Standard of review Archives - Page 4 of 4

December 9, 2021May 4, 2022

Québec – partial award may determine scope of arbitration agreement for final award – #563

In Maïo v Lambert, 2021 QCCS 3884, Justice Castonguay denied an application to annul in part and modify a final award. He found that the arbitrator did not exceed the scope of his mandate, including in how he ruled on matters that had been circumscribed in a prior partial award, and that the applicant was essentially seeking an improper review of the merits of the dispute.

December 7, 2021May 4, 2022

Ontario – A reminder of the “hands off” approach of courts in arbitration even with oppression claims and injunctions – #561

In TSCC No. 2364 v. TSCC No. 2442, 2021 ONSC 7689, Justice Myers affirmed the “hands off” approach courts take regarding disputes that are properly the subject of an arbitration clause. The applicant condominium corporation sought an order by way of an oppression remedy or an injunction precluding the respondent condominium corporation from drawing amounts from a bank account for shared management services. The parties had already been through a lengthy arbitration regarding various disputes between them pursuant to a shared facilities agreement. Justice Myers held that the proper forum for the new disputes was arbitration.

November 25, 2021May 4, 2022

Ontario – Appeal of award dismissed after party refused to participate – #557

In Vanhof & Blokker Ltd. v Vanhoff & Blokker Acquisition Corp., 2021 ONSC 7211, the Respondents/Appellants on Appeal (“the Sellers”) sold the assets of their horticultural and garden supply business to the Applicants/Respondents on Appeal (“the Purchasers”) pursuant to an Asset Purchase Agreement dated December 29, 2014. The Sellers alleged that the Purchasers breached the terms of the Asset Purchase Agreement and they therefore refused to make payments under the Agreement, claiming that they were induced to enter into the Agreement by fraudulent and negligent misrepresentations made by the Purchasers. The Sellers refused to participate in an arbitration of the dispute and then appealed the final award. Justice Pollack dismissed the appeal, relying upon s. 27(3) of the Arbitration Act, 1991, S.O. 1991, c. 17, on the basis that the Sellers had been advised of the date for the arbitration and had filed material, but had failed to participate. They were obliged to raise their objections about the arbitrator’s jurisdiction before the arbitrator at the hearing, rather than by letter.

November 23, 2021May 4, 2022

BC – correctness standard of review applies on set aside applications on jurisdiction grounds – #555

In lululemon athletica canada inc. v Industrial Color Productions Inc., 2021 BCCA 428, Justice Marchand, for the British Columbia Court of Appeal, dismissed lululemon’s appeal of the chambers judge’s dismissal of its application to set aside the arbitrator’s award made in favour of Industrial Color Productions (“ICP”). The issue was whether the arbitrator had acted outside his jurisdiction in awarding ICP damages that lululemon argued were never claimed in the pleading. Justice Marchand found that the chambers judge had applied the wrong standard of review – the standard of review is correctness and United Mexican States v Cargill, 2011 ONCA 622 remains the leading case on the standard of review for set aside applications on matters of jurisdiction. Canada (Minister of Citizenship and Immigration) v. Vavilov, 2019 SCC 65 and Sattva Capital Corp. v. Creston Moly Corp., 2014 SCC 53 were not helpful in this context. However, Justice Marchand found that the chambers judge’s decision to dismiss the set aside application was correct; the arbitrator did not stray outside the scope of the submission to arbitration when the impugned pleading was read generously.

October 26, 2021May 4, 2022

Ontario – Court of Appeal does not address whether Vavilov changed the standard of review – #546

In Ontario First Nations (2008) Limited Partnership v. Ontario Lottery and Gaming Corporation, 2021 ONCA 592, Justice Jamal (as he then was), writing for the Court of Appeal, found that it was unnecessary to address whether Vavilov changed the standard of review analysis in Sattva and Teal Cedar in an appeal from a commercial arbitration decision. Justice Jamal held that the parties’ disagreement as to how the applicable principles of contractual interpretation should be applied to the contractual facts is, absent an extricable error of law, an exercise of contractual interpretation by a first-instance decision maker on a matter of mixed fact and law that attracts appellant deference. Further, the Court should refrain from deciding issues of law that are unnecessary to the resolution of an appeal.

September 28, 2021May 4, 2022

Saskatchewan – Arbitrator’s jurisdiction when one party alleged to have repudiated arbitration agreement – #536

In Saskatchewan v Capitol Steel Corporation, 2021 SKQB 224, Saskatchewan alleged that Capitol Steel Corporation (“CSC”) had repudiