Ontario – No appeal where parties agree dispute “finally settled” by arbitration – #737

In Baffinland Iron Mines LP v. Tower-EBC G.P./S.E.N.C., 2023 ONCA 245, Baffinland Iron Mines LP (“BIM”) appealed a decision of Justice Laurence A. Pattillo dismissing its application for leave to appeal an arbitral award. Justice Pattillo had dismissed the application on the basis that the relevant arbitration agreements precluded appeals. BIM then sought to appeal that decision. Tower-EBC G.P./S.E.N.C (“TEBC”) moved to quash the appeal on the basis that there is no right to appeal from a denial of leave to appeal. The Court of Appeal dismissed the application to quash, holding that BIM’s appeal fell within a “narrow category of cases” that are an exception to the rule that there is no right to appeal from a denial of leave to appeal. Those are ones where it is alleged, as here, that the application judge mistakenly declined jurisdiction to consider the leave issues. The appeal itself, however, was also dismissed. The Court of Appeal found that the application judge’s interpretation of the arbitration agreements was correct. The Court concluded, among other things, that in the dispute resolution clause the phrase “finally settled” (used in relation to an arbitration) meant the same as the phrase “final and binding” (used in relation to decisions of a Dispute Arbitration Board, the “DAB”). Both resulted in there being no further recourse from the arbitral award by way of appeal. 

Briefly, the facts were these. BIM and TEBC entered into two contracts in 2017 that provided for TEBC to perform earthworks for BIM’s construction of a railway to transport ore from its mine on Baffin Island, Nunavut, to a nearby port. The dispute arose when BIM terminated the contracts for delays. The dispute resolution clauses provided, in part:

“Unless settled amicably, any dispute in respect of which the DAB’s decision (if any) has not become final and binding shall be finally settled by international arbitration. Unless otherwise agreed by both Parties:

(a) the dispute shall be finally settled under the Rules of Arbitration of the International Chamber of Commerce,

(b) the dispute shall be settled by three arbitrators appointed in accordance with these Rules …”[emphasis added]

The ICC Rules provided:

“35(6) Every award shall be binding on the parties. By submitting the dispute to arbitration under the Rules, the parties undertake to carry out any award without delay and shall be deemed to have waived their right to any form of recourse insofar as such waiver can validly be made.”

On BIM’s application for leave to appeal the arbitration award, Justice Pattillo accepted TEBC’s argument that the parties had contracted out of the right to appeal, given the reference to disputes being “finally settled by arbitration”, as well as because of the incorporation of ICC Rule 35(6). As a result, he refused to consider the grounds asserted by BIM on the leave to appeal application. BIM filed an appeal of that decision and TEBC filed a motion to quash the appeal.

On TEBC’s motion to quash the appeal, TEBC argued there was no right to appeal from the denial of leave to appeal because the Arbitration Act, 1991, S.O. 1991, c. 17 (“Arbitration Act”) does not provide for one and, also because there is a general rule that there is no appeal from a refusal of leave to appeal. It relied on Hillmond Investments Ltd. v. Canadian Imperial Bank of Commerce (1996), 1996 CanLII 413 (ON CA), 29 O.R. (3d) 612 (C.A.) (“Hillmond Investments”). In that case, the Court of Appeal quashed an appeal from a decision denying leave to appeal for a number of reasons, including that: (1) the Arbitration Act does not grant a right of appeal from an order refusing leave to appeal: (2) the appellant could not rely upon s. 6(1)(b) of the Courts of Justice Act, R.S.O. 1990, c. C.43 (the “CJA”), which provides for an appeal from a final order, as the refusal by the lower court to grant leave to appeal was an interlocutory order; and (3), in any event, allowing an appeal under the CJA from a refusal to grant leave to appeal would defeat the legislated impediment to appeals under the Arbitration Act.

The Court of Appeal in this case instead applied Denison Mines Ltd. v. Ontario Hydro (2001), 2001 CanLII 5681 (ON CA), 56 O.R. (3d) 181 (C.A.) (“Denison Mines”), where the appeal from a denial of leave to appeal was not quashed. In Denison Mines, the Court of Appeal applied a recognized exception to the rule that there is no appeal from a decision refusing leave to appeal. That exception arises when the appeal alleges that the judge mistakenly declined jurisdiction to hear the leave application (para. 8). It held that an order declining jurisdiction to grant leave to appeal is final within the meaning of s. 6(1)(b) of the CJA (para. 21) and, as a result, there is a right to appeal. As an aside, it expressed doubts about the conclusion in Hillmond Investments that the refusal to grant leave based on the merits was in fact an interlocutory order. 

TEBC had argued that Denison Mines was distinguishable because in that case the parties had agreed not to argue the grounds for leave until the application judge decided whether the arbitration agreement precluded appeals, whereas here, the parties had argued both issues at the same hearing. The Court of Appeal found that this was a distinction without a difference. The result flowed, in either case, from the declination of jurisdiction and not from how many issues were put before the application judge. The application to quash the appeal was, therefore, dismissed.

The appeal itself was also dismissed. As appellant, BIM argued that Justice Pattillo failed to properly apply the presumption of consistent expression when interpreting the contracts. The presumption is that language in a contract is used consistently, with the same words meaning the same thing, and the use of different words indicates an intention to refer to different things. Here the contracts used the phrase “final and binding” in relation to decisions of the DAB. Those words have been held to preclude appeals. At the same time, the contracts used a different phrase, “finally settled”, in relation to arbitration. If the presumption of consistent expression were properly applied, BIM argued this would mean that the parties intended something different than precluding appeals in the case of arbitration.

The Court of Appeal dismissed this argument. It stated that there can be more than one way to say something. Where the ordinary meaning of different words or phrases is clearly the same, the presumption cannot be applied to force a different meaning on one set of the words or phrases. Further, the application of the presumption in this case pointed in favour of “a consistent meaning to the repeated word ‘final’ (or ‘finally’) when it was used with ‘binding’ and when it was used with ‘settled’. In each phrase it carried the meaning of ‘admitting of no further disputation’, ‘exclud[ing] any right of appeal which would otherwise have existed’, or ‘oust[ing] all rights of appeal’ …Settled, like conclusive or binding, reinforces the meaning of final − it does not alter it” (para. 43).  

Because the Court of Appeal found that Justice Pattillo’s interpretation of the dispute resolution clause was correct, it did not consider the applicable standard of review nor the argument, based on Justice Pattillo’s interpretation being found incorrect, that given a priority of terms provision in the contracts, the dispute resolution clause had priority over the relevant provision from the ICC Rules. 

Contributor’s Note:  

In Schafer v Schafer, 2023 ABCA 117 the Alberta Court of Appeal also recently considered the exception to the general rule that there is no right of appeal from a leave to appeal decision except where the lower court mistakenly declines jurisdiction and found that the exception has a narrow application. This decision of the Ontario Court of Appeal is the latest installment in the dispute between the parties covered by this blog. See the following previous Case Notes: Ontario – Participating party in arbitration not granted leave to intervene in appeal/set aside application – #537; Ontario – Set- aside application failed; dispute covered by arbitration agreement, no objection to jurisdiction – #616; Liz’s 2022 Hot Topic: Treatment of arbitration agreements in 2022 – #703.