When will a Canadian court set aside or refuse to enforce an arbitral award?

Across cases involving set-aside applications, enforcement, arbitral finality, and stays in favour of arbitration, courts consistently rejected attempts to challenge an arbitral outcome simply because the losing party believed it was wrong.

Taken together, the five decisions illustrate an important feature of Canadian arbitration law: deference to arbitral outcomes is strong, but it depends on the integrity of the arbitral process.

What are the grounds to set aside an arbitral award in Ontario?

The Ontario Court of Appeal’s decision in Mexico v. Burr illustrates how demanding a challenge to an arbitral award can be.

The underlying dispute arose after Mexico revoked a permit allowing investors to operate casino games of chance. The tribunal concluded that Mexico had failed to accord fair and equitable treatment under NAFTA Article 1105 and awarded the investors more than $80 million.

Mexico sought to set the award aside and, after its application was dismissed, argued on appeal that the application judge had applied the wrong standard of review and that Mexico had been denied a full and fair opportunity to present its case.

The Court of Appeal rejected those arguments.

The relevant question was not whether a reviewing court would have reached the same conclusions as the tribunal. Judicial intervention was warranted only where the tribunal’s conduct was sufficiently serious that it could not be condoned and offended basic notions of morality and justice.

That threshold was nowhere near met. The arbitration had involved more than nine years of contested proceedings, nine hearing days, more than 20 witnesses, and over 1,500 pages of submissions. The court characterized Mexico’s arguments about documentary production as selective cherry-picking that presented a revisionist history of routine and largely inconsequential orders. As for the judicial review issue Mexico said was of central importance, it had occupied three paragraphs of hundreds of pages of written submissions and one sentence of Mexico’s opening.

The decision reminds us that a set-aside application is not an opportunity to reconstruct ordinary procedural disagreements as fundamental unfairness after an unfavourable award.

For counsel, it also underscores a practical point: if a procedural issue is genuinely important, it needs to be identified, developed, and preserved during the arbitration itself.

Can an arbitrator reconsider a final award?

Judicial deference operates not only after an award reaches court. It also reinforces the principle that an arbitrator’s authority has limits once a final award has been issued.

In Silver Elephant Mining Corp. v. Andean Precious Metals Corp., an arbitrator awarded Silver Elephant the USD $1 million it claimed but ordered each party to bear its own legal fees, citing divided success and conduct that had increased the other party’s costs.

Silver Elephant asked the arbitrator to reconsider the costs award. The arbitrator refused, concluding that the Partial Final Award was final and that she was functus officio.

The British Columbia Court of Appeal refused Silver Elephant leave to appeal. Notably, the court accepted that whether functus officio applies to arbitrators is a question of importance to those engaged in arbitration, but found the proposed appeal lacked sufficient merit to warrant a full hearing.

The court also considered the parties’ agreement, which provided that there would be no appeal from the arbitrator’s determination. The court read that provision broadly: it excluded appeals for errors of law and indicated that the parties intended the costs determination to be final and within the arbitrator’s discretion.

The court was also unpersuaded by the analogy between an arbitrator and a judge who may reconsider an order before it is formally entered. Courts possess inherent jurisdiction arising from their very nature as superior courts. Administrative tribunals do not, and any authority to reconsider must be found in statute. Arbitral tribunals likewise lack inherent jurisdiction, and no authority was cited supporting an arbitrator’s inherent power to reconsider a costs award.

The practical implication is straightforward. Parties should not assume that an arbitrator retains a general power to revisit a final award simply because one side believes that part of the result should be reconsidered.

The wording of the arbitration agreement also matters. A broadly drafted no-appeal provision can significantly restrict post-award recourse.

Can a Canadian court refuse to enforce an award on public policy grounds?

The Ontario Superior Court’s decision in Bluewaves Mobility Innovation Inc. v. Zillnk demonstrates a similarly restrictive approach to attempts to resist enforcement on public policy grounds.

The dispute concerned intellectual property relating to radios sold to Telus. During the arbitration, BMI sold the disputed intellectual property to its majority shareholder, without notice to Zillnk, without its consent, and without paying it anything. That same day, the shareholder resold the intellectual property to a US buyer, which agreed to pay USD $8 million in cash and shares for the intellectual property, together with associated Telus purchase orders. When Zillnk’s counsel asked about the transaction, BMI initially produced a fabricated version of the transfer agreement, which was withdrawn once BMI’s counsel learned what had been delivered.

