Arbitration Matters

February 7, 2021April 24, 2021

Supreme Court – for those SCC justices willing to consider it, Vavilov applies to private commercial arbitration where legislation provides for appeal – #420

Canada’s Supreme Court in Wastech Services Ltd. v. Greater Vancouver Sewerage and Drainage District, 2021 SCC 7 offered to clarify a contracting party’s duty to exercise in good faith a discretion granted to it by contract and recognized in Bhasin v. Hrynew, 2014 SCC 71. In dismissing the appeal from Greater Vancouver Sewerage and Drainage District v. Wastech Services Ltd., 2019 BCCA 66, the Supreme Court upheld a decision in first instance to set aside a private, commercial arbitration award. The appeal presented an opportunity for the Supreme Court to consider the effect, if any, of Canada (Minister of Citizenship and Immigration) v. Vavilov, 2019 SCC 65 on the standard of review principles applicable to appeals of commercial arbitration awards set out in Sattva Capital Corp. v. Creston Moly Corp., 2014 SCC 53 and Teal Cedar Products Ltd. v. British Columbia, 2017 SCC 32.

Regarding that opportunity, six justices preferred to “leave [it] to another day” while the other three chose to embrace it, considering that to “leave this undecided is to invite conflict and confusion”. The six reasoned that they did not have the benefit of submissions on that question or the assistance of reasons on point from the courts below and that, in any event, the appeal’s outcome did not depend on identifying whether the proper standard of review was correctness or reasonableness.

Three justices acknowledged “important differences between commercial arbitration and administrative decision‑making” but declared that such differences do not affect the standard of review where legislation provides for a right of appeal. Drawing on Vavilov which explained that “a legislative choice to enact a statutory right of appeal signals an intention to ascribe an appellate role to reviewing courts”, the three held that Vavilov had “displaced” the reasoning in Sattva and Teal Cedar. “Concluding otherwise would undermine the coherence of Vavilov and the principles expressed therein”. The three limited the scope of their determination. “Our conclusion on this point is limited to the specific statutory provision at issue. In every case, the question is one of legislative intention, as reflected in the language of the statute”.

Independent of the above, the six justices also expressly agreed with B.C.’s Attorney General that, when granting leave to appeal, courts should “simply and precisely” state questions of law upon which they grant leave in order to prosecute appeals efficiently. The six observed that the “complicated formulation of the first question of law” made it difficult for the courts below to provide a direct and effective answer.

January 27, 2021April 24, 2021

N.W.T. – Court applies Vavilov to commercial arbitration awards subject to statutory right of appeal – #419

In Northland Utilities (NWT) Limited v. Hay River (Town of), 2021 NWTCA 1, N.W.T.’s Court of Appeal held that Canada (Minister of Citizenship and Immigration) v. Vavilov, 2019 SCC 65’s revised framework applies to commercial arbitration awards reviewed as a result of a statutory right of appeal. “It is difficult to follow the argument that the reliability of Canada as a forum for resolution of local and global business disputes, would be rendered less grounded in the rule of law in a rules-based system of law by employing an appellate review standard”. The Court distinguished appeal wording in the N.W.T.’s domestic arbitration legislation from the former B.C. domestic arbitration legislation considered in Sattva Capital Corp. v. Creston Moly Corp., 2014 SCC 53 (CanLII), [2014] 2 SCR 633 and Teal Cedar Products Ltd. v. British Columbia, 2017 SCC 32 (CanLII), [2017] 1 SCR 688. Vavilov’s omission of any mention of commercial arbitration did not argue for or against its extension. “Silence cuts both ways”. The Court did not comment on whether Vavilov applied to awards arising from contracts which contained no right of appeal and where no statute provided such right. Note: the agreement to arbitrate in issue ought to qualify as a statutory arbitration and not a consensual arbitration as it was not negotiated but imposed under section 91(5) of the Cities, Towns and Villages Act, SNWT 2003, c 22, Sch B.

January 24, 2021January 25, 2021

B.C. – T’s responses to F’s mediation efforts justify delayed oppression remedy petition, qualify as component of oppressive conduct – #418

In Gierc Jr. v. Wescon Cedar Products Ltd., 2021 BCSC 23, Madam Justice Catherine Murray determined that Petitioner’s “reasonable efforts to mediate and settle the matter” served two (2) purposes: to rebut Respondents’ allegations of Petitioner’s undue delay to apply for oppression remedy under the Business Corporations Act, SBC 2002, c 57 and to qualify Respondents’ own conduct as oppressive.

January 24, 2021January 24, 2021

N.L. – court’s efforts to case manage procedure and focus dispute overlap with arbitration’s benefits – #417

To assist the parties to reach the merits and perhaps resolve related issues not squarely before the court, Mr. Justice Glen L.C. Noel in Oleynik v. Kachanoski, 2021 NLSC 4 wielded four (4) different procedural tools when adjudicating a procedural dispute: (i) assume case management; (ii) encourage elimination of preliminary procedural initiatives; (iii) ‘direct’ alternative dispute resolution; and, (iv) caution costs. Only (i) and (iv) were within Noel J.’s express jurisdiction to order. Lacking jurisdiction under (ii) to prevent Respondent altogether from presenting its preliminary application or (iii) to impose mediation, Noel J. did expressly urge or “direct” consideration of the options. Noel J.’s efforts reflect the courts’ genuine interest in assisting parties to either reduce or focus their disputes and incur less time and cost. Those efforts overlap with the benefits commonly expected in arbitration and expressly urge litigants to seek out those benefits.

