In lululemon athletica canada inc. v. Industrial Color Productions Inc., 2021 BCCA 108, Madam Justice Susan Griffin stayed execution of part of an arbitration award pending appeal of lululemon athletica canada inc. v. Industrial Color Productions Inc., 2021 BCSC 15 but without preventing Respondent’s application for recognition of the same award. Required to consider the merits of the appeal when considering a stay of execution, Griffin J.A. focused on proposed grounds relating to the decision made to apply a standard of reasonableness rather than a standard of correctness for errors of law, as established in Mexico v. Cargill, Incorporated, 2011 ONCA 622. Griffin J.A. noted the release of Wastech Services Ltd. v. Greater Vancouver Sewerage and Drainage District, 2021 SCC 7 after the decision in first instance, the B.C. Court of Appeal’s own choice in Greater Vancouver Sewerage and Drainage District v. Wastech Services Ltd., 2019 BCCA 66 to apply standard of correctness and the lack of a B.C. Court of Appeal decision which re-considered the standard set following the various, recent Supreme Court decisions. She determined that Appellant met the “low threshold” but she did not address success on appeal. Following her decision, Mr. Justice Gordon S. Funt in lululemon athletica canada inc. v. Industrial Color Productions Inc., 2021 BCSC 422, acknowledged the appeal of his earlier decision and, having noted Griffin J.A.’s stay of execution, granted recognition of the award.
(1) Decision by Griffin J.A. granting leave and staying execution – In her decision, Griffin J.A. summarized the parties’ dispute and the procedural history leading up to the arbitrator’s April 15, 2020 award (“Award”) which ordered Appellant to make two (2) payments for different breaches: a payment of $455,755.03 USD and a payment of $1,081,967.00 USD.
On appeal, Appellant set out that it had paid the $455,755.03 USD but sought an order staying execution of that part of the Award requiring it to pay the $1,081,967.00 USD. It had deposited the latter amount in trust with its lawyers pending its application for a stay of execution pending appeal.
Griffin J.A. also set out Funt J.’s initial decision in lululemon athletica canada inc. v. Industrial Color Productions Inc., 2021 BCSC 15 dismissing the application for an order under section 34(2)(a)(iv) of the International Commercial Arbitration Act, RSBC 1996, c 233 (“ICAA”) to set aside the Award. For the earlier Arbitration Matters note on Funt J.’s initial decision, see “Commercial dispute “foundationally different” from investor-state claim – #409”.
Funt J. determined that a standard of reasonableness applied to the court’s review of jurisdictional challenges in consensual arbitration. He distinguished Mexico v. Cargill, Incorporated, 2011 ONCA 622, stating that “[a] dispute involving two commercial parties over the termination of a private contract is, without more, foundationally different than a claim for damages against a country under NAFTA engaging international multilateral trade agreement or treaty interpretation principles”. Also, Funt J. dismissed the requirement for a more express or “paint by numbers” treatment of a party’s jurisdictional argument, stating that “the parties’ expectations as to the completeness of the arbitrator’s reasons is less than those of parties engaged in commercial litigation before a judge”.
With reference to RJR‑MacDonald Inc. v. Canada (Attorney General), 1994 CanLII 117 (SCC),  1 S.C.R. 311, British Columbia (Milk Marketing Board) v. Grisnich (1996), 1996 CanLII 883 (BCCA) and Gill v. Darbar, 2003 BCCA 3, Griffin J.A. set out those elements which Appellant had to demonstrate in order to obtain a stay of execution: (i) some merit to the appeal, in the sense that there is a serious question to be determined; (ii) irreparable harm would be occasioned to Appellant if the stay was refused; and, (iii) the balance of convenience favours granting a stay.
(i) merits of the appeal – Griffin J.A. set out her analysis at paras 24-39. Managing expectations from the onset of her analysis, Griffin J.A. observed that the “threshold for finding that an appeal has some merit on a stay application is quite low”. Appellant need “merely show that the appeal is not frivolous or vexatious”. See Peachland (District) v. Peachland Self Storage Ltd., 2013 BCCA 230 para. 16.
