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DEVELOPING BIAS DOCTRINE IN CANADA

ONTARIO COURT OF APPEAL: IF BIAS SHOWN, DECISION MUST BE OVERTURNED!

As we have written here before, proving bias tends to be an uphill battle. Because of that, this ground of complaint is rarely pursued in tax or trade appeals. That may be changing, given a recent ruling of the Ontario Court of Appeal (“ONCA”) in a trade remedy case, which confirmed that if a complainant can prove a “reasonable apprehension of bias” in the decision-making process, the entire decision must be overturned!

In this Tax Appeals Series blog, we review that decision and examine the potentially HUGE consequences that can follow.

Background

In Vento Motorcycles, Inc. v. United Mexican States, 2025 ONCA 82 (“Vento”), an American company brought a claim against Mexico under the North American Free Trade Agreement (“NAFTA”) — which was still in effect at the time of the complaint — alleging that Mexico had improperly denied them preferential import tariffs.

The claim was heard before a three-person Arbitration Tribunal in Toronto, with one particular Mexican nominee (the “Nominee”). After the hearing, the Tribunal unanimously dismissed Vento’s claim.

Vento later discovered that throughout the arbitration hearing, the Nominee had several undisclosed discussions with Mexican government officials, one of whom was Mexico’s lead counsel in the arbitration. These discussions included an offer to appoint the Nominee to Mexico’s roster of panelists for future arbitration panels under other trade agreements — which he accepted.

After learning of these communications, Vento applied to the Ontario Superior Court of Justice (“ONSC”) to set aside the award, alleging bias. The ONSC found that the Nominee’s situation DID create a “reasonable apprehension of bias” but refused to set aside the award, reasoning that the bias of one member did not necessarily “taint” the three-member Panel’s final decision. The ONSC also reasoned that the need for “finality and efficiency” in arbitration allowed for this approach, despite the bias of one of three decision-makers.

The ONCA’s Decision

The ONCA ultimately disagreed and allowed Vento’s appeal, overturning the original Arbitration Panel decision. The Court agreed that there was bias, applying an objective test — namely, whether an informed person, viewing the matter realistically and practically, would think it more likely than not that the decision-maker would not decide fairly.

In applying this objective test to the finding that one member of a three-member Tribunal was biased, the Court observed that it was impossible to know how one biased decision-maker may have influenced the others, leaving open the possibility that one member’s apparent bias could well have “poisoned the well.”

In the circumstances, the need for integrity in the decision-making process required that the entire decision be overturned, notwithstanding the significant waste of time and resources.

Takeaways

In most tax or trade disputes, proving that a decision was tainted by a “reasonable apprehension of bias” is an extreme uphill battle. However, if one can actually get there, Vento shows that an appearance of bias in the decision-making process will result in the overturning of the entire decision.

Experienced Tax & Trade Counsel can help maximize the fairness of proceedings or successfully appeal biased decisions.

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Download a PDF copy of this Blog here.

For an updated Index of our Tax Appeals Series, click here.