In Sheridan v Sheridan, 2022 ABQB 180, Justice Jerke dismissed the appeal of an arbitral award for which leave had not been sought. The appellant Husband argued that by providing in the parties’ arbitration clause that any award was “subject to the rights of appeal under s. 44” of the Alberta Arbitration Act, RSO 2000, c. A-43, he was entitled to appeal on all of the grounds set out in s. 44(1) – on a question of law, on a question of fact or on a question of mixed law and fact. However, Justice Jerke found that this language meant that the award was also subject to s. 44(2) of the Act, which provides that where the arbitration agreement does not provide that the parties may appeal an award on a question of law, leave is required. This means that the arbitration agreement must explicitly allow an appeal on the s. 44(1) specified grounds, or the parties may appeal only a question of law, with leave of the court. Because the parties’ arbitration agreement did not explicitly do so, the appeal was dismissed because the Husband had not sought leave.
Husband and Wife agreed to proceed via a med/arb process to deal with their divorce and division of matrimonial property. The parties signed an arbitration agreement and instructed the arbitrator to proceed as follows: “in all respects, the [Alberta] Arbitration Act will apply with no modifications unless expressly set out herein”. The arbitrator delivered an award on July 21, 2021, and a supplemental award on September 1, 2021.
On October 7, 2021, Husband brought an application to appeal the awards under the Arbitration Act, RSA 2000, c. A-43. Wife’s position was that leave to appeal was required and, because none was sought, the appeal should be dismissed. There was no dispute that Husband had not sought leave to appeal and he argued that he had an appeal as of right. The dispute turned on the proper interpretation to be given to the appeal rights in the parties’ arbitration agreement.
The arbitration agreement provided as follows:
“AND WHEREAS the mother and father have agreed to retain the arbitrator to resolve their submitted issues and the arbitrator has agreed to accept such appointment; provided however, the parties and the arbitrator have agreed to approach the hearing and resolution of their outstanding issues as a mediation/arbitration such that the arbitrator shall attempt initially to mediate the said issues with a view to assisting the parties to come to resolution of all disputes they can ultimately agree upon and settle; further provided however that, if and as it becomes the opinion of the arbitrator that the parties will be unable to agree on any issue, or issues, in dispute, the arbitrator shall then rule upon such issues and the parties shall be bound by such rulings;
AND WHEREAS it is the intention and desire of the parties that there shall be a final resolution and determination of the issues that have to be ruled on by binding arbitration pursuant to the provisions of the Arbitration Act, RSA 2000, c. A-43, and amendments thereto (the “Act”) and the law applicable to the issues in dispute in the Province of Alberta.
9. Enforcement of Award(s)
The award(s) of the arbitrator on the issues submitted when made and executed by him shall be final and binding upon the parties and enforceable in any Court of competent jurisdiction and in the same manner as any other judgment of the said Court subject, however, to the rights of Appeal under Section 44 of the Act. By signing this Agreement, the parties are confirming their instructions to their respective counsel to prepare and enter … such Order or Judgment as may be necessary to effect Court approval of, and compliance with, the arbitrator’s award.”
Therefore, the arbitration agreement provided that the resolution and determination of the outstanding issues would be dealt with by “binding arbitration pursuant to the provisions of the Arbitration Act” and that the arbitrator’s award was to be “final and binding upon the parties and enforceable…, subject to the rights of [a]ppeal under s. 44 of the Act”.
Section 44 provides:
“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.
44(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.”
Husband argued that the provision in the parties’ arbitration agreement which included the appeal rights under the Act was sufficient to engage all rights of appeal in s. 44(1). In other words, he had the right to appeal on a question of law, on a question of fact, or on a question of mixed law and fact because the arbitration agreement “so provides”, as required under s. 44(1).
Justice Jerke disagreed:
“ The flaw in this argument is that the agreement does not purport to engage s 44(1), nor does it purport to engage the rights of appeal in s 44(1). It engages all of the appeal rights in s 44. And s 44 provides rights to appeal on three distinct questions if the parties agree and provide for it in their agreement; and the right to one question for appeal, with leave, if they do not agree. In essence, the parties agreed that, if they agreed to do so and provided in the agreement for it (which they did not) they could appeal under s 44(1) (without leave); and if not (which is the actual case here) they still had a right of appeal under s 44(2) (with leave).” [Emphasis in original.]
In interpreting the arbitration agreement, Justice Jerke noted that the parties simply stated that s. 44 of the Act would apply, not just s. 44(1). Section 44(2) states that where the arbitration agreement does not provide that the parties may appeal on a question of law, leave is required. He found that this language meant that because the parties did not agree that there was a right to an appeal on any of the grounds found in s. 44(1), the Husband required leave to appeal on a question of law.
This interpretation was consistent with the parties’ direction to the arbitrator that, “in all respects, the Arbitration Act will apply with no modifications unless expressly set out herein.” There were no modifications in the parties’ direction to the arbitrator.
Therefore, the Husband required leave to appeal and, because he had not sought it, his appeal was dismissed.
First, Justice Jerke noted that his conclusion on how the language of the arbitration agreement was to be interpreted as consistent with the weight of authority in Alberta. He referred to: Seneviratne v Seneviratne, 1998 ABQB 289 at paras. 34 and 35; Kawchuk v Kovacs, 2016 ABCA 210 at paras. 6 and 28; and Mailer v Mailer, 2021 ABQB 423 (in obiter). Those cases found that in order to engage s. 44(1), the parties must expressly provide what categories of appeal are permitted. Husband relied upon a single earlier case, Willick v Willick, 1994 CanLII 9182 (AB QB) at para. 26, which Justice Jerke found had never been followed.
Second, because of Justice Jerke’s conclusion, it was not necessary for him to engage in the analysis that comes up in the case law frequently – whether any or all of the grounds relied upon by the Husband constituted questions of law that may be appealed with leave of the court. These cases reveal that true questions of law are rare. See also Sattva Capital Corp. v Creston Moly Corp., 2014 SCC 53.
Third, drafters of arbitration clauses have many tools at their disposal to make sure that the language captures the intentions of the parties. Given the number of decisions interpreting language like that found in this case and the precedent arbitration clauses that are readily available, it should be easy to draft an arbitration clause that is not ambiguous or one that is not open to a credible challenge by the losing party to the arbitration.