Ontario – Court affirms narrow jurisdiction to set aside an arbitral award – #729

In Canada Soccer Association Incorporated v. Association de Soccer de Brossard, 2023 ONSC 1367, Bell J. dismissed a motion to stay an arbitral award and granted a cross-motion to enforce the award. The case is a reminder that applications to set aside arbitral awards which merely quarrel with the merits of a decision, even when dressed up as  procedural grievances, attract little judicial sympathy.

In this case, the arbitration resulted from of a decision by Canada Soccer Association Incorporated (“Canada Soccer”), the governing body for national-level soccer in Canada, to deny the application of Association de Soccer to Brossard (“ASB”) for a National Young Club Licence (“Licence”). ASB appealed this decision to the Sport Dispute Resolution Centre of Canada. The Arbitrator ordered Canada Soccer to grant ASB a Licence for the 2023 and 2024 soccer season (the “Award”). 

The arbitration was conducted pursuant to the Canada Sports Dispute Resolution Code (the “Code”). Section 6.12(c) of the Code provides: “The award shall be final and binding upon the Parties. There is no right of appeal on questions of law, fact or mixed questions of fact and law.

Canada Soccer commenced proceedings to set aside the Award pursuant to s. 46(1)6 of the Arbitration Act, 1991, SO 1991, c 17, which provides:

“On a party’s application, the court may set aside an award on any of the following grounds:

6. The applicant was not treated equally and fairly, was not given an opportunity to present a case or to respond to another party’s case, or was not given proper notice of the arbitration or of the appointment of an arbitrator.”

Canada Soccer argued that the Arbitrator had “failed to apply the criteria required by Canada Soccer” for awarding a Licence and that the Award violated its “natural justice rights.”  Canada Soccer also sought a stay of the Award, pending the Court’s decision in Canada Soccer’s application to set aside the Award. The stay application was the subject of this decision. 

Issue: Was a stay of proceedings warranted in the circumstances?

Canada Soccer sought a stay of the Award pursuant to Section 50(5) of the Arbitration Act, 1991, which provides:

“If the period for commencing an appeal, application to set the award aside or application for a declaration of invalidity has not yet elapsed, or if such a proceeding is pending, the court may,

(a)   enforce the award; or

(b)   order, on such conditions as are just, that enforcement of the award is stayed until the period has elapsed without such a proceeding being commenced, or until the pending proceeding is finally disposed of.”

The application judge, Bell J., applied the three-part test for obtaining a stay, a form of injunctive relief, from the seminal case RJR-MacDonald Inc. v. Canada (Attorney General), 1994 CanLII 117 (SCC), which requires that a party establish that:

(i) there is there a serious question to be determined on the application, 

(ii) the moving party will suffer irreparable harm if the stay is not granted, and 

(iii) the balance of convenience favours granting the stay. 

The Court found there was not a serious question to be determined, as the grounds for setting aside the award were merely a disagreement with the merits of the Award that were “thinly disguised as a procedural grievance” and did not raise genuine issues about natural justice and procedural fairness. This, the Court reminded, runs afoul of the principle articulated by the Ontario Court of Appeal in Tall Ships Development Inc. v. Brockville (City), 2022 ONCA 861 that set aside applications should not “be treated as an alternate appeal route.”    

The Court further explained that “Canada Soccer cannot use s. 46(1)6 to bootstrap its substantive concerns with the arbitrator’s findings which, pursuant to s. 6.12(c) of the Code, are immune from appeal.” 

The Court also concluded that Canada Soccer did not satisfy the remaining branches of the RJR-MacDonald test. It did not lead evidence that it would suffer irreparable harm, with the Court disagreeing that “confusion” about the Award or its potential precedential effect amounted to irreparable harm or that Canada Soccer would be unable to consider pending applications until the case was decided. The Court explained: 

“Canada Soccer’s affiant agreed on cross-examination that Canada Soccer can assess every pending and future application for a license. In any event, the arbitral award is not a “precedent.” The Code, which is the framework for the arbitration, provides that “[e]ach case must be determined on its facts and the Panel shall not be bound by previous awards or decisions, including those of the SDRCC”: Code, s. 5.13(e).”

The Court also found that the balance of convenience strongly favoured ASB. A stay would harm ASB as it would deprive ASB from fielding a soccer team for the upcoming season even if it prevailed in the set aside application. In contrast, there was no evidence of harm that would accrue to Canada Soccer. 

The Court also granted ASB’s cross-motion to enforce the Award. Canada Soccer opposed the motion, arguing that ASB had “unclean hands” for writing to the Minister of Sport to accuse Canada Soccer of “bullying.”  The Court rejected this argument, noting that “the letters are unrelated to ASB’s cross-motion to enforce the arbitral award.”

Contributor’s Note: 

Outside arbitral proceedings, parties may take for granted their ability to satisfy the first branch of the RJR-MacDonald test. The threshold – whether there is a serious question to be tried – is a low one and courts will typically only undertake a preliminary assessment of the merits of the case and need only be satisfied that the application is neither “vexatious nor frivolous.” 

Parties seeking to stay arbitral awards, however, face closer scrutiny. Where an applicant brings what is in effect a disguised appeal of the merits, it can expect that the court hearing the stay application will find the set aside application to be vexatious at a preliminary stage in the proceedings. The following related Case Notes may interest Arbitration Matters readers: Ontario – Set-aside application can’t bootstrap appeal– #707, which comments on Tall Ships Development Inc. v. Brockville (City), 2022 ONCA 861, which the Court relied on in dismissing the stay application and Ontario – Arbitration Act does not preclude court staying execution of final award under Courts of Justice Act – #444, which discussed Zenith Aluminum Systems Ltd. v. 2335945 Ontario Inc., 2021 ONSC 1128, where the Court dismissed attempts to limit the court’s jurisdiction to stay execution of final arbitral awards to only those circumstances set out in section 50(5)Arbitration Act, 1991.