Canada – For those SCC Justices Willing to Consider it, Vavilov Applies to Private Commercial Arbitration where Legislation Provides for Appeal

Feb 2021

This article first appeared on Urbas Arbitral, here.

Canada’s Supreme Court in Wastech Services Ltd. v. Greater Vancouver Sewerage and Drainage District, 2021 SCC 7 offered to clarify a contracting party’s duty to exercise in good faith a discretion granted to it by contract and recognized in Bhasin v. Hrynew, 2014 SCC 71.  In dismissing the appeal from Greater Vancouver Sewerage and Drainage District v. Wastech Services Ltd., 2019 BCCA 66, the Supreme Court upheld a decision in the first instance to set aside a private, commercial arbitration award.  The appeal presented an opportunity for the Supreme Court to consider the effect, if any, of Canada (Minister of Citizenship and Immigration) v. Vavilov, 2019 SCC 65 on the standard of review principles applicable to appeals of commercial arbitration awards set out in Sattva Capital Corp. v. Creston Moly Corp., 2014 SCC 53 and Teal Cedar Products Ltd. v. British Columbia, 2017 SCC 32.

Regarding that opportunity, six justices preferred to “leave [it] to another day” while the other three chose to embrace it, considering that to “leave this undecided is to invite conflict and confusion”.  The six reasoned that they did not have the benefit of submissions on that question or the assistance of reasons on point from the courts below and that, in any event, the appeal’s outcome did not depend on identifying whether the proper standard of review was correctness or reasonableness.

Three justices acknowledged “important differences between commercial arbitration and administrative decision-making” but declared that such differences do not affect the standard of review where legislation provides for a right of appeal. Drawing on Vavilov which explained that “a legislative choice to enact a statutory right of appeal signals an intention to ascribe an appellate role to reviewing courts”, the three held that Vavilov had “displaced” the reasoning in Sattva and Teal Cedar. “Concluding otherwise would undermine the coherence of Vavilov and the principles expressed therein”. The three limited the scope of their determination. “Our conclusion on this point is limited to the specific statutory provision at issue. In every case, the question is one of legislative intention, as reflected in the language of the statute”.

Independent of the above, the six justices also expressly agreed with B.C.’s Attorney General that, when granting leave to appeal, courts should “simply and precisely” state questions of law upon which they grant leave in order to prosecute appeals efficiently.  The six observed that the “complicated formulation of the first question of law” made it difficult for the courts below to provide a direct and effective answer.

Wastech Services Ltd. (“Wastech”) and Greater Vancouver Sewerage and Drainage District (“Metro”) entered into a December 20, 1996 contract for the operation and management of the Greater Vancouver Regional District’s waste disposal system entitled “Comprehensive Agreement” (“CA”).  Wastech and Metro negotiated the CA over the course of eighteen (18) months producing what Mr. Justice Mark T. MacEwan in the first instance qualified as a “unique, complex and long-term” agreement.  For the earlier Arbitration Matters on MacEwan J.’s decision in Greater Vancouver Sewerage and Drainage District v. Wastech Services Ltd., 2018 BCSC 605, see “B.C. – court identifies limits to duty of good faith to meet party’s contractual expectations – #062”.

The CA provided that solid municipal waste would first be delivered to a number of transfer stations around the lower mainland and then transported by Wastech to the Cache Creek Landfill (“CCLF”), the Vancouver Landfill (“VLF”) or the Burnaby Waste to Energy Facility (“Burnaby Incinerator”).

The CA provided that compensation for Wastech’s transfer, transport and disposal services to CCLF would be calculated by payment of a ‘Long Haul Rate’ (“LHR”) and its transfer and transport services to VLF and Burnaby Incinerator by way of a ‘Short Haul Rate’ (“SHR”).  The costs of running the different transfer stations were apportioned to the LHR and SHR based on the tonnes of waste long-hauled to CCLF as opposed to those short-hauled to VLF and Burnaby Incinerator. 

