For better or for worse, parties can challenge arbitral decisions through multiple avenues, whether through a review of a preliminary jurisdictional ruling, set-aside application, or appeal. Arbitration case law in 2023 highlighted a striking lack of consistency between the standards of review and appeal applied in each of these different avenues.
The Ontario Court of Appeal’s recent decision in Russian Federation v Luxtona Limited, 2023 ONCA 393 confirmed that, if a party applies to court to “decide the matter” of a preliminary jurisdiction objection under Article 16(3) of the Model Law, there is no deference applied – the process is a hearing de novo. The de novo “standard” (which is not actually a standard of review at all as it is a fresh hearing) has to date only been applied to preliminary jurisdictional rulings, not final awards.
The standard of review for a final award will depend on the method of challenging it – and there are slight differences in the domestic arbitration legislation.
If a party chooses to appeal an award, the party will face multiple different threshold tests and standards as it progresses. As upheld in Esfahani v Samimi, 2023 ABCA 220, if a party must first seek leave to appeal the award (for example under section 44(2) of Alberta’s Arbitration Act), and the arbitration agreement does not provide for an appeal, a party may apply for leave to appeal a question of law and must overcome the threshold test for permission to appeal. The test in Alberta requires establishing the following elements: (1) Is the question reasonably arguable; (2) is deciding the question likely to affect the result of the litigation; (3) is the answer likely to be of interest to others, or likely to influence later suits; and (4) is there any independent reason not to re-litigate the question, or to limit the scope of the appeal? The test for permission to appeal varies slightly across different provinces (see e.g. section 59 of British Columbia’s Arbitration Act and section 45 of Ontario’s Arbitration Act).
If a party’s application for permission to appeal is denied, and the party appeals that denial to the court of appeal after being denied leave to appeal at first instance, the court of appeal may apply some undefined “higher threshold”. For example, in Pilgrim v True-Line Contracting Ltd, 2023 ABCA 126, a party sought leave to appeal a chambers judge’s decision denying leave to appeal an arbitral decision. The court held that, because the Court of King’s Bench is the primary appellate court of review for arbitration matters, a party seeking to appeal to a second level of court must meet a “higher threshold”, citing to ENMAX Energy Corporation v TransAlta Generation Partnership, 2020 ABCA 68. Thus, even before getting to an appeal on the merits, a party may have to meet multiple different tests and standards.
If a party makes it to an appeal of the arbitral award on the merits, the standard of review of an appeal of a private arbitration has been a moving target since the Supreme Court of Canada’s decision in Canada (Minister of Citizenship and Immigration) v. Vavilov, 2019 SCC 65 (“Vavilov”) – and case law in 2023 did not resolve this discussion. In the post-Vavilov world, even though Vavilov did not address private commercial arbitrations, lower courts have issued conflicting decisions grappling with the application of Vavilov to private arbitration awards, and this trend continued in 2023 (see Case Note 276, “Alberta & Manitoba – courts take different paths to different outcomes following same S.C.C. case”; Case Note 790, “Manitoba awards set aside after arbitrator rewrote parties bargain”). This question in particular could use some appellate-level guidance.
If a party chooses to forego an appeal, or cannot appeal the award, or simply opts for a multi-pronged approach, a party may also choose to seek to set aside an arbitral award. The standards will be different yet again. The grounds for setting aside an arbitration award are enumerated in the applicable arbitration legislation (e.g. section 45 of Alberta’s Arbitration Act) and the standard of review may depend upon the ground. But 2023 saw at least one court applying the Vavilov standard of reasonableness on a set-aside application (see Case Note 793, “Newfoundland and Labrador set aside application denied where award meets Vavilov reasonableness test”).
In the result, parties are faced with a wide range of potential standards for reviewing an arbitrator’s awards, which may give rise to multiple different approaches (and possibly different results) to a review of the same decision. For example, if a party applies for set-aside and an appeal concurrently (which does not infrequently occur), the same decision would be subject to different standards of review. It also raises the question of whether the different standards of review are meaningful at all if they are all available to parties. I will be keeping an eye out for any clarity in this area in 2024.