BINDING ARBITRATION - Arbitrators and arbitration boards - Personal interest or bias - Removal

Law360 Canada (May 31, 2023, 5:46 AM EDT) -- Application by the franchise owners to set aside the final award by the arbitrator. The parties entered into the master franchise agreement (MFA) where the master franchisee acted as the middle person between franchise owners and individual coffee shop owners in Canada. The MFA contained a clause which provided that all disputes which arose in connection with the MFA should be settled by binding arbitration using the facilities and National Arbitration Rules whereby the parties jointly selected one neutral arbitrator maintained by the ADR Institute of Canada. The arbitrator determined that the first franchise owner wrongfully terminated the MFA. The first franchise owner was ordered to pay $10,000,000 to the master franchisee in damages. The first and second franchise owners were also ordered to pay $200,000 in damages for breach of the statutory duty of fair dealing. Meanwhile, the first franchise owner was successful in its claim for unpaid royalties in the amount of $69,000. The franchise owners were unaware that the arbitrator was retained as sole arbitrator on another matter by counsel of the master franchisee....
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