In Terrace Community Forest LLP v Skeena Sawmills Ltd., 2022 BCCA 37, the Court of Appeal for British Columbia started its reasons with, “this appeal is about the meaning of the word or. It is also about the goals of legislated regimes and the role of courts in protecting the interests of non-parties to arbitration proceedings”. Section. 29(4) of the B.C. Arbitration Act, S.B.C. 2020, c. 2 provides that a subpoena issued by an arbitrator to a non-party can be set aside on an application “to the arbitral tribunal or the Supreme Court”. The parties to this court application disputed whether the word “or” was inclusive (A or B or both) or exclusive (A or B, but not both). The Court of Appeal agreed with the judge below, Justice Milman, that “or” is to be given an exclusive meaning. Because the non-party asked the arbitrator to set aside the subpoena first, the court had no jurisdiction under s. 29(4). Therefore, Justice Milman declined to apply s. 29, and an appeal of his decision was not prohibited under s. 29(10). The appeal was dismissed.
The appellant Terrace Community Forest LLP was subject to a subpoena issued by an arbitrator in a proceeding in which respondent Skeena Sawmills Ltd. was a party. The appellant, not a party to the arbitration, applied to the arbitrator to have the subpoena set aside. The arbitrator declined to do so and instead varied the subpoena’s terms to address the appellant’s confidentiality concerns. The appellant was not happy with that outcome and then petitioned the B.C. Supreme Court for the same relief. Justice Milman dismissed the petition at 2021 BCSC 1522. This was the appeal of that order.
The arbitration involved a rate dispute between respondent Skeena Sawmills and Terrace Timber Ltd. arising out of a logging contract, in respect of which the appellant was not a party. However, Skeena argued that the appellant was the only other licencee that was conducting comparable work in the logging area at the relevant time, so it believed that the appellant’s documents would be relevant to the dispute. On January 14, 2021, the arbitrator issued a subpoena to compel the appellant to disclose commercial information about its operations.
On January 26, 2021, the appellant’s counsel wrote to the arbitrator requesting a hearing under s. 29(4) of the Act to set aside the subpoena because of confidentiality concerns or, in the alternative, an amendment to the subpoena to include a “counsels’- eyes-only undertaking”. After a hearing on that issue, the arbitrator issued a decision on February 8, 2021, in which the subpoena was amended to include confidentiality protections. Dissatisfied with this outcome, on February 16, 2021, the appellant applied to the B.C. Supreme Court for the same relief. Justice Milman concluded that s. 29(4) meant that the appellant could apply to the arbitrator or the court to set aside the subpoena, but not both. Having applied to the arbitrator, the appellant could not seek the same relief from the Court. Justice Milman found that s. 29 of the Act provides for no right of appeal and s. 4 precludes any review of the order of an arbitrator, except as provided for in the Act.
The jurisdictional issue – The respondent raised a jurisdictional issue. It argued that s. 4 of the Act sets out a general prohibition on court involvement that precluded an appeal from Justice Milman’s order. The respondent also argued that Justice Milman’s order was a decision under s. 29 of the Act, which s. 29(10) says cannot be appealed. The appellant disagreed that the order was a decision under s. 29.
Section 4 states, in part:
“4. In matters governed by this Act,
(a) a court must not intervene unless so provided in this Act…”
The Court of Appeal found that this provision was not a prohibition against an appeal of Justice Milman’s award, but rather limited “first-instance” review of the arbitral order. The provision says nothing about further appeals to the Court of Appeal. It relied upon the commentary of the Uniform Law Conference of Canada with respect to the equivalent provision in the Uniform Arbitration Act and found that the respondent’s interpretation would render redundant other provisions in the Act which expressly prohibited or limited appeals of the Supreme Court to the Court of Appeal.
Further, s. 29 of the Act allows the arbitrator to make an order requiring a non-party to produce records or to issue a subpoena requiring a person to give evidence. Section 29(10) provides that a Supreme Court decision under this section may not be appealed. With respect to s. 29(10) of the Act, the Court of Appeal had this to say:
“ While s. 29(10) does say that “[a] Supreme Court decision under this section may not be appealed,” when the chambers judge dismissed the petition, he was not making a “decision under” s. 29. Milman J. was interpreting s. 29 to hold that he could not make a decision under s. 29”.
In other words, because Justice Milman found that the appellant was entitled to ask either the arbitrator or the court to set aside the subpoena and had proceeded before the arbitrator, the court had no jurisdiction under s. 29(4). Further, any interpretation of the Act in which the Supreme Court’s interpretation on a question of law regarding its own jurisdiction were to go unsupervised, would undermine the goal of efficiency in arbitration.
Therefore, neither of these provisions affected the general right of appeal from orders of the Supreme Court which is conferred by s. 6 of the B.C. Court of Appeal Act, R.S.B.C 1996, c. 77. The Court rejected the respondent’s argument that it had no jurisdiction.
