Arbitration is a favourable alternative to traditional trial proceedings due to its expeditious and efficient nature, making it an attractive option for commercial disputes. But what happens when the arbitration process encounters delay? In a notable family law decision, Maharajh v. Mathura, 2024, ONSC 5737 (CanLII), the Ontario Superior Court of Justice issued an order under s. 15(1) of the Arbitration Act to remove an arbitrator due to significant delays in the mediation-arbitration process. This post explores the key takeaways from this decision and its broader implications for commercial disputes.
Factual background
Ms. Maharajh and Mr. Mathura were married in 2011 and separated in 2021. Following their separation, Ms. Maharajh brought a claim for equalization, post-separation adjustment expenses, ongoing and retroactive child support and Federal Child Support Guidelines, section 7 expenses. The parties were given a court date in March 2024 to address Ms. Maharajh’s claims.
Despite the scheduled date for trial, the parties were encouraged to explore alternative pathways for dispute resolution. They agreed to use the arbitration services of an arbitration, and in March 2024, they engaged in a mediation which was ultimately unsuccessful.
After the mediation, Ms. Maharajh faced prolonged delays in moving the matter to arbitration. The arbitrator failed to make any substantive efforts to advance the proceedings and was largely unresponsive to communications from Ms. Maharajh and her counsel. Despite initially offering to schedule a conference call, the arbitrator remained silent for nearly a month. Repeated attempts by Ms. Maharajh to reach the arbitrator went unanswered, and even a follow-up phone call from her counsel was met with silence.
Ms. Maharajh’s efforts were further frustrated by Mr. Mathura’s lack of cooperation. Mr. Mathura made no effort to exchange substantive offers to settle or otherwise engage with resolution process.
By August 2024, Ms. Maharajh’s counsel wrote to the arbitrator expressing Ms. Maharajh’s concerns with the delays. The letter sought the arbitrator’s authority to withdraw from the matter and advised that leave to bring a motion removing the arbitrator had been granted. Finally, the arbitrator responded by providing available dates for the arbitration, but offered no explanation for the delays. By this point, Ms. Maharajh lost all trust in the arbitrator and sought to have her removed.
Analysis
Section 15(1) of the Arbitration Act gives the court’s jurisdiction to remove an arbitrator “[…] on a party’s application if the arbitrator becomes unable to perform his or her functions, commits a corrupt or fraudulent act, delays unduly in conducting the arbitration or does not conduct it in accordance with section 19 (equality and fairness).” See the Arbitration Act, 1991, SO 1991, c 17.
The jurisdiction granted under s. 15(1) is rarely exercised as the threshold is high. In Rosenberg v. Minster, 2014 ONSC 845, the Court has held that “mere delay is insufficient to destroy the arbitration.” There must be some form of prejudice or unfairness that fundamentally undermines the decision to arbitrate (see Rosenberg at paras. 38 and 58 and Maharajh at para. 19). There is a two-part test, which considers:
- Whether the arbitrator unduly delayed the parties’ arbitration; and
- Whether the delay has caused prejudice and unfairness that fundamentally undermines the agreement to arbitrate.
In this case, the Court was satisfied that both prongs of the test had been met.
First, the Court accepted that the arbitrator did not respond in a timely manner, despite numerous attempts to contact her. No explanation was given. Notwithstanding the delays caused by Mr. Mathura, the proceedings were undoubtedly delayed by the actions of the arbitrator. Her refusal to respond to the numerous communications from Ms. Maharajh and her counsel between April and August 2024, without reason, delayed the expected timeline of the arbitration.
Second, the delays caused by the arbitrator fundamentally undermined the agreement to arbitrate. The Court underscored that had the parties proceeded with the initial trial date in March 2024, it is likely that they would have received a decision before the date of the motion to remove the arbitrator. Instead, Ms. Maharajh lost the opportunity to have this matter settled by way of a trial, which was fundamentally unfair. The parties’ agreement to arbitrate was motivated, in part, by the promise of efficiency. This has been severely undermined by the arbitrator’s actions.
Ms. Maharajh was also prejudiced by the actions of Mr. Maharaj. Accordingly, after determining that
Ms. Maharajh’s motion to remove the arbitrator should be granted, the Court opted not to select a new arbitrator. The Court held that Mr. Mathura’s refusal to engage productively and act cooperatively in the proceedings render arbitration ineffective. In the Court’s view, a return to arbitration would not result in a just resolution of the matter. The parties were ordered to return to the trial management process.
Key takeaways
Ultimately, methods of alternative dispute resolute, such as arbitration, require all parties to work together cooperatively. This includes the arbitrator.
This case highlights that, while removing an arbitrator is uncommon, it can be done. Section 15(1) of the Arbitration Act protects the interests of all parties involved in the arbitral process, reinforcing the advantages of a more expeditious and efficient dispute resolution process. Although the Court’s intervention here was in the context of a family law matter, there is nothing to suggest that the same test does not apply to commercial arbitration. Where an arbitrator is delaying to the point where there would no longer be a just resolution, they can be removed. The better option, of course, is to select a responsive arbitrator who has time in their schedule to hear the matter.
For more information on this topic, please reach out to the authors, Chloe Snider and Ekin Cinar.
The authors wish to thank Ananta Sriram, articling student, for her assistance with this article.