January 21, 2021January 21, 2021

B.C. – court adjourns its assistance to issue subpoenas approved in international commercial arbitration – #416

Despite having “no difficulty accepting” the arbitrator’s conclusion that non-party witnesses had testimony “relevant to the issues in the Arbitration and material to its outcome”, Mr. Justice Gordon C. Weatherill in Octaform Inc. v Leung, 2021 BCSC 73 opted to adjourn an arbitral party’s applications to issue subpoenas in assistance of an arbitration conducted under the International Commercial Arbitration Act, RSBC 1996, c 233. Weatherill J. did affirm that arbitrations are “autonomous, self-contained, self-sufficient processes”, did acknowledge that “[i]t is the task of the Arbitrator to determine the truth” and did note that the arbitrator had not varied his initial approval of the subpoenas request after having participated in fourteen (14) days of hearing. Nonetheless, Weatherill J. considered the applications “premature”. He commented on whether one witness had been duly contacted and recorded that the other witness had set conditions on potentially attending. The witnesses did have over three (3) months between service of the October 9, 2020 applications and the January 14, 2021 hearing at which the witnesses were represented and could have addressed any concerns about willingness to participate. Weatherill J. still opted to see whether either witness in the future “unreasonably refuses to provide written evidence in chief and attend the hearing of the Arbitration for viva voce examination in chief, cross-examination and re-examination”. At that future time he advised “I will consider issuing the requested subpoenas”.

January 20, 2021January 20, 2021

Québec – no legal principle to support applying competence-competence for mediation – #415

In a proposed class action involving claims under an insurance policy for indemnification for business interruption due to COVID-19 measures, Mr. Justice Gary D.D. Morrison in 9369-1426 Québec inc. (Restaurant Bâton Rouge) v. Allianz Global Risks US Insurance Company, 2021 QCCS 47 referred the parties to mediation and arbitration and dismissed the application for authorization. While Québec law did not state that parties to an insurance contract can submit their disputes to arbitration, it also does not stipulate that they cannot. The Code of Civil Procedure, CQLR c C-25.01’s class action provisions are procedural and do not modify substantive law or create jurisdiction for the courts over disputes which parties have lawfully excluded. Having relied in part on proportionality to refer the parties, Morrison J. declined to comment on whether his order would “require each individual insured to proceed by way of the lengthy and costly dispute resolution process, which may discourage many from exercising their rights”. Morrison J. also held that competence-competence does not arise in referral to mediation “as there exists no legal principle in support of such an approach”.

January 20, 2021January 25, 2021

Ontario – raising arbitration in defence helps demonstrate defendant did not waive arbitration – #414

In Elgin Mills v. Farhanian, 2020 ONSC 6435, Master Karen E. Jolley granted an application for a stay, holding that a defendant does not attorn to the court process by filing a defence wherein it specifically raises the arbitration provision. Master Jolley followed the precedent set by ABN Ambro Bank Canada v. Krupp Mak Maschihnenbau GmbH, 1996 CanLII 12449 (ON SCDC) which held that reference to arbitration in a defence may be treated as a request to arbitrate, “were one needed“. She further held that defendant’s delayed application for a stay, coupled with light activity in the litigation, did not justify refusing stay and that the work in the litigation could be repurposed for an arbitration.

January 17, 2021February 19, 2021

Québec – sequential arbitrations without exclusion of courts renders clause invalid in real rights litigation – #413

Distinguishing between actions involving personal and real rights, Mr. Justice Martin Castonguay in Specter Aviation v. Laprade, 2020 QCCS 4392 held that article 3148 para. 2 of the Civil Code of Québec, CQLR c CCQ-1991 did not apply to deny the court’s jurisdiction when a party invoked an agreement to arbitrate. Rather, article 622 of Code of Civil Procedure, CQLR c C-25.01 governed when the dispute involved ownership of an aircraft and it required him to consider whether the parties had negotiated a binding, mandatory agreement to arbitrate. Castonguay J. determined that the parties’ agreement to arbitrate was ambiguous and invalid, including a mention of two (2) sequential arbitrations and lacking an express exclusion of the courts if the parties did undertake arbitration.

January 16, 2021April 25, 2021

Alberta – court rules permitting appeal of Master’s stay decision consistent with section 7(6) of Arbitration Act – #412

In Agrium, Inc v. Colt Engineering Corporation, 2020 ABQB 807, Madam Justice Nancy Dilts held that unsuccessful applicants could appeal to a justice of the court a Master’s decision refusing a stay under section 7(1) of the Arbitration Act, RSA 2000, c A-43. The legislated right of appeal from a Master’s decision under the Alberta Rules of Court, Alta Reg 124/2010 does not contradict the policy decisions underlying the Arbitration Act. The Court of Queen’s Bench Act, RSA 2000, c C-31 “creates layers of decision making authority” and section 7(6) did not intend to render Master’s decisions on stay applications “unappealable”. Section 7(6) should “not be read in a manner that would be inconsistent with that legislated right”. Having jurisdiction to hear the appeal, Dilts J. held that she retained jurisdiction under section 7(1) to consider waiver and attornment notwithstanding expiry of a limitation period in which to commence arbitration.

January 14, 2021January 14, 2021

Ontario – enforcing award’s remedy excludes substituting court’s own remedy – #411

In Abittan v. Wilcox, 2020 ONSC 6836, Mr. Justice Frederick L. Myers reiterated the “consequences” of agreeing to submit disputes to arbitration, limiting his involvement by “[i]gnoring the merits of the Arbitrator’s decisions, as I must, and considering only the nature and form of remedy granted”. Enforcing the award which ordered one party to pay the other the costs of the arbitration, Myers J. explained that section 50(7) of the Arbitration Act, 1991, SO 1991, c 17 did not authorize him to change the remedy ordered in an award. Doing so would not be enforcing an award but substituting the court’s award for that of the arbitrator.