Ensuring Procedural Fairness in Arbitration
In the case of Petersoo v. Petersoo, the parties were arguing over several issues, including parenting and child support. When mediation failed, they turned to arbitration. The arbitrator held a pre-arbitration conference to determine various matters including the issues for arbitration. There is no record of what happened at the pre-arbitration conference and there were no pleadings.
The day before the arbitration commenced the wife delivered her opening statement and there, apparently for the first time, raised her desire to relocate with the children to Guelph so that they could attend the private school that she thought was more suitable for their educational needs.
The arbitrator awarded sole custody of the parties’ three children to the wife, permitted her to relocate with the children from Toronto to Guelph, Ontario, made a child and spousal support award, and an award of costs.
The husband moved to set aside the arbitral award on the basis that it was procedurally unfair because he only received notice that mobility was an issue for the arbitration the day before it was commenced. He challenged the entire decision of the arbitrator. This matter was an appeal of an arbitral award.
The Court found that the wife’s opening speech was the first meaningful notice the husband had that mobility was going to be an issue. The husband did not request an adjournment once he received this information. The husband argued that he refrained from seeking an adjournment because he had sought one earlier in the arbitration process and had been denied.
Justice Akbarali decided that the arbitral award that addressed parenting ought to be set aside. It was fundamentally unfair that the husband was not given adequate notice that the issue of mobility would be part of the arbitration. Furthermore, the arbitration did not comply with section 19(2) of the Arbitration Act which requires that "each party shall be given an opportunity to present the case and to respond to the other party's case."
In order to meaningfully present a case and respond to another party's case, a party must know what issues are in dispute. The judge described this as an “elemental” part of the legal process. No pleadings were exchanged to define the issues.
Even though they are not mandatory in arbitration, the judge remarked how helpful pleadings can be in creating a fair dispute resolution process. They serve to provide notice and certainty about the case to meet. Any fair dispute resolution process requires notice and certainty. Pleadings are simply and effective way to ensure these requirements are met.
The parties’ Mediation-Arbitration Agreement provided for a pre-arbitration meeting at which, among other things, the issues for arbitration could be defined. Justice Akbarali stated that there was no evidence before her as to what issues were defined in this meeting. Absent this evidence, the judge could not address what issues were or were not discussed prior to arbitration.
However, the wife admitted to the court that mobility was not addressed at that time. Her Honour went on to say that based on the obligation set out in s. 19(2) of the Arbitration Act, it was incumbent on the arbitrator to enquire about the issue, in order to ensure proper notice was given. The arbitrator ought to have recognized the issue of mobility as a new one and made enquiries as to when it arose.
In the end, Justice Akbarali found that, “[t]he failure to ensure procedural fairness in the process is a denial of natural justice. This denial amounts to an error of law that requires intervention. It is necessary to set aside the arbitral award as it relates to parenting issues.” As such, the award regarding mobility was set aside.
The husband also sought relief from the court with regards to the arbitrator’s decision to impute his income to $250,000 per year for child support purposes. The court refused to set the arbitrator’s decision aside on this point, since the husband had sufficient time to prepare his arguments, and there were no obvious flaws with the reasoning offered by the arbitrator.
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