In their CA, Wastech and Metro agreed that Wastech’s compensation would be based on an 89% ‘target operating ratio’ (“Target OR”). The volume of waste allocated to each disposal site served as a critical variable in calculating revenues and costs and Wastech’s ability to reach its Target OR.  MacEwan J. noted a key fact: “When the CA was made, both parties knew that if the Target OR was to be achieved, rates, costs, and total volumes allocated to each disposal site all had to be in an appropriate balance”.

The CA gave Metro the discretion to annually allocate waste between the disposal sites.  In 2010, Metro decided to significantly redirect the volume of waste from CCLF to VLF and made it impossible for Wastech to achieve its Target OR in 2011. 

Despite Wastech’s proven contractual expectations, the CA included no provision to compensate Wastech for lost profits occasioned by a negative impact on the Target OR caused by Metro’s decision to significantly reallocate waste volumes.  MacEwan J. noted that “[t]he CA did not expressly deal with a re-distribution of waste from the CCLF (such as occurred in 2011) because, when the CA was under negotiation, the parties’ representatives considered that it was not realistically possible that Metro would do this”. 

The facts demonstrated that the parties had drafted their CA based on what they believed would be realistic and not radical redistributions of waste volumes.  Nonetheless, the parties disputed the impact of Metro’s exercise of its discretion.  To resolve their dispute, they engaged in arbitration, resulting in a February 13, 2015 award (“Award”) which ordered Metro to pay Wastech $2.9 million in damages.  Dissatisfied with the Award, Metro sought leave to appeal under section 31 of B.C.’s former Arbitration Act, RSBC 1996, c 55. (B.C. has since introduced, effective September 1, 2020, a new domestic arbitration statute, Arbitration Act, SBC 2020, c 2).

Preliminary remark – The Supreme Court’s reasons on the substance of the appeal appear below in section (7).  This note focuses on a preliminary issue raised before the Supreme Court regarding court intervention and appeals of private commercial arbitration awards.  A review of the procedural history helps enhance the importance of how and why the Supreme Court’s two (2) sets of reasons diverge on a court’s role in appeals of arbitration awards. 

(1) Initial leave to appeal – Madam Justice Fitzpatrick granted leave in Greater Vancouver Sewerage and Drainage District v. Wastech Services Ltd., 2016 BCSC 68 (“Wastech 2016 BCSC 68”). At para 91, Fitzpatrick J. made passing reference to the standard of review, stating only her determination that the issues had “arguable merit, whether from the standard of correctness or reasonableness”.  A challenge to Fitzpatrick J.’s Wastech 2016 BCSC 68 decision was unsuccessful, as set out in Greater Vancouver Sewerage and Drainage District v. Wastech Services Ltd., 2016 BCCA 393 (“Wastech 2016 BCCA 393”).  Regarding the standard of review, the Court of Appeal’s reasons in Wastech 2016 BCCA 393 were summary, as were its overall reasons for Wastech’s appeal of Fitzpatrick J.’s decision to grant leave. 

(2) In Greater Vancouver Sewerage and Drainage District v. Wastech Services Ltd., 2019 BCCA 66 (“Wastech 2019 BCCA 66”) para. 49, the Court of Appeal commented on the standard of review applicable to granting leave to appeal.  Because Wastech 2016 BCCA had dismissed Wastech’s appeal based on Wastech’s argument that Metro’s two (2) grounds of appeal were not questions of law, the Court of Appeal in Wastech 2019 BCCA 66 held that Wastech 2016 BCCA 393 had effectively rejected the argument.  By doing so, the implication or inference was that the Court of Appeal had determined that there was a question of law and that Metro’s appeal met section 31 of the Arbitration Act.

