In Esfahani v. Samimi, 2022 ABCA 178, the Court of Appeal for Alberta set out the procedure to be undertaken by the Court of Queen’s Bench when an arbitral award is appealed under s. 44(2) of the Arbitration Act, RSA 2000, c A-43. It states that if the arbitration agreement does not provide that the parties may appeal an award to the court on a question of law, a party may, with the permission of the court, appeal an award to the court on a question of law. The Court of Appeal held that the procedure is as follows: (a) an appeal does not exist unless permission to appeal is granted; (b) if parties do not make the required election in their arbitration agreement, permission to appeal is required and will be granted on questions of law only, subject to s 44(3) of the Arbitration Act (which provides that a party may not appeal an award to the court on a question of law that the parties expressly referred to the arbitral tribunal for decision); and (c) an application for permission to appeal must be heard and decided first, and separately, not contemporaneously with the appeal of the arbitral award.
The Respondent’s Husband wished to appeal certain aspects of an April 6, 2020, arbitral award relating to child support. Section 44(2) of the Arbitration Act says the following about appeals:
“44(1) If the arbitration agreement so provides, a party may appeal an award to the court on a question of law, on a question of fact or on a question of mixed law and fact.
(2) If the arbitration agreement does not provide that the parties may appeal an award to the court on a question of law, a party may, with the permission of the court, appeal an award to the court on a question of law.
(2.1) The court shall grant the permission referred to in subsection (2) only if it is satisfied that
(a) the importance to the parties of the matters at stake in the arbitration justifies an appeal, and
(b) the determination of the question of law at issue will significantly affect the rights of the parties.
(3) Notwithstanding subsections (1) and (2), a party may not appeal an award to the court on a question of law that the parties expressly referred to the arbitral tribunal for decision. [Emphasis added]”
The parties signed a standard form arbitration agreement in which they had the option of checking which “remedy” sub-clause they wished to rely upon, but no option was selected. Therefore, the arbitration agreement was silent on rights of appeal.
On May 20, 2021, the parties attended the family docket court for directions on procedure for the Husband’s appeal. The chambers judge directed that an application for permission to appeal pursuant to s 44(2) of the Arbitration Act and the appeal on the merits should be scheduled and heard together in a one-day special hearing.
The Appellant Wife sought and obtained leave to appeal this decision.
On her appeal, she submitted that the chambers judge erred because: (a) permission to appeal must be obtained first before an appeal on the merits can be scheduled; (b) the process adopted turns an appeal requiring permission into an appeal as of right; (c) the process adopted did not allow section 44(2) of the Arbitration Act to operate as a gatekeeping function to limit judicial intervention in arbitrations; (d) the process adopted was inconsistent with the philosophy of the Arbitration Act; (e) it was procedurally unfair to her to have the permission to appeal heard concurrently with the appeal itself; and (f) no appeal exists until such time as permission to appeal has been granted. Further, the Appellant Wife submitted there was no clear process or established practice in the Court of Queen’s Bench of having the permission to appeal and appeal matters heard concurrently, and the chambers judge was wrong to base her decision on this misapprehension.
The Court of Appeal for Alberta agreed. It held that an interpretation of s 44 of the Arbitration Act is a question of law and must be correct. Court orders directing procedural steps must be substantively fair and no deference is given by the reviewing court.
The Court found that the chambers judge erred in law because the statute mandates a bifurcated process. Where an arbitration agreement does not specify the types of issues that can be appealed, permission to appeal must be sought and permission to appeal may only be granted on errors of law. A party seeking to appeal must therefore first obtain permission to appeal. Citing Isabelle v. The Royal Bank of Canada, 2008 NBCA 69, the Court noted that a bifurcated process for dealing with leave applications was preferred over a process which would see both proceedings dealt with contemporaneously. A bifurcated process is aligned with the legislative intent of s 44(2) of the Arbitration Act that arbitration proceedings are designed to produce finality of awards in an efficient manner while keeping judicial involvement to a minimum.
The Court noted that there is no procedure in the Court of Queen’s Bench that compels contemporaneous hearings of permission to appeal applications and appeals under the Arbitration Act. Indeed, there is a danger that the application for permission to appeal is rendered moot when an order is made to hear it and the appeal contemporaneously because, assuming there was a proper basis for an appeal, the judge hearing the application and the appeal would inevitably just decide the appeal on its merits. Accordingly, the Court set out the following law and procedure to be undertaken by the Court of Queen’s Bench when an arbitral award is appealed under s. 44(2) of the Arbitration Act:
“(a) An appeal does not exist unless permission to appeal is granted.
(b) If parties do not make the required election, permission to appeal is required and will be granted on questions of law only, subject to s 44(3) of the Arbitration Act.
(c) An application for permission to appeal must be heard and decided first, and separately, not contemporaneously with the appeal of the arbitral award.”
In establishing a clear procedure pursuant to s 44(2), the Court noted that litigants are entitled to have consistent and substantively fair procedures to avoid needless confusion, the wasting of time, delayed final resolutions, and unnecessary costs. In the result, the Court agreed with the Appellant Wife and ordered that the Respondent Husband’s notice of appeal was suspended until permission to appeal was obtained. If permission was not obtained within 90 days, the appeal would be quashed.
Contributor’s Note:
This decision provides clarity to the process of s 44(2) Arbitration Act appeals while emphasizing the general principles of finality and efficiency in arbitration. In particular, the Court of Appeal was cognizant of the fact that resorting to the courts detrimentally affects the well-recognized benefits of arbitration of speed, efficiency and cost and noted it is favourable to litigants to restrict judicial involvement in arbitrations. This decision serves a reminder that arbitration proceedings are designed to produce finality of awards in an efficient and economical way and reduce judicial involvement to a minimum.