What happens when an arbitrator refuses to implement a
court's binding directions? Unsurprisingly,
in Eyelet Investment Corp v. Song, Ontario's
Divisional Court held that the arbitrator was wrong in his refusal
and ordered that a new arbitrator hear the arbitration. This
decision clarifies the interaction and hierarchy between
Ontario's courts and arbitral tribunals. It also reminds us
that, simply put, arbitrators are duty-bound to follow court
directions, even if they disagree with the logic behind these
directions.
The Initial Award
The underlying dispute arose from several failed real estate
transactions between a builder, Eyelet Investment Corp., and
certain buyers. The buyers allegedly put down deposits to buy homes
from the builder but later advised the builder that they did not
intend to close their purchases. In turn, the builder kept the
buyers' deposits and sold the houses to others at a loss.
Then, the builder initiated arbitration against the buyers