Since s. 31(1) of the Arbitration Act permits an arbitral appeal only on a question of law, I agree with Mr. Nathanson that the division of this court must be taken to have found that the proposed grounds of appeal were questions of law and that the requirements of s. 31 of the Act were met. This conclusion is supported by the Supreme Court of Canada’s comment in [Sattva] that the Supreme Court of British Columbia in that instance had been bound by this court’s finding that leave had been properly granted, “including the determination that a question of law had been identified”.

(3) First instance decision – At paras 31-34, the Supreme Court set outlined the decision in the first instance by which MacEwan J. concluded to allow the appeal of the arbitrator’s Award. 

MacEwan J. recognized the efforts of the arbitrator to resolve the dispute according to the expectations which Wastech and Metro accepted as having been established.  Both knew of Wastech’s legitimate expectations and that any rate adjustment by Metro which thwarted Wastech’s ability to meet that expectation was “highly unlikely”.  As the arbitrator wrote, “by a mutual desire to simplify the CA, both parties agreed that no provision dealing with that eventuality should be included in the CA”.

Despite the proven fact that one party’s contractual expectations had not been met and the efforts of the arbitrator to navigate the undertow created by the competing streams of case law set out in Data & Scientific Inc. v. Oracle Corp., 2015 ONSC 4178 and Empire Communities Ltd. et al. v. H.M.Q. et al., 2015 ONSC 4355, MacEwan J. concluded that what is clearly fair is not always clearly reflected in the parties’ contracts.

(4) Appeal – In addition to the reasoning related to the duty of good faith and the role of Bhasin v. Hrynew, 2014 SCC 71 (CanLII), [2014] 3 SCR 494 (“Bhasin v. Hrynew”), the Court of Appeal did address the standard of review at paras 3-7. At paras 35-41, Kasirer J. outlined the Court of Appeal’s reasoning.

(5) Supreme Court and concurring sets of reasons – All nine (9) justices concurred in the result, dismissing the appeal.  Mr. Justice Nicholas Kasirer authored the reasons on behalf of six (6) justices: Mr. Chief Justice Richard Wagner, Madam Justice Rosalie Silberman Abella, Mr. Justice Michael J. Moldaver, Madam Justice Andromache Karakatsanis, Madam Justice Sheilah L. Martin, and himself at paras 1-114.  Concurring on the dismissal of the appeal, Mr. Justice Russell Brown and Mr. Justice Malcolm Rowe delivered separate reasons on Madam Justice Suzanne Côté’s and their own behalf at paras 115-141.

(6) Supreme Court and standard of review of commercial arbitration awards – Kasirer J. at paras 42-47 addressed the standard of review whereas Brown and Rowe JJ did so at paras 117-122.

(a) Six justices – Kasirer J. noted that the parties had raised a preliminary issue involving (i) the standard of review applicable on appeal of a commercial arbitration award and (ii) the proper characterization of the questions of law raised in the appeal.

Wastech argued that section 31 of the Arbitration Act and the Supreme Court’s prior decisions in Sattva Capital Corp. v. Creston Moly Corp., 2014 SCC 53, [2014] 2 S.C.R. 633 (“Sattva”) and Teal Cedar Products Ltd. v. British Columbia, 2017 SCC 32, [2017] 1 S.C.R. 688 (“Teal Cedar”) limited Metro’s appeal to questions of law.  Wastech submitted that Metro’s questions did not raise extricable questions of law and were therefore not eligible for review on appeal.  Wastech submitted further that the questions of law identified in the appeal were subject to review on a reasonableness standard and even on a correctness standard revealed no reviewable error.

Metro resisted Wastech’s approach.  It argued that the Court of Appeal, having considered Sattva and Teal Cedar, disclosed full awareness of the limited scope of appeals in commercial arbitration.  The questions were reviewable on a standard of correctness as the questions involved (a) the content of the duty to exercise contractual discretionary powers in good faith and (b) the arbitrator’s error in stating the legal test. Metro added that the Award was unreasonable even if a standard of reasonableness applied.

Kasirer J. readily conceded that the Supreme Court had held that the standard of review applicable in appeals under section 31 of the Arbitration Act is reasonableness, subject to limited exceptions involving constitutional questions or questions of law of central importance to the legal system as a whole and outside the adjudicator’s expertise.  He referred to Sattva paras 102-106 and Teal Cedar paras 74-76.

Having made the concession, Kasirer J. observed that the Supreme Court had released its reasons in Vavilov after the hearing in Wastech Services Ltd. v. Greater Vancouver Sewerage and Drainage District, 2021 SCC 7.  Though Vavilov set out a revised framework for determining the standard of review a court should apply when reviewing the merits of an administrative decision, he wrote that “I note that Vavilov does not advert either to Teal Cedar or Sattva, decisions which emphasize that deference serves the particular objectives of commercial arbitration”.  In recording those observations, Kasirer J. referred readers to Sattva para 104 and Teal Cedar paras 81-83.

Kasirer J. elected to “leave to another day” the effect “if any” of Vavilov on the standard of review principles set out in Sattva and Teal Cedar.

We have not had the benefit of submissions on that question, nor do we have the assistance of reasons on point from the courts below. Moreover, the parties here agree, rightly in my view, that the outcome of this appeal does not depend on the identification of the proper standard of review. Thus, although this Court would ordinarily be called upon to determine whether the Court of Appeal identified the correct standard of review and applied it properly, in this case it is unnecessary to decide whether the standard is correctness or reasonableness (see Agraira v. Canada (Public Safety and Emergency Preparedness), 2013 SCC 36, [2013] 2 S.C.R. 559, at paras. 45-47)”.

Referring “similarly” to Newfoundland and Labrador (Attorney General) v. Uashaunnuat (Innu of Uashat and of Mani-Utenam), 2020 SCC 4 (“Uashaunnuat”) para. 15, Kasirer J. added that his decision not to participate further in the discussion of Vavilov’s impact did not mean he agreed with the views stated by Brown and Rowe JJ

Respectfully stated, the fact that I do not pursue discussion of this particular point raised in the opinion of my colleagues should not be understood as my agreeing with their view”[.]

Kasirer J. closed his analysis on the standard of review by addressing Wastech’s attempt to challenge the questions on which leave was granted.  He stated that Wastech ought to have appealed the Court of Appeal decision granting leave to appeal.  Having failed to successfully argue that the questions were questions of law and having failed to successfully appeal the decision granting leave to appeal, Wastech was too late to do so at the Supreme Court.  Kasirer J. did endorse the submissions made by the Attorney General of British Columbia that, when granting appeals, the courts should state simple and precise questions.

Nevertheless, I respectfully agree with the Attorney General of British Columbia’s submission that, in granting leave to appeal, leave courts should ensure that the questions of law upon which leave is granted are simply and precisely stated to prosecute the appeal efficiently. In this case, the complicated formulation of the first question of law, in particular, made it difficult for the courts below to provide a direct and effective answer”.

(b) Three justices – Brown and Rowe JJ noted that Kasirer J. did not identify the standard of review given that, on either the standard of reasonableness or correctness, Kasirer J. would have overturned the award.  In contrast, Brown and Rowe JJ required that the standard of review be resolved in order to resolve conflicting lines of authority which they listed at para. 117: Northland Utilities (NWT) Limited v. Hay River (Town of), 2021 NWTCA 1 paras 21-44; Ontario First Nations (2008) Limited Partnership v. Ontario Lottery and Gaming Corporation, 2020 ONSC 1516 paras. 62-75; Cove Contracting Ltd. v. Condominium Corporation No 012 5598 (Ravine Park), 2020 ABQB 106 paras 3-12; Allstate Insurance Co. v. Ontario (Minister of Finance), 2020 ONSC 830 paras 12-19; Buffalo Point First Nation v. Cottage Owners Association, 2020 MBQB 20 paras 46-48; Clark v. Unterschultz, 2020 ABQB 338 paras 55-56).