The merits – The appellant’s positon was that: (1) the “or” language in s. 29(4) allowed it to apply to the Supreme Court after applying to the arbitrator for an order setting aside the subpoena; and (2) in the alternative, because Justice Milman varied the subpoena, there was a new subpoena, which gave the appellant the choice to seek to have it set aside by either the Supreme Court or the arbitrator. Therefore, this was not a “second kick at the can”, as the respondent alleged.
On the first issue, the meaning of s 29(4), the appellant argued that the word “or” in s. 29(4) should be read inclusively, both as a matter of statutory interpretation and because constitutional considerations weigh in favour of finding that the Supreme Court retains jurisdiction to allow non-parties access to the courts. Further, if the legislature had intended to preclude access to the Supreme Court after an application to the tribunal under s. 29(4), it would have used clear language, but instead used the word “or”. Finally, it argued that as a non-party it did not consent to the arbitrator’s jurisdiction.
The respondent supported the reasoning of Justice Milman that the word “or” was to be read exclusively.
The Court of Appeal found that this was a matter of statutory interpretation and therefore a question of law reviewable on a standard of correctness, and that Justice Milman was correct. The Court of adopted Justice Milman’s reasoning (para. 52):
“ I agree with [the respondent] that the use of the word “or” in s. 29(4) of the Act is more like the latter, in the sense it must have been intended to apply exclusively.
 I say that because the Legislature cannot have intended that a third party in [the appellant’s] position could make sequential applications to set aside the same subpoena if dissatisfied with the answer it received the first time round. There is no provision made in s. 29 or anywhere else in the Act for a third party in [the appellant’s] position to bring an appeal or seek a review of an arbitrator’s decision under s. 29(4). On the contrary, s. 4 of the Act precludes any review in this court of an arbitrator’s order except as provided in the Act.
 I appreciate that [that the appellant] says that the Act provides for such a review in s. 29(4) itself, but that provision does not read that way. By its plain meaning, it contemplates an application in the first instance to either the arbitrator or the court at the election of the third party, but not both. There is no provision in that section for a review of the arbitrator’s decision in this court, as the Act does expressly provide elsewhere, for example in ss. 18(4) and 23(7).”
Further, the Court of Appeal found that this analysis was supported by the scheme object of the Arbitration Act, which is to “ensure that contracting parties have access to a good and accessible method of seeking resolution for many kinds of disputes that can be more expedient and less costly than going to court”. An interpretation that requires the subject of the non-party subpoena to choose either the arbitral tribunal or the Supreme Court for their challenge would advance those purposes while at the same time preserving the non-party’s ability to have its interests argued before a Superior Court. It gives the non-party the choice to apply to Supreme Court or attorn to the jurisdiction of the tribunal.
As to the second issue, whether the amended subpoena was a “new” subpoena, the appellant argued that there was no “prior” application to the arbitral tribunal with respect to the amended subpoena, which allowed it to apply to the Court to have it set aside. The application before the Supreme Court was a “first application” and not the same one heard by the arbitrator.
The respondent argued that the amended subpoena was issued as a result of the appellant’s confidentiality concerns about the original subpoena which it had raised before the arbitrator. The appellant would be making the same arguments to the Supreme Court that had resulted in the amended subpoena issued by the arbitrator.
The Court of Appeal agreed with the respondent. Had the appellant been wholly unsuccessful before the arbitrator, the subpoena would not have been amended and the Supreme Court would not have had jurisdiction to hear the appellant’s application. The fact that the appellant was partially successful because the arbitrator varied the subpoena cannot give jurisdiction to the Supreme Court which would otherwise have none. However, the Court of Appeal left for another day whether this outcome would obtain in a hypothetical scenario if the amended subpoena were so fundamentally different from the original subpoena and introduced new concerns for the non-party which it was unable to raise before the arbitrator.
Therefore, the Court of Appeal dismissed the appeal on both grounds raised by the appellant: (1) s. 29(4) of the Act requires the non-party which wishes to challenge the subpoena to make a choice to do so either before the arbitrator or before the Supreme Court, but not both; and (2) the fact that the arbitrator amended the subpoena does not make it a new subpoena for the purposes of s. 29(4) of the Act.
First, for an earlier case note on Justice Milman’s decision, see Case Note 524: B.C. – Under new B.C. Act, third party may apply to arbitrator OR court to set aside subpoena issued by arbitrator.
Second, for earlier case notes on subpoenas issued by arbitrators to non-parties, see Case Notes: B.C. – court adjourns its assistance to issue subpoenas approved in international commercial arbitration – #416, Ontario – non-party witnesses applying to arbitrator to quash summonses do not attorn to jurisdiction – #462, and B.C. – court assists arbitration with subpoenas, subject to respect of implied undertaking of confidentiality – #470.