The arbitrator ultimately awarded Zillnk USD $9,667,163 and CAD $6,113,706 plus costs, fees, and interest, together with continuing accounting obligations.

BMI sought to set the award aside, while Zillnk sought enforcement.

The court refused to set the award aside, notwithstanding BMI’s own conduct during the arbitration.

The decision is significant because it distinguishes between misconduct surrounding a dispute and the much narrower legal standard required to invoke public policy as a basis for setting aside an arbitral award.

Public policy is not a general invitation to ask a court whether the result appears fair. The relevant threshold concerns acts that are illegal in the forum, conduct repugnant to the orderly functioning of its social or commercial life, or outcomes that fundamentally offend local principles of justice and fairness. The court pointed to Feldman Karpa, where the Court of Appeal declined to set aside an award notwithstanding evidence that a party had advanced fictitious rebate claims, on the basis that deference was owed to the tribunal in deciding how such conduct should be addressed.

BMI’s arguments did not meet that standard. In substance, they repackaged disagreements about contractual interpretation and jurisdiction as public policy objections.

The court also enforced the award in full, including the continuing reporting and audit obligations attached to the monetary relief. Enforcement was therefore not limited to the headline damages figure.

For parties considering a public policy challenge, the case is another warning against treating the exception as a broad residual ground of review. Canadian courts continue to approach it narrowly.

Can a non-signatory rely on an arbitration clause?

A fourth decision demonstrates how far judicial deference can extend before the tribunal has even decided its own jurisdiction.

In Bombardier Inc. v. Alstom Rail Sweden AB, the Ontario Court of Appeal considered whether litigation should be stayed in favour of ICC arbitration where the party seeking the stay had not itself signed the agreement containing the arbitration clause.

The contractual history was complex. Bombardier had first sold a subsidiary under a 2017 share purchase agreement containing an Ontario jurisdiction clause. In 2020, it sold a broader group of companies to Alstom under a separate agreement containing an ICC arbitration clause. The former counterparty to the 2017 agreement became part of the Alstom group and was renamed Alstom Rail Sweden.

After Bombardier sued Alstom Sweden in Ontario, Alstom Sweden sought a stay in favour of the ICC arbitration already underway.

The stay was granted.

The Court of Appeal held that, at this stage, the applicant needed to establish only an arguable case that an arbitration agreement existed and applied. Whether Alstom Sweden ultimately qualified as an affiliate entitled to rely on the arbitration clause was a matter for the arbitral tribunal under the competence-competence principle. The court emphasized that the motion judge’s findings decided nothing: they were not binding determinations on whether Alstom Sweden is an affiliate or may rely on the clause. The Ontario action can be reactivated if the ICC declines jurisdiction.

The Court of Appeal took the same approach in reviewing the motion judge’s decision. Bombardier argued that the motion judge’s interpretation of the contract should be reviewed for correctness. The Court of Appeal disagreed with this argument. Since the motion judge’s analysis turned on the contract in its particular factual context, including whether the relevant prerequisites were arguably satisfied, his decision was reviewable only for palpable and overriding error.

This matters particularly in disputes involving corporate groups, overlapping contracts, and non-signatories. When deciding whether to grant a stay, the court does not necessarily have to resolve the underlying jurisdictional question itself.

For contract drafters, however, the case contains a separate warning. Definitions of “parties,” “affiliates,” and other entities entitled to invoke an arbitration clause should be drafted with precision. In this case the definition of “Parties” was tautological, meaning simply the parties to the agreement, which gave the court nothing to work with. If arbitration is intended to be limited to named signatories, the agreement should make that clear.

When does an arbitrator’s failure to disclose a conflict invalidate the award?

Against the four decisions favouring arbitral autonomy and finality stands Mandani v. Arasi.

The dispute arose from an agreement under which one former business partner was to transfer his shares to another in exchange for monthly payments: the arbitration clause named a specific individual, Bijan Rahimi, as arbitrator.