[For earlier Arbitration Matters notes on each of the cases inventoried by Brown and Rowe JJ., see the urbitral notes below].

Having identified the conflict, they identified the solution. “This question ought to be resolved”.

Brown and Rowe JJ observed that “[c]ertain trial courts have, however, resisted applying this principle to appeals from arbitral awards” and they categorized the resistance reasons into two (2) reasons. First, Sattva and Teal Cedar do not support the application of appellate standards of review to arbitration appeals and Vavilov did not expressly overrule those decisions. Second, Vavilov was guided by “constitutional considerations” and appeals from private arbitration awards are guided by “commercial considerations about respect for the decision-makers chosen by the parties”.

They acknowledged “important differences between commercial arbitration and administrative decision-making”, referring readers specifically to para. 104 of Sattva Capital Corp. v. Creston Moly Corp.  Having conceded certain differences, they declared that such differences do not affect the standard of review where legislation provides for a right of appeal. “Appellate standards of review apply as a matter of statutory interpretation”. They drew on para. 39 of Vavilov which explained that “a legislative choice to enact a statutory right of appeal signals an intention to ascribe an appellate role to reviewing courts”.

[120] Factors that justify deference to the arbitrator, notably respect for the parties’ decision in favour of alternative dispute resolution and selection of an appropriate decision-maker, are not relevant to this interpretive exercise. What matters are the words chosen by the legislature, and giving effect to the intention incorporated within those words. Thus, where a statute provides for an “appeal” from an arbitration award, the standards in [Housen] apply. To this extent, Vavilov has displaced the reasoning in [Sattva] and [Teal Cedar ]. Concluding otherwise would undermine the coherence of Vavilov and the principles expressed therein”.

Because the appeal was brought pursuant to section 31 of the Arbitration Act which provided for appeals on consent or with leave on a question of law and in light of Vavilov “it follows” that the standard of review is correctness.  They were quick to limit the scope of their determination.

Our conclusion on this point is limited to the specific statutory provision at issue. In every case, the question is one of legislative intention, as reflected in the language of the statute”.

Before closing, they answered the reference Kasirer J. made to a passage in Uashaunnuat.

[122] Instead of responding substantively, our colleague invokes an unfortunate passage from the majority judgment in Newfoundland and Labrador (Attorney General) v. Uashaunnuat (Innu of Uashat and of Mani-Utenam), 2020 SCC 4, at para. 15, explicitly dismissing opposing views of colleagues as unworthy of answer. Of no less concern are the implications of his refusal to decide the appropriate standard of review, which risks undermining this Court’s decision in Vavilov as it relates to statutory appeals. To leave this undecided is to invite conflict and confusion”.

That passage from Uashaunnuat reads as follows.

[15] There are several aspects of the content of the dissent with which we disagree, but it is not the general practice in this Court for the majority to engage in a point by point refutation of dissenting reasons.  Consequently, the fact that we do not mention any particular point raised in the dissent should not be taken as our agreeing with it”.

(7) Exercise of contractual discretion – The substance of the appeal focused on a contracting party’s duty to exercise in good faith a discretion granted to it by contract. Both sets of reasons acknowledged the Supreme Court’s express recognition of that discretion and duty in Bhasin v. Hrynew.

Kasirer J. wrote that the duty to exercise such discretion in good faith requires that it be exercised in a manner consistent with the purpose for which it was granted in the contract.  A breach occurs only where a party exercises its discretion in a manner unconnected to the purpose underlying the discretion and may be contrary to the requirements of good faith.