Appellant proposed to argue three (3) errors made by Funt J. when dismissing its application: finding that the standard of review of the arbitrator’s decision was reasonableness, instead of correctness; failing to find that the arbitrator had “no jurisdiction” to award damages given Respondent’s pleadings; and, failing to find that the arbitrator erred by failing to give reasons on Appellant’s “jurisdiction” issue.
Griffin J.A. focused on Appellant’s proposed arguments relating to Funt J.’s decision to distinguish Mexico v. Cargill, Incorporated, 2011 ONCA 622 and apply a standard of reasonableness. She also noted that, after Funt J.’s decision, the Supreme Court issued its decision in Wastech Services Ltd. v. Greater Vancouver Sewerage and Drainage District, 2021 SCC 7. She acknowledged that the Supreme Court did not consider it necessary to decide the standard of review but she noted that Court of Appeal in its own analysis in Greater Vancouver Sewerage and Drainage District v. Wastech Services Ltd., 2019 BCCA 66 had applied a standard of correctness for errors of law.
Respondent asserted its support of Funt J.’s choice of applicable standard of review, supporting it with references to relevant precedents from the Supreme Court and the B.C. Court of Appeal.
“ ICP submits that the judge’s conclusion that the standard of review is reasonableness is consistent with the Supreme Court of Canada’s analysis in Sattva Capital Corp. v. Creston Moly Corp., 2014 SCC 53 at paras. 104–106; and Teal Cedar Products Ltd. v. British Columbia, 2017 SCC 32 at paras. 74–81; as well as this Court’s reasons in Nolin v. Ramirez, 2020 BCCA 274 at para. 34; and 1120732 B.C. Ltd. v. Whistler (Resort Municipality), 2020 BCCA 101 at paras. 34–35”.
Griffin J.A. did not dispute the precedents provided but did comment that neither party had presented her with a case from the Court of Appeal which considered the standard set by Mexico v. Cargill, Incorporated, 2011 ONCA 622 following the various, recent Supreme Court decisions and, on that basis, held that Appellant “meets the low threshold of establishing there is some merit to the ground of appeal asserting that the judge applied the wrong standard of review”.
“ Nevertheless, in my view, it can be said that the question of the correct standard of review from the type of arbitrator’s decision at issue in this case is unsettled at the appellate level, post‑Vavilov and post‑Wastech. Neither party referred me to a case in which this Court considered Cargill in light of the recent Supreme Court of Canada decisions. In determining that the standard of review was reasonableness, the judge seemed influenced by general policy reasons and, it could be argued, did not focus on the specific statutory provision giving rise to the review”.
Griffin J.A. also added that her determination on the “low threshold” did not address success on appeal. At para. 35, she expressed “some difficulty” with Appellant’s reasoning and offered “one reading” which not only suggested the decision was reasonable but prompted her to comment that “it strikes me that [Appellant] may really be seeking to delve into the merits of the case, which is not the court’s role on review”. Griffin J.A. refrained from making further comment, concluding simply that Appellant’s argument was not frivolous.
(ii) irreparable harm – Griffin J.A. set out her analysis at paras 40-44. For this element, Griffin J.A. referred to affidavit evidence filed by Appellant that Respondent does not have any assets in Canada and that Appellant “does not have insight into [Respondent’s] assets or income in the United States”.
Griffin J.A. observed that “[i]t is, of course, not surprising in a matter involving an international arbitration that a foreign party might not have assets in the country where the arbitration takes place”. Having conceded that, Griffin J.A. did note that Respondent filed no evidence in response regarding its financial circumstances. Though the onus rested on Appellant, it had raised “enough of a question” and the “lack of evidence” from Respondent “does suggest there is some risk of irreparable harm to [Appellant] if it was to pay the award to [Respondent] and succeed on appeal, as there is a risk that [Respondent] might be unable to pay it back”.
