Should I Stay an Arbitration or Should I Go
In a recent decision, the Ontario Superior Court of Justice provides guidance on a novel remedy under Section 13 (7) of the Arbitration Act, 1991, and determines the appropriate test for when a stay of an arbitration should be granted.
Overview
In Atkinsréalis Construction (Pacific) Inc. v. GIP Construction Ontario East Ltd., 2026 ONSC 4785, the Ontario Superior Court ruled on an unusual motion seeking to stay an arbitration pending the outcome of an application challenging an arbitrator’s conduct on the grounds of a reasonable apprehension of bias.
In determining the proper test for granting the stay under s. 13(7) of the Arbitration Act, 1991, the court was guided by principles set out by the Supreme Court of Canada in RJR—MacDonald v. Canada (Attorney General) for granting interlocutory injunctions or stays, and ordered a stay of the arbitration proceedings. It held that the applicant had established a strong prima facie case of a reasonable apprehension of bias, irreparable harm would occur if a stay was not granted, and only a minor inconvenience would result from the stay.
Background
This case stems from an arbitration relating to a construction project. The applicant raised issues with the arbitrator’s conduct during the arbitration process, including that the arbitrator engaged in cross-examination of witnesses as if he were the respondent’s lawyer, aiming to undermine the witnesses’ evidence. The applicant contended that the questioning created an impression that the arbitrator adopted the respondent’s positions on facts, issues, and credibility.
After eight days of witness testimony and evidence, the applicant advanced a motion asking the Arbitrator to recuse himself given the above conduct. The arbitrator released a decision shortly thereafter in which he determined that he did not need to recuse himself and should remain involved until completion of the arbitration.
The applicant then commenced an application in the Ontario Superior Court of Justice challenging the arbitrator’s decision not to recuse himself, raising the issue of reasonable apprehension of bias.
The application hearing took place in July 2026, but did not finish that day. The hearing was expected to proceed again on September 22, 2026. However, the arbitration was expected to recommence a short time later on October 5, 2026 to continue with expert witnesses.
Due to the close proximity of the hearing date and arbitration proceedings, the applicant commenced a motion under section 13 (7) of the Arbitration Act, 1991, seeking a stay of the arbitration pending the outcome of their application.
Analysis
Section 13 of the Arbitration Act, 1991 permits a party to challenge an arbitrator in limited circumstances. One of the grounds is when circumstances exist that may give rise to a reasonable apprehension of bias.
Section 13 (7), indicates that:
Arbitration may continue
(7) While an application is pending, the arbitral tribunal, including the challenged arbitrator, may continue the arbitration and make an award, unless the court orders otherwise. (Emphasis added)
The typical outcome is that the arbitration hearing will continue while the court challenge is underway. In his endorsement, Justice Myers highlights that s. 13(7) is an extraordinary process and is an exception to the general rule that challenges to the process need to await the final outcome of a proceeding.[1] However, in this case, the court grappled with the issue that the Legislature did not proscribe any test or grounds for the court to consider under s. 13(7).
To remedy this issue, the court turned to the common law test for a stay of proceedings and interlocutory injunctive relief as set out in RJR-MacDonald Inc. v. Canada (Attorney General), [1994] 1 SCR 311. The court also considered the statutory background and purpose of the Arbitration Act, 1991, to provide an independent arbitral process and to respect the high degree of deference to be given to arbitrators’ decisions.[2]
In consideration of these factors and on a plain reading of section 13 (7), the court determined that:
It is clear therefore that the mere bringing of an application in court to assert the issue of bias does not necessarily shut down the arbitration. In fact, it is reasonable to expect that arbitrators, having already ruled that they are entitled to sit, will likely want to keep the process moving toward a conclusion.[3]
The court determined that when considering whether arbitral proceedings should be stayed, the applicant must show that there is a “strong prima facie case” for their claim of reasonable apprehension of bias. This approach respects the need for court to “proceed warily and with deliberation before wading into an arbitration.”
Decision of the Court
The court reviewed the transcripts of the arbitrator’s questioning and the arbitrator’s written reasons for not recusing himself in determining whether the applicant had demonstrated a strong prima facie case. The court then considered whether there would be irreparable harm to either party if a stay were to be granted.
The court determined that the applicant had a strong prima facie case regarding the alleged bias based on the evidence before it. The court raised concerns with the arbitrator’s seemingly flawed reasoning underlying his decision not to recuse himself, and the arbitrator’s misunderstanding of his own cross-examination-like conduct. The motion judge noted that he had “serious concerns about the propriety of several of the Arbitrator’s interventions.”[4]
The court also weighed the potential for irreparable harm and the balance of convenience in relation to the stay. The court found that if a stay was not granted, irreparable harm would occur for the applicant if they were required to appear before the arbitrator and continue the remaining steps in arbitration given the serious allegations of bias. Justice Myers also indicated that the minimal delay between the hearing of the application and resumption of the arbitration would result in a short stay, which did not significantly inconvenience the respondents.
The court granted the stay of the arbitration pending the outcome of the application.
Conclusion
Justice Myers makes it clear that the remedy under s. 13(7) will only be granted if a strong prima facie case can be shown by an applicant. This means that it is likely only in limited circumstances that a court will grant a remedy under s. 13(7), given the requirement to present strong and convincing evidence, and the court’s reluctance to interfere with the role arbitrators and their proceedings.
As such, counsel should carefully consider the strength of available evidence, the cost and time required to argue the motion, and overall impact that a stay will have on their client’s case before looking to s. 13(7). However, Justice Myers’s decision provides some guidance as to what a court will consider when granting a remedy under this section, so counsel can be better informed when considering whether to pursue such a remedy.
[1] At Para 19
[2] Paragraphs 23-26
[3] Para 26
[4] Para 37