In Lawrence v. Wood, 2025 ABKB 594, the Court dismissed an application for leave to appeal an award of an arbitral tribunal, or alternatively, to set it aside. The Applicants argued that that the tribunal was functus officio and lacked jurisdiction when it issued an award stating that a prior award was to be paid jointly and severally. The Court disagreed and held that the tribunal still had jurisdiction to make this clarification because this issue was dealt with “implicitly” in the first award, or alternatively, it was a new issue that was not before it when the first award was issued.
Background to the Dispute
This case arose out of lengthy and complex litigation between the Wood Parties and the Lawrence Parties. The parties then agreed to arbitration, in two phases, and entered into an Arbitration Agreement, section 49 of which stated: “The Wood Parties and the Lawrence Parties agree that any arbitration award shall be deemed joint and several in favour of or against each of the Wood Parties and the Lawrence Parties.” This section and, in particular, the word “deemed” became the subject of a dispute after the first award was issued and is the subject of this case note.
The Arbitration
(i) November 2023 Award – The tribunal issued an award on the phase two issues on November 20, 2023, in favour of the Wood Parties (“November 2023 Award”). It included directions with respect to certain amounts to be paid to the Wood Parties.
Shortly thereafter, the Wood Parties sent a letter to the tribunal seeking a direction that the Lawrence Parties were jointly and severally liable to pay the amounts owing pursuant to the November 2023 Award.
The Lawrence Parties objected to this request, arguing that the tribunal was functus officio and that its jurisdiction on this issue had ended.
(ii) The May 2024 Award – In response to the Wood Parties’ request, the tribunal issued an award in May of 2024 (“May 2024 Award”), in which it concluded it was not functus officio and stated that the question of the applicability of s. 49 of the Arbitration Agreement to the November 2023 Award had not previously been sent to it for determination. It was a new issue. It held that section 49 of the Arbitration Agreement applied and that it deemed all arbitration awards to be joint and several, as a result of which any monies payable under the November 2023 award were due and payable jointly and severally by the Lawrence Parties.
Court Challenge to the May 2024 Award
The Lawrence Parties applied to the Court for leave to appeal the May 2024 Award or, alternatively, for an order setting it aside.
The Court found that whether the tribunal was functus officio was a legal question, but that the test for granting leave to appeal was not met.
On the set-aside application, the Lawrence Parties relied on s. 45(1)(g) of the Alberta Arbitration Act, which provides for set aside of an award where the procedures followed in the arbitration did not comply with the Act or the arbitration agreement. The Court found that the issue raised was a question of law, not procedure, and dismissed the set-aside application on that basis, but considered the application in the event it was wrong.
The Lawrence Parties made two main arguments.
First, because the tribunal did not address the question of joint and several liability in the November 2023 Award, it was functus officio on that issue and lacked jurisdiction to make the May 2024 Award.
Second, section 43(1) of the Arbitration Act, RSA 2000, c A-43 limits the ability of a tribunal to correct or amend an award. It states:
“43(1) An arbitral tribunal may, on its own initiative within 30 days after making an award or at a party’s request made within 30 days after receiving the award,
(a) Correct typographical errors, errors of calculation and similar errors in the award, or
(b) Amend the award so as to correct an injustice caused by an oversight on the part of the arbitral tribunal.”
The Lawrence Parties argued that the May 2024 Award did not fall within either sections 43(1)(a) or (b).
The Court dismissed these arguments for the following reasons.
First, on the question of whether the tribunal was functus officio, the Court found that section 49 of the Arbitration Agreement was in full force and effect and it operated to pre-determine the issue of joint and several liability because the parties had agreed to it. In other words, this was not an issue that the tribunal had to decide. It provided that any arbitration award would be “deemed” joint and several in favour of or against each of the Wood Parties and the Lawrence Parties. The May 2024 Award did not re-examine the issue or change or vary the November 2023 Award. Instead, “the May 2024 Award was simply a confirmation that the parties were bound to their agreement in section 49.” (Decision at para 108). However, the May 2024 Award was “necessary to provide a fulsome remedy” to the Wood Parties by “clarifying” that the monetary awards owing to the Wood Parties under the November 2023 Award could be enforced jointly and severally.
The Court held, in the alternative, that the issue of the applicability of section 49 of the Arbitration Agreement was not an issue that was put before the tribunal at the time of the November 2023 Award and therefore its jurisdiction over the issue could not have been extinguished. The Court stated:
“..[o]r, in other words, the issue of the application of section 49 was a new issue put to the arbitration panel for the first time subsequent to the issuance of the November 2023 Award. The question of functus does not arise when the arbitration panel is considering a fresh issue not previously submitted to it by the parties.” (Decision at para 111)
Second, with respect to section 43(1) of the Arbitration Act, which allows the tribunal to correct or amend an award in limited circumstances, the Court held that it did not apply.