Among other nuances, Brown and Rowe JJ emphasized that the duty of honest performance and the duty to exercise discretion in good faith should remain distinct.

urbitral notes – First, the impact of Vavilov urged by Brown and Rowe JJ has been advocated well before the February 5, 2021 release of Wastech Services Ltd. v. Greater Vancouver Sewerage and Drainage District, 2021 SCC 7.  In their paper submitted to the Canadian Journal of Commercial Arbitration in December 2020 (currently under peer review), authors James Plotkin and Mark Mancini have already made a detailed argument in line with Brown and Rowe JJ’s opinion on the standard of review issue. Their paper takes the position that Vavilov’s underlying rationale on the appellate review standard ought to apply with full force to appeals from arbitral awards. They argue that far from lying at odds with the principles underpinning arbitration law, applying the appellate standard of review is consistent with and in fact furthers respect for party autonomy. Digging deep into Canada’s common law provinces’ domestic arbitration legislation, the authors argue that the existing review framework is flawed and that Vavilov’s focus on legislative intent (coupled with party autonomy) is the way forward.

Second, Québec’s Code of Civil Procedure, CQLR c C-25.01 (“C.C.P.”) allows for no appeals, on consent or with leave, in private commercial arbitrations.  See articles 645 C.C.P. et seq.

Article 645 C.C.P. A party may apply to the court for the homologation of an arbitration award. As soon as it is homologated, the award acquires the force and effect of a judgment of the court.

The court seized of an application for the homologation of an arbitration award cannot review the merits of the dispute. It may stay its decision if the arbitrator has been asked to correct, supplement or interpret the award. In such a case, if the applicant so requires, the court may order a party to provide a suretyship”.

The courts in Québec have held that a statutory arbitration is deemed to be consensual if one party can still opt out. See the Québec Court of Appeal’s decision in Conseil d’arbitrage des comptes des avocats du Barreau du Québec v. Marquis, 2011 QCCA 133.

Third, Kasirer J. and Brown and Rowe JJ adopted competing approaches on whether to restate the standard of review comments in light of Vavilov.  Over the fourteen (14) month delay between the December 6, 2019 hearing and the February 5, 2021 release of the decision, each of the nine (9) justices had ample time to choose whether to address the issue and to adopt the approach urged by Brown and Rowe JJ at this time.  Each justice’s decision to side with either of set of reasons could have produced a third, further set of reasons in which the third set of justices would agree to stand (i) with Kasirer J. on the duties related to exercising a contractual grant of discretion and (ii) with Brown and Rowe JJ on the approach to the standard of review.  They did not and no third set of reasons arose.

Fourth, the reasons identified in the case law inventoried at para. 117 arguably exceed the two (2) categories listed by Brown and Rowe JJ.  The listed cases also do not necessarily ‘conflict’ just because they did not each or all apply Vavilov.  Rather, the ‘conflicting’ results rest in some cases on distinctions drawn by the source of the right to arbitrate: statute or private agreement.  If the arbitration arose by virtue of statute, the court then applied Vavilov.  Other disagreements on Vavilov’s application do qualify as conflict but also reflect the contribution, or lack thereof, made by parties’ submissions before such determinations are made by the courts.  See for example “Alberta & Manitoba – courts take different paths to different outcomes following same S.C.C. case – #276”.

In addition, regarding the first of the two (2) reasons listed by Brown and Rowe JJ, the first arguably contains two (2): Sattva and Teal Cedar do not support the application of appellate standards of review to arbitration appeals; and, Vavilov did not expressly mention either of those decisions, let alone overrule them.

Fifth, for a recent appellate decision applying Vavilov, see the Arbitration Matters note “N.W.T. – Court applies Vavilov to commercial arbitration awards subject to statutory right of appeal – #419” regarding Northland Utilities (NWT) Limited v. Hay River (Town of), 2021 NWTCA 1.  In that January 20, 2021 decision, the N.W.T.’s Court of Appeal held that Vavilov’s revised framework applies to commercial arbitration awards reviewed as a result of a statutory right of appeal.  “It is difficult to follow the argument that the reliability of Canada as a forum for resolution of local and global business disputes, would be rendered less grounded in the rule of law in a rules-based system of law by employing an appellate review standard”. The Court distinguished appeal wording in the N.W.T.’s domestic arbitration legislation from the former B.C. domestic arbitration legislation considered in Sattva and Teal Cedar. Vavilov’s omission of any mention of commercial arbitration did not argue for or against its extension. “Silence cuts both ways”. The Court did not comment on whether Vavilov applied to awards arising from contracts that contained no right of appeal and where no statute provided such right.  Note: the agreement to arbitrate in issue ought to qualify as a statutory arbitration and not a consensual arbitration as it was not negotiated but imposed under section 91(5) of the Cities, Towns and Villages Act, SNWT 2003, c 22, Sch B.