(iii) balance of convenience – Griffin J.A. set out her analysis at paras 45-49. Appellant submitted that it had paid the arbitral award for damages into its own lawyers’ trust account pending the outcome of its application to set aside the award in the appeal. Griffin J.A. noted that role of interest and inconvenience suffered by Respondent in receiving the funds while the appeal remained active. She therefore addressed the balance of convenience by nuancing the terms of the stay of execution order so that Respondent would not have “to engage in further collection and execution efforts for the arbitration award”. Griffin J.A. then issued a stay by including the following terms:
– the amount of the award at issue, plus interest, as described in Appellant’s submissions, will continue to be held in the trust account of Appellant’s counsel pending the appeal;
– should this Court dismiss the appeal, the funds will be paid out to Respondent within five (5) days of this Court’s order dismissing the appeal, subject to any contrary court order;
– Respondent is not stayed from taking steps to have the arbitration award recognized pursuant to s. 35 of the ICAA; and,
– the parties can agree to payment out of all or part of the funds.
In closing, Griffin J.A. affirmed that her intention that the appeal proceed “with due diligence”.
(2) Decision by Funt J. granting recognition – Following Griffin J.A.’s decision, Respondent returned to Funt J. for recognition of the Award. In brief reasons, Funt J. acknowledged the stay of execution issued by Griffin J.A. and, relying on section 35(1) of the ICAA, recognized the Award.
“ In the case at bar, I recognize the February 9, 2021 final arbitral award as binding. The arbitral award has also not been set aside. Accordingly, the arbitral award should continue to be recognized.
 The effect of Justice Griffin’s February 23, 2021 order is to suspend with enforcement of arbitral award and, accordingly, I will refuse enforcement of the arbitral award pursuant to s. 36(1)(a)(vi) of the ICA Act.
 In sum, the arbitral award is recognized, but its enforcement is refused at this time. There is liberty to apply as events may warrant”.
urbitral notes – First, for a recent decision similar in approach to Funt J.’s decision to recognize but not enforce a decision, see the earlier Arbitration Matters note “Québec – recognition granted for international award with which respondent had already complied – #307”. In Metso Minerals Canada Inc. v. Arcelormittal exploitation minière Canada, 2020 QCCS 1103, Madam Justice Marie-Anne Paquette issued an order recognizing an international commercial arbitration award despite prior compliance with the payment obligations in the award. She underlined that recognition and enforcement were distinct aspects: although an award will not be enforced if it is not recognized, it can be recognized without being enforced. She further noted that the award once recognized could serve other purposes between the same parties, including their other ongoing arbitrations regarding the same grinding mill.
Second, regarding Wastech Services Ltd. v. Greater Vancouver Sewerage and Drainage District, 2021 SCC 7, see the Arbitration Matters note “Supreme Court – for those SCC justices willing to consider it, Vavilov applies to private commercial arbitration where legislation provides for appeal – #420”. In that decision, Canada’s Supreme Court 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 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.
Third, regarding Nolin v. Ramirez, 2020 BCCA 274, see the Arbitration Matters note “B.C. – court qualifies parties’ agreement to require only summary reasons as “penny-wise and pound-foolish” – #381”. In that decision referred to by Griffin J.A., B.C.’s Court of Appeal set aside part of an arbitration award which rested on the arbitrator’s dismissal of a party’s evidence as suspicious in one context and reliance on it in another. The handling of the evidence was so inconsistent that the Court found it “impossible to understand how the arbitrator came to his conclusion” on the related issues and the arbitrator provided no justification in the summary reasons agreed to by the parties. Without more explanation in the brief reasons and unable to reconcile the findings and conclusions, the Court set aside that portion of the award related to the handling of that evidence.
The Court paused, at paras 30-39 to determine whether the Supreme Court of Canada’s December 2019 decision in 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 (“Former Arbitration Act”). The latter has been replaced, effective September 1, 2020, with the Arbitration Act, SBC 2020, c 2.
The Court observed that neither the majority six (6) nor the concurring three (3) referred to Sattva Capital Corp. v. Creston Moly Corp., 2014 SCC 53 (CanLII),  2 SCR 633 or Teal Cedar Products Ltd. v. British Columbia, 2017 SCC 32 (CanLII),  1 SCR 688, “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”.