Spirit Bay Developments Limited Partnership v Scala Developments Consultants Ltd., 2021 BCSC 1415, is part of a series of cases that leave an important question undetermined at the end of 2021: what is Vavilov’s impact on commercial arbitration appeals? Although on its own Spirit Bay is not the most significant case of the year, the impact of the Vavilov on commercial arbitration appeals will be studied with interest by arbitration practitioners in 2022 and is an important aspect of arbitration jurisprudence in 2021.
By way of background, in Sattva Capital Corp. v Creston Moly Corp., 2014 SCC 53, the Supreme Court of Canada held that reasonableness will almost always be the applicable standard of review for domestic commercial arbitrations, except in rare circumstances where the question is one that would attract a correctness standard, such as a constitutional question or a question of law of central importance to the legal system as a whole and outside the arbitrator’s expertise. The Supreme Court of Canada reaffirmed Sattva in Teal Cedar Products Ltd. v British Columbia, 2017 SCC 32.
Following Sattva and Teal Cedar, the Supreme Court of Canada released its reasons in Canada (Minister of Citizenship and Immigration) v. Vavilov, 2019 SCC 65. Vavilov addressed the standard of review of administrative decisions. It was silent on the standard of review with respect to commercial arbitration decisions, which has resulted in uncertainty and inconsistency among Canadian courts as to its applicability. In Wastech Services Ltd. v. Greater Vancouver Sewerage and Drainage District, 2021 SCC 7, a majority of the Supreme Court of Canada refused to definitely resolve the question because, among other reasons, the court did not have full argument on the issue before it. However, the minority determined that the issue should be resolved and held that where a statute provides for an appeal from an arbitration award, the standard of review is correctness.
Courts across Canada have considered Vavilov in the context of domestic arbitration with varying results. Spirt Bay is one of these cases. In Spirit Bay, the Petitioner argued that although the minority decision in Wastech was not binding, it was persuasive, and Vavilov had impliedly overruled Sattva and Teal Cedar. The Court concluded that Vavilov had not impliedly overruled Sattva or Teal Cedar and that reasonableness remains the standard of review.
For an earlier Case Note on this decision see B.C. – Portion of arbitral award set aside; re-hearing to be conducted by different arbitrator – #518.
For a Case Note considering Wastech see Supreme Court – for those SCC justices willing to consider it, Vavilov applies to private commercial arbitration where legislation provides for appeal – #420.
For some additional Case Notes that discuss the applicability of Vavilov (there are many) see, e.g.
- Alberta & Manitoba – courts take different paths to different outcomes following same S.C.C. case – #276;
- Ontario – Vavilov standard applies to statutory insurance arbitration but not private commercial arbitration – #298;
- Ontario – Vavilov does not overrule Teal Cedar or Sattva Capital – #302;
- N.W.T. – Court applies Vavilov to commercial arbitration awards subject to statutory right of appeal – #419;
- Ontario – on appeal, court raises legislation neither party pleaded in arbitration, reversing arbitrator’s definition of key term – #502;
- Ontario – Court of Appeal does not address whether Vavilov changed the standard of review – #546 and;
- Newfoundland and Labrador – Labour Arbitrator’s Collective Agreement Interpretation Passes Vavilov Reasonableness Muster – #559.