The Court stated that, “either the application of section 49 was dealt with implicitly as part of the November 2023 Award and simply confirmed by the May 2024 Award, or the application of section 49 was a discrete issue put to the arbitration panel subsequent to the November 2023 Award. Accordingly, I am of the view that section 43(1) does not apply here.” (Decision at para 121)
The Court further held that if it was wrong about the application of section 43(1) to the May 2024 Award, the tribunal’s intervention was necessary to correct an injustice, and permitted under section 43(1)(b). (Decision at para 122).
The Court denied the Lawrence Parties’ applications for leave to appeal the May 2024 Award and to set it aside.
Contributor’s Notes:
An analysis of this case requires a review of basic principles. When can a tribunal re-visit an earlier award?
First, an award finally disposes of all or some of the substantive matters in dispute between the parties. There may be more than one award issued in an arbitration to deal with the substantive issues in dispute. On the facts, those substantive issues were determined in the November, 2023 Award. The Court found (in one of its alternative findings) that the May 2024 Award considered a new issue raised after the release of the November 2023 Award. In other words, the parties did not put the new issue to the tribunal before the November 2023 Award was issued.
Second, arbitration is a consensual process and parties can jointly request that the tribunal address a new issue or clarify an award. This is not what occurred here. The Lawrence Parties objected to this new issue going to the tribunal.
Third, there are limitations on what a tribunal may do after it has issued an award. Section 43(1)(a) of the Alberta Arbitration Act is clear that a tribunal may correct typographical errors, errors of calculation and “similar errors in the award”. On the facts, this was not such a case and the Court so found.
Subsection (b) states that a tribunal may amend the award “so as to correct an injustice caused by an oversight on the part of the arbitral tribunal”. The Court found that this provision could apply to the circumstances here, “as it clarified and confirmed” the application of section 49 of the Arbitration Agreement to the November 2023 Award. However, the difficulty with this reasoning is that the Court did not identify any oversight, just an injustice. The tribunal was not permitted to “clarify and confirm” under this provision.
Third, the concept of functus officio is important. Once a tribunal issues an award, it no longer has jurisdiction to deal with any of the matters which are determined in it. Sections 43 (referred to above) and s. 44 are limited statutory exceptions to functus officio. Section 44 was not addressed in this decision. It provides that a tribunal may make an additional award to deal with a matter in dispute that was presented in the arbitration but omitted from the earlier award. Here, it was agreed that this issue was not presented in the arbitration. The Court noted that, by way of contrast, this issue was specifically raised by the parties before the Cost Award made in phase 1 of the arbitration was issued and the tribunal addressed it in that Award so that it was consistent with the parties’ Arbitration Agreement.
The Court stated suggested that the Woods Parties sought the May 2024 Award because they wanted assurance that the Lawrence Parties would comply with the term of the Arbitration Agreement that they were jointly and severally liable to pay the amounts due pursuant to the November 2023 Award. The Wood Parties were concerned about enforcing the November 2023 Award. It also appears to me that the Court was sympathetic to this concern and did what it could to assuage it.
This case demonstrates that the Arbitration Act does not always provide a clear way for a tribunal to “fix” an earlier award. The Court’s analysis was strained as it tried to do so. It found that the issue of joint and several liability was “implicitly” dealt with in the November 2023 Award because of s. 49 of the Arbitration Agreement and it also characterized the issue as new because it was not before the tribunal when it issued its phase 1 award. The problem with that analysis is that the new issue was not put to the tribunal with the consent of both sides.
If a matter does not fit within the restricted grounds set out in the Arbitration Act to allow a tribunal to re-visit an award, the only alternative is often for the parties to apply to court to seek leave to appeal or apply to set aside the award, which can be expensive, time consuming, and public.
The new ADRIC Rules, effective March 1, 2025, address this limitation. They set out a framework that expands the grounds for post-award recourse to the tribunal to allow it to vary or clarify the award at the request of a party. Rule 5.4.1 provides that a party may:
“(a) apply to amend or vary the award, ruling, order, or decision;
(b) apply to the Tribunal for clarification of an award, ruling, order, or decision; or
(c) apply to the Tribunal to make an additional award for claims presented in the proceedings but omitted from the award.”
This is a practical approach which gives the arbitrator an opportunity to address errors at an early stage and avoid the parties having to incur the additional cost and delay of initiating court proceedings. For commentary on this change to the Rules see: W. Horton, L.C. Munro, and E. McMurtry, “Unveiling the New ADRIC Arbitration Rules: An Updated Approach to Commercial Arbitration in Canada” (2025) Canadian Journal of Commercial Arbitration.