Vavilov’s silence on any mention of its prior decisions may not have weighed much for Brown and Rowe JJ but others have noted the omission.  For example, see Nolin v. Ramirez, 2020 BCCA 274 in which the B.C. Court of Appeal observed that neither the majority nor the dissent in Vavilov referred to Sattva or Teal Cedar, “let alone the word “arbitration””.

Sixth, for earlier Arbitration Matters notes on the decisions listed by Brown and Rowe JJ at para. 117, see the following:

(i) Buffalo Point First Nation et al. v. Cottage Owners Association, 2020 MBQB 20 and Cove Contracting Ltd v. Condominium Corporation No 012 5598 (Ravine Park), 2020 ABQB 106 – “Alberta & Manitoba – courts take different paths to different outcomes following same S.C.C. case – #276”-

In Cove Contracting Ltd v. Condominium Corporation No 012 5598 (Ravine Park), 2020 ABQB 106, Mr. Justice Grant S. Dunlop held that Canada (Minister of Citizenship and Immigration) v. Vavilov, 2019 SCC 65 had not changed the standard of review for commercial arbitrations from reasonableness to correctness and denied leave to appeal.  In Buffalo Point First Nation et al. v. Cottage Owners Association, 2020 MBQB 20, Mr. Justice Chris W. Martin held that Vavilov had changed the standard and granted leave to appeal.  Dunlop J. postponed his hearing to give the parties the opportunity to argue the role of Vavilov.  Martin J. issued his decision on leave to appeal without hearing from the parties but invited them to submit an argument for the merits of the appeal.

(ii) Allstate Insurance Company v. Her Majesty the Queen, 2020 ONSC 830 – “Vavilov standard applies to statutory insurance arbitration but not private commercial arbitration – #298

In Allstate Insurance Company v. Her Majesty the Queen, 2020 ONSC 830, Madam Justice Breese Davies held that Canada (Minister of Citizenship and Immigration) v. Vavilov, 2019 SCC 65 altered judicial intervention on appeals from insurance arbitration mandated by legislation.  Davies J. held that legislation which includes a statutory appeal mechanism signals legislative intent that courts are to perform an appellate function in respect of the administrative decision and apply appellate standards of review. Davies J. distinguished between appeals of statutory arbitrations and private commercial arbitrations, the latter being seen as an autonomous, self-contained process in which courts should “generally” not intervene.

(iii) Ontario First Nations (2008) Limited Partnership v. Ontario Lottery and Gaming Corporation, 2020 ONSC 1516 – “Vavilov does not overrule Teal Cedar or Sattva Capital – #302

In Ontario First Nations (2008) Limited Partnership v. Ontario Lottery and Gaming Corporation, 2020 ONSC 1516, Mr. Justice Glenn A. Hainey held that Canada (Minister of Citizenship and Immigration) v. Vavilov, 2019 SCC 65 does not refer to either Sattva or Teal Cedar and that it is not reasonable to conclude that the Supreme Court meant to overrule its own decisions without making any reference to them or to the area of law to which they relate.

(iv) Nolin v. Ramirez, 2020 BCCA 274 – “Court qualifies parties’ agreement to require only summary reasons as “penny-wise and pound-foolish” – #381

The Court paused, at paras 30-39 to determine whether Canada (Minister of Citizenship and Immigration) v. Vavilov, 2019 SCC 65 applied to the standard of review of family law arbitration awards under section 31 of the now-repealed Arbitration Act, RSBC 1996, c 55.

