Ontario – No appeal lies from preliminary jurisdictional decision – #666

In Iris Technologies Inc. v. Rogers Communications Canada Inc., 2022 ONCA 634, the Ontario Court of Appeal quashed a motion for leave to appeal from the lower court’s decision in which it was asked to  “decide the matter” of arbitral jurisdiction under the Ontario Arbitration Act, 1991. The Court of Appeal confirmed its earlier decision, United Mexican States v. Burr, 2021 ONCA 64, made under the Ontario International Commercial Arbitration Act, 2017. The Court also made it clear that no appeal lies from lower court decisions which “decide the matter” of arbitral jurisdiction when the question comes before the court as a preliminary issue before the final award is rendered.

The Applicant objected to the arbitrator’s jurisdiction to decide the counterclaim and argued that it was subject to the exclusive jurisdiction of the Canadian Radio-television and Telecommunications Commission. Pursuant to section 17(7) of the Arbitration Act, 1991, arbitrators may rule on a jurisdictional objection either: (a) as a preliminary question (i.e., before issuing an award); or (b) in an award.  In this case, the arbitrator ruled that he had jurisdiction in a preliminary jurisdictional decision, rather than as part of an award. 

The Applicant then applied to the Ontario Superior Court of Justice under section 17(8) of the Arbitration Act, 1991, which provides that “[i]f the tribunal rules on an objection [to jurisdiction] as a preliminary question, a party may, within thirty days after receiving notice of the ruling, make an application to the court to decide the matter.” The Superior Court of Justice reversed the arbitrator’s decision. It found that the arbitrator did not have jurisdiction to hear the counterclaim.

The Respondent moved for leave to appeal to the Court of Appeal, which quashed the motion for leave to appeal pursuant to section 17(9)  of the Arbitration Act, 1991, which states unambiguously that “[t]here is no appeal from the court’s decision” under section 17(8).

In doing so, the Court of Appeal accepted that the question of whether a matter is within the exclusive jurisdiction of another decision-maker is a jurisdictional question, as had been made clear both in the arbitrator’s reasons and in those of the Superior Court of Justice.

The Court of Appeal noted that its conclusion is consistent with its decision in United Mexican States v. Burr, 2021 ONCA 64, which reaches the same conclusion in respect of Article 16(3) of the UNCITRAL Model Law on International Commercial Arbitration, Schedule 2 to the Ontario International Commercial Arbitration Act, 2017, which provides that “[i]f the arbitral tribunal rules as a preliminary question that it has jurisdiction, any party may request, within thirty days after having received notice of that ruling, the court […] to decide the matter, which decision shall be subject to no appeal”.

Contributor’s notes

The result in this case is not surprising, nor is the result in Burr. The statutory provisions at issue are crystal clear: no appeal lies from lower court decisions which “decide the matter” of arbitral jurisdiction, where the arbitrator ruled on the question as a preliminary matter.

But the practical application of those statutory provisions is somewhat perplexing. Arbitral tribunals may decide to rule on a jurisdictional issue as a preliminary question, or as part of an award. If they rule as a preliminary question, then the court may “decide the matter” of jurisdiction and there is no further appeal. However, if the arbitral tribunal rules on the jurisdictional objection in its final award, then the jurisdictional issue can then be decided by the court in the context of a set-aside application or an appeal. The lower court’s decision is then subject to further appeals.

I would suggest that this result is problematic. Why should appeal rights on the very same issue turn on the arbitral tribunal’s procedural decision of whether to deal with a question as a preliminary matter or in a final award? The more important jurisdictional decisions are precisely those that tribunals may be more likely to decide as a preliminary question. They are the dispositive questions that are so important that it makes sense to put the rest of the proceeding on hold so that the question can be dealt with first. Examples include questions of whether a non-signatory is bound by the arbitration agreement, or whether there is an arbitration agreement at all.

 Is it appropriate for such decisions to be decided by lower courts only, following an arbitral tribunal’s preliminary ruling, while perhaps less important jurisdictional questions that form part of a final award are the subject of a set-aside decision that may be further appealed?

And what happens when the tribunal renders a jurisdictional decision as part of a partial or interim award rendered in the course of a proceeding, rather than a final award? Which mechanism applies? And does it make sense for appeal rights to turn on whether the tribunal styled its decision an “award” or not?

Legislative attention to this issue may be needed to ensure that parties’ procedural rights are not limited in perhaps unintended ways.

For Arbitration Matters’ discussion of United Mexican States v. Burr, 2021 ONCA 64, see Case Note #427, Ontario – court enforces Model Law prohibition of appeals where arbitral tribunal decides jurisdiction as preliminary question.