration agreement to proceed in the place of litigation, particularly ongoing litigation.
In Zanin v. Ooma, Inc. (2025 FC 51), the Federal Court of Canada considered an arbitration agreement in a motion to certify a class action relating to marketing of a voice-over-internet-protocol telecommunication service. The Court found that the underlying contract contained a valid arbitration agreement, and that the competence-competence principle applied. The Court noted that only in exceptional circumstances would it not enforce an otherwise valid arbitration agreement, and finding no such exceptional circumstances in the case at bar, staying the action in favour of arbitration. The Court was not persuaded by unconscionability arguments, signalling that although courts will consider such arguments (following the Supreme Court of Canada’s decision in Uber Technologies Inc. v. Heller, 2020 SCC 16), the competence-competence principle will continue to apply in cases where it is not impossible for the parties to arbitrate, which is a very high bar.
Courts Provide Clarification on Appeals of Arbitral Awards
Canadian courts also considered whether and how arbitration awards may be appealed to courts.
In 2501373 Ontario Inc. et al. v. Selfe et al., 2025 ONSC 5216, the ONSC considered an application for leave to appeal an arbitral award. Under Ontario’s Arbitration Act, 1991 (SO 1991, c 17) where an arbitration agreement is silent on appeals, arbitral awards may be appealed on questions of law, with leave from the Court. The applicant argued that the terms of the arbitrator’s appointment was the relevant arbitration agreement, and was silent on appeals on questions of law, and that it was therefore permitted to seek leave to appeal. The Court disagreed, finding the share purchase agreement, over which the parties were arbitrating, was controlling, and expressly prohibited appeals. Citing the high bar for leave underscored in a previous 2025 case from the same Court (Ontario Minister of Transportation v. Link 427 General Partnership, 2025 ONSC 2375), the Court also found that even if appeals had not been precluded, it would not have granted the applicant leave because no truly extricable question of law had been identified.
In HZPC Americas Corp. v. Skye View Farms Ltd., 2025 PESC 25, the Supreme Court of Prince Edward Island (“PEISC”) considered the issue of which province was the proper seat of an arbitration in an application to set aside or appeal an award. The parties had proceeded to arbitration without discussing the seat of arbitration. The arbitration occurred under the auspices of the Fruit & Vegetable Dispute Resolution Corporation, whose arbitration rules stipulated that the seat of arbitration was Ontario, unless otherwise agreed. The hearing physically took place in Prince Edward Island. In the set-aside proceeding, the PEISC considered whether it was the proper reviewing court. The Court found that it was not, as the arbitration agreement stipulated Ontario as the seat and that the decision to physically conduct the arbitration in Prince Edward Island did not displace that choice of seat. The Ontario Arbitration Act 1991 allows non-Ontario courts to intervene in some matters governed by the Act, but not in hearing applications to set aside or appeal awards, which must be brought in Ontario.
Canadian Courts Confirm High Bar for Setting Aside Arbitral Awards
Two 2025 decisions from the ONSC highlight the high bar that courts apply for setting aside arbitral awards.
In The United Mexican States v. Gordon G. Burr (2025 ONSC 5724), the ONSC dismissed Mexico’s application to set aside an international arbitral award over allegations of procedural unfairness and denial of natural justice based on the arbitral tribunal’s refusal to order production of alleged “key documents” and failing to expressly reference each argument of the losing party in the decision. The Court emphasized that it would only intervene “when the Tribunal’s conduct is so serious that it cannot be condoned” and if the process offended “our most basic notions of morality and justice” (paragraph 75). Routine procedural decisions like the ones complained of do not meet this standard.
Similarly, in Tehama Group Inc. v. Pythian Services Inc. (2025 ONSC 4134), the ONSC refused to set aside an arbitral award based on allegations that the arbitrator’s process was unfair or contrary to the parties’ agreement. Pursuant to a previous decision of the Court (2024 ONSC 1819), the arbitration was heard by the global accounting firm PwC in Toronto. The Court determined that a lack of certain procedural steps (such as sur-reply or cross-examination), accorded with the parties’ agreed arbitration process, and did not meet the test to set aside under the Model Law on Commercial Arbitration, scheduled to the International Commercial Arbitration Act, 2017 (S.O. 2017, c. 2, Sched. 5).
Ontario Courts Apply Objective Test for Reasonable Apprehension of Bias of an Arbitrator
Two Ontario decisions considered the reasonable apprehension of bias.
In Vento Motorcycles Inc. v. Mexico (2025 ONCA 82), the Court of Appeal for Ontario (“ONCA”) held that a reasonable apprehension of bias by one member of a three-member tribunal “taints” the process and justifies the set-aside of an arbitral award. In this case, undisclosed communications between Mexico’s arbitrator nominee and government officials (which included professional advancement opportunities for the arbitrator) during an investor-state arbitration compromised the process’s integrity. The ONCA overturned the lower-court decision, which denied set-aside where there was no bias issue in play with respect to two members of the tribunal. By contrast, the ONCA determined that impartiality is paramount and that neither the lack of direct financial gain by the subject arbitrator nor the presence of other unbiased tribunal members mitigates the taint of bias.