Arasi objected to Rahimi’s appointment and repeatedly raised concerns about his relationship with Mandani, noting that Mandani had previously carried out construction work for Rahimi. Rahimi confirmed only that he had received professional services in the past. On the evidentiary record before the court, Mandani was in fact continuing to carry out construction work at Rahimi’s private residence on an ongoing basis during the arbitration, so the arbitrator was receiving professional services from one of the parties while adjudicating their dispute.

That ongoing relationship was not disclosed, even when Arasi asked directly for confirmation that all professional engagements since the dispute began had been disclosed and considered.

The Supreme Court of British Columbia set the award aside.

Importantly, the court did not require proof that the arbitrator was actually biased or that the award itself was substantively wrong. The failure to disclose the relevant relationship was sufficient to undermine the process. Where the disqualifying circumstances exist, no impropriety need be imputed to the arbitrator: the award cannot stand, and the entire process is tainted regardless of whether the decision was correct.

The court treated disclosure as a positive and continuing obligation. Disclosure of an earlier relationship does not necessarily discharge that duty if the relationship continues or changes during the arbitration.

The case also illustrates the importance of how a party responds when it suspects a conflict. Arasi had raised the issue promptly and repeatedly rather than remaining silent and preserving it only as a post-award challenge.

That distinction mattered. The statutory framework can prevent a party from raising bias after an award where it knew of the relevant circumstances and failed to use the available challenge procedure. Here, however, Arasi did not know that the relationship was ongoing. The arbitrator’s silence therefore both grounded and preserved the challenge.

Will a Canadian court respect our arbitration agreement?

Read individually, the five decisions address different questions: procedural fairness, functus officio, enforcement and public policy, competence-competence, and arbitrator disclosure.

A single month is a small sample, and none of these decisions breaks new ground. What makes them worth reading together is that they apply well-established principles across two provinces, four different statutory grounds, and disputes ranging from an investment treaty claim to a falling out between two former business partners. Taken as a snapshot, they show what that settled approach looks like in practice.

The framework these courts applied is familiar. Canadian courts generally respect the choices parties make when they agree to arbitrate. That includes the tribunal’s determination of the dispute, contractual limits on appeals, broad remedial awards, and the tribunal’s ability to decide threshold questions concerning its own jurisdiction.

A losing party therefore faces a substantial hurdle if its objection is, in substance, that the tribunal interpreted the contract incorrectly, managed the procedure differently than it would have preferred, or reached a result it considers unfair.

But deference is not unconditional.

The legitimacy of arbitration depends on the integrity of the process that produces the award. An undisclosed relationship that raises justifiable concerns about an arbitrator’s independence or impartiality is fundamentally different from disagreement with the tribunal’s reasoning.

That explains the apparent contrast between Mandani and the other four decisions. The courts were not applying two different philosophies of arbitration. They were drawing the line between reviewing an arbitral outcome and protecting the integrity of the arbitral process.

For arbitration counsel and arbitrators, the resulting principle is useful: process protects an award, and disclosure is part of that process, not a formality surrounding it.

Frequently asked questions

Three questions that commonly arise when parties consider arbitration or a challenge to an arbitral award.

Are arbitration clauses enforceable in Ontario?

Yes. Ontario courts generally respect arbitration agreements and may stay court proceedings in favour of arbitration. As illustrated by Bombardier Inc. v. Alstom Rail Sweden AB, an applicant seeking a stay needs only establish an arguable case that an arbitration agreement exists and applies; the tribunal may then determine the underlying jurisdictional question.

What are common arbitration mistakes?

Canadian court decisions from July 2026 illustrate several mistakes that can arise in arbitration, including failing to raise and preserve procedural objections during the arbitration, assuming that an arbitrator can reconsider a final award, and failing to raise concerns about an arbitrator’s independence or impartiality promptly. Contract drafting can also create problems, as illustrated by the tautological definition of “Parties” in Bombardier Inc. v. Alstom Rail Sweden AB.

What is the downside of arbitration?

One potential downside of arbitration is the limited ability to challenge an unfavourable award. Depending on the arbitration agreement and the applicable law, appeal rights may be restricted or excluded altogether, while the grounds for setting aside an award are generally narrow. The July 2026 Canadian decisions illustrate this point. In Silver Elephant Mining Corp. v. Andean Precious Metals Corp., a broadly drafted no-appeal provision excluded appeals on questions of law, while other decisions demonstrate the high threshold for setting aside an award on grounds such as procedural unfairness or public policy.