The Court observed that neither the majority nor the dissent referred to Sattva Capital Corp. v. Creston Moly Corp. or Teal Cedar Products Ltd. v. British Columbia, “let alone the word “arbitration””.

Having identified the issue raised by the release of Vavilov and the parties’ views on its application to their appeal, the Court observed that, to its knowledge, “no appellate court has considered the issue” and declined to be the first appellate court to do so.

In my opinion, it makes no difference in this case whether the standard of review is reasonableness or palpable and overriding error, as the result would be the same. Since it is unnecessary to decide the obviously complex question, I will leave it to another day”.

(v) Travelers Insurance Company of Canada v. CAA Insurance Company, 2020 ONCA 382 – “Appeal Court questions why arbitrate under a statute if statute does not apply to both parties – #341

In Travelers Insurance Company of Canada v. CAA Insurance Company, 2020 ONCA 382, Ontario’s Court of Appeal set aside an award which issued following a statutory arbitration because the Ontario statute did not apply to the defendant.  The Court questioned how did Ontario statutory accident benefits for a Nunavut accident come to be arbitrated under Ontario’s Insurance Act, RSO 1990, c I.8 if that legislation’s priority rules only apply if both insurers are subject to those rules.  The Court identified as a “serious” error the arbitrator’s determination that the Insurance Act applied to the defendant insurer.  Despite that error, the Court is silent on (i) how/when parties can consent by contract to submit to statutory arbitration under a statute which does not apply to one of them and (ii) why apply the standard of review applicable to statutory arbitrations, recently restated in Canada (Minister of Citizenship and Immigration) v. Vavilov, 2019 SCC 65, to an appeal from a consensual arbitration.

Seventh, Brown and Rowe JJ referred readers to para. 104 for a few mentions of the differences between commercial arbitration and administrative decision making.  Para. 105 immediately offset those differences by noting some of their similarities.  The two (2) paras read as follows:

[104] Appellate review of commercial arbitration awards takes place under a tightly defined regime specifically tailored to the objectives of commercial arbitrations and is different from judicial review of a decision of a statutory tribunal. For example, for the most part, parties engage in arbitration by mutual choice, not by way of a statutory process. Additionally, unlike statutory tribunals, the parties to the arbitration select the number and identity of the arbitrators. These differences mean that the judicial review framework developed in Dunsmuir v. New Brunswick, 2008 SCC 9, [2008] 1 S.C.R. 190, and the cases that followed it, is not entirely applicable to the commercial arbitration context. For example, the AA forbids review of an arbitrator’s factual findings. In the context of commercial arbitration, such a provision is absolute. Under the Dunsmuir judicial review framework, a privative clause does not prevent a court from reviewing a decision, it simply signals deference (Dunsmuir, at para. 31).

[105] Nevertheless, judicial review of administrative tribunal decisions and appeals of arbitration awards are analogous in some respects. Both involve a court reviewing the decision of a non-judicial decision-maker. Additionally, as expertise is a factor in judicial review, it is a factor in commercial arbitrations: where parties choose their own decision-maker, it may be presumed that such decision-makers are chosen either based on their expertise in the area which is the subject of dispute or are otherwise qualified in a manner that is acceptable to the parties. For these reasons, aspects of the Dunsmuir framework are helpful in determining the appropriate standard of review to apply in the case of commercial arbitration awards”.

author

Daniel Urbas

Daniel Urbas is an experienced litigator, arbitrator and mediator with over 25 years of dispute resolution experience. He has earned a variety of repeat, annual peer recognitions including “Leading Lawyer” in “Commercial Arbitration” in the 2019 edition of the Lexpert ® / American Lawyer Guide to the Leading 500 Lawyers…

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