In MTCC No. 1251 v. Windsor Arms Hotel Corp. (2025 ONSC 5009), the ONSC considered the importance of howarbitrators manage disclosure of conflicts of interest in arbitration proceedings. In this case, the arbitrator promptly disclosed a conflict arising from a business referral that he had received from an expert involved in the arbitration over which he presided. He indicated that he would not proceed with the arbitration unless all parties to the arbitration agreed to waive the conflict. He subsequently reversed position, stating that he would not recuse himself as arbitrator despite the absence of the waivers he had requested. He also continued to interact with the expert on the second matter and refused to disclose his emails with the expert to allow a party in the arbitration to assess the seriousness of the issue. The ONSC applied the objective test for assessing reasonable apprehension of bias set out by the ONCA in Aroma Franchise Company, Inc. v. Aroma Espresso Bar Canada Inc. (2024 ONCA 839), which focuses on what a reasonable and informed observer would conclude, and does not require proof of actual bias. The Court found that the combination of the referral and the arbitrator’s subsequent conduct (including admitting then denying the conflict, withdrawing his offer to resign without full waivers, refusing disclosure, ongoing interaction with the expert, etc.), rather than the referral alone, created an environment where a reasonable person could question the impartiality of the arbitrator. Therefore, the Court granted the application and removed the arbitrator.
New ADRIC Arbitration Rules – Effective March 1, 2025
The Arbitration Rules of the ADR Institute of Canada (“ADRIC”), which are commonly used in Canada, particularly in domestic disputes, were updated, effective March 1, 2025 (“2025 Rules”). Significant updates from the previous version of the rules (which had been in effect since December 1, 2016 (“2016 Rules”)) include:
- Disclosure at the appointment stage: The 2025 Rules impose on parties an ongoing obligation to disclose to potential arbitrators, the other parties, and ADRIC (if it is involved in the appointment process) “any information that would enable an Arbitrator to assess whether circumstances exist that may give rise to justifiable doubts as to the Arbitrator’s independence or impartiality”.
- Changes to pleadings and evidence procedures: The 2025 Rules align the ADRIC pleading procedure with standard international arbitration practice. An arbitration commences with a claimant’s Notice to Arbitrate. Respondents must respond with an Answer to Notice within 21 days, clearly stating any disputed facts, claims, issues, or disagreements regarding jurisdiction, arbitrator appointment or qualifications for arbitrators, as applicable. Any objections not raised at this stage will be lost, unless new facts arise. The first substantive submission of each party that follows must include all available evidence (including witness statements and expert reports). The 2025 Rules retain the Redfern-type process for document production.
- Updated arbitrator challenge procedures: The 2025 Rules create a fast and final process for challenging arbitrator appointments if there are defensible doubts as to the arbitrator’s qualifications, independence or impartiality. Within 15 days of becoming aware of a challengeable issue, a party may apply to ADRIC to obtain a challenge adjudicator to hear the dispute. The adjudicator’s determination is not appealable. Procedures for challenging the appointment of a challenge adjudicator or an interim arbitrator are also available, on similarly short timelines, and are likewise final and not appealable.
- Removal of the distinction between international and non-international arbitration: The 2025 Rules apply equally to international and non-international arbitrations (which are governed by separate legislation in most Canadian jurisdictions). The previous ADRIC rules stipulated that unless the parties agreed otherwise, the UNCITRAL Arbitration Rules would apply to an international arbitration under the auspices of ADRIC.
- Med-Arb procedure: The ADRIC Med-Arb Rules came into effect in 2020; the 2025 Rules refer to those rules and clarify how they interact with the 2025 Rules where an arbitration is converted into a med-arb.
- New appeal procedures: The 2025 Rules contain a set of procedures for when parties opt into the ADRIC appeal procedure. This provides for the possibility of an appeal in writing made to a three-person appeal tribunal.
- Equity, diversity, and inclusion: Under the 2025 Rules, ADRIC will consider equity, diversity, and inclusion (in addition to existing factors from the 2016 Rules) in its arbitrator appointment process.
- Precedents and checklist: The 2025 Rules contain a sample procedural order and simplified procedure, as well as a checklist for the parties’ preliminary meeting (i.e. the first case management conference).
- Updated arbitrator appointment procedure: Concurrently with the 2025 Rules, ADRIC released a new arbitrator appointment protocol, which sets out the procedures for arbitrators to be appointed by ADRIC and the criteria that arbitrators must meet to be considered for appointment.
Discover more insights into the latest developments in arbitration in 2025 from around the world now
ABOUT THE AUTHORS
Andrew Kalamut is a disputes and litigation Partner at McCarthy Tétrault LLP in Toronto and is a member of the International Arbitration Practice Group. His practice focuses on corporate/commercial litigation, particularly involving mining, construction/infrastructure, and professional negligence.
Jocelyn Turnbull Wallace is a Partner at McCarthy Tétrault LLP in Calgary and is a member of the International Arbitration Practice Group, where her disputes practice focuses on corporate commercial litigation and arbitration, both domestic and international, in industries such as construction, energy, and securities.
Kyle R. McMillan is an Associate at McCarthy Tétrault LLP in Calgary and is a member of the International Arbitration Practice Group, focusing on commercial litigation and arbitration in industries including energy, financial services and construction.
*The views and opinions expressed by authors are theirs and do not necessarily reflect those of their organizations, employers, or Daily Jus, Jus Mundi, or Jus Connect.
