Saskatchewan – Judicial review available only when arbitration agreement provides – #594

In Ministry of Highways for the Province of Saskatchewan v. West-Can Seal Coating Inc. et al, 2022 SKQB 43, Justice Currie heard, and rejected, all grounds pursued by the applicant, Ministry of Highways (the “Ministry”), to set aside a decision arising from an arbitration conducted pursuant to the New West Partnership Trade Agreement (“NWPTA”), a trade agreement among the four western Canadian provinces. Justice Currie confirmed that, unless contracted for by the parties, there is no role for judicial review of an arbitration award. The options are appeal (if applicable) and set aside. Set aside applications are also limited to issues of procedural fairness, and not whether the decision is correct on its merits.

The respondent, West-Can Seal Coating Inc. (“West-Can”), commenced an arbitration pursuant to a Bid Protest Mechanism (“BPM”) in the NWPTA arising from the Ministry’s award of a contract for highway micro-surfacing. West-Can alleged that the Ministry had violated chapter 5 of the Canadian Free Trade Agreement (“CFTA”), an agreement among Canada and the provinces and territories. Chapter 5, which is referenced specifically in the BPM, contains certain standards of fair process. West-Can argued that these standards were breached when the Ministry evaluated several elements of the bids, resulting in its award of the contract to another bidder.

Pursuant to the BPM, the arbitration process was conducted entirely in writing, starting with West-Can’s initial pleading, the Ministry’s reply and a West-Can’s counter-reply. Only the material filed in accordance with that process could be considered by the arbiter[1]. Thereafter, the arbiter was required to deliver a “report” (not an award) containing:

(a) findings of facts;
(b) a determination as to whether the specific procurement at issue was consistent with the applicable trade agreement;
(c) if applicable, recommendations for corrective action by the government entity; and
(d) the amount of any awards, as provided for under Article 7 (and not in issue here), and when those awards should be paid.

In his report issued on March 29, 2021, the arbiter made factual findings and concluded that the Ministry had breached chapter 5 of the CFTA. The arbiter also provided recommendations for the Ministry to improve its process.

Thereafter, the Ministry brought an application for judicial review, arguing that the arbiter had breached principles of procedural fairness and rendered an unreasonable report. West-Can responded that a general judicial review application was unavailable to the Ministry.

Justice Currie agreed, relying on the Ontario Court of Appeal’s decision in Inforica Inc. v. CGI Information Systems and Management Consultants Inc., 2009 ONCA 642, in which the court adopted the language from Inforica’s factum that “arbitral proceedings are presumptively immune from judicial review and oversight” (Inforica, para. 14). The court noted that Justice Rothstein in Sattva Capital Corp. v. Creston Moly Corp., 2014 SCC 53 had similarly stated at para 104 that appellate review of arbitration awards is different than judicial review, and that approach is also consistent with the Supreme Court of Canada’s subsequent jurisprudence in Highwood Congregation of Jehovah Witnesses (Judicial Committee) v. Wall, 2018 SCC 26. There, the Court concluded at para 14 that judicial review was only available where there has been an exercise of state authority of sufficient public character.

Justice Currie noted that, here, the parties had elected to govern their affairs, including any disputes, through a contractual agreement, namely the BPM in the NWPTA. That agreement limited the court’s jurisdiction on review of an arbiter’s decision and did not permit a full judicial review.

Further, Justice Currie rejected the Ministry’s arguments that there was court jurisdiction to conduct a judicial review under The Queen’s Bench Rules, ruling that the Rules do not grant jurisdiction; rather they apply if the court already has jurisdiction. He similarly rejected the notion of an inherent jurisdiction for judicial review. Accordingly, the only mechanism for review was that agreed to in Article 9(1)(c) of  the BPM which provided for limited judicial review relating to specific provisions of The Arbitration Act, 1992, as follows:

“9(1) A disputant may request judicial review of an arbiter’s report within 15 days of it being issued under Article 5(5) in accordance with:

(c) clauses 46(1)(c) and (f) through (i) and subsection 46(8) of The Arbitration Act, 1992 (SS 1992, c. A-24.1) if the government entity is from Saskatchewan….”

Justice Currie reviewed each of the complaints by the Ministry, noting that all but one of them fell within the bases for set aside in s. 46 and therefore could be considered by the court. However, he rejected the Ministry’s complaints, finding that the necessary procedural fairness obligations were, in each instance, met. In particular, Justice Currie rejected the claims that a) the arbiter had exceeded the scope of the arbitration, finding the necessary jurisdiction was granted in the parties’ agreement and the BPM; b) that West-Can had raised various new arguments in its counter-reply for which the Ministry was denied an opportunity to respond in light of the proscribed written nature of the arbitration process, finding that the arguments were either raised in the initial request or irrelevant to the outcome, and/or the Ministry had not objected at the time; and c) that the arbiter had considered irrelevant evidence and failed to consider relevant evidence, finding that the impugned evidence was relevant and that the decision suggested that the arbiter had considered all relevant evidence.

Though the Ministry claimed that the decision rendered was wholly unreasonable, Justice Currie found that this was not a matter for review under s. 46 (1). In any event, citing Canada v. Vavilov, 2019 SCC 65 for the proposition that “a reasonable decision is one that is based on an internally coherent and rational chain of analysis and that is justified in relation to the facts and law that constrain the decision maker” (Vavilov, para 85), he found that the requirements for a reasonable decision had been met. The Ministry’s application was dismissed.

Contributor’s notes:

First, this decision reinforces the notion of party autonomy, including in respect of appeals and set aside applications. Where parties have contractually agreed to the mechanism for review of a decision, they will be held to their bargain.

Second, the decision reiterates the focus of set aside applications, that is, whether procedural fairness has been accorded to both parties. Where the evidence demonstrates that the parties were treated fairly, the court will be satisfied and the application dismissed. The court’s role is not to look behind that fair treatment to determine if it agrees with the decision on the merits.

Third, for some recent cases on set aside applications, see case notes: Ontario – Award enforcement application met with merits arguments in leave to appeal/set aside cross-application #539 (set aside applications not to be an appeal on the merits), Alberta – arbitrator’s breach of procedural fairness in costs award leads to set aside of award on merits – #455 (set aside decision on merits where there has been a breach of fairness), 407 (errors of law are not the basis for a set aside) and BC – Arbitrator’s decision set aside for lack of procedural fairness – #575 (successful set aside application where breach of fairness proven).

[1] The BPM uses the language of arbiter, not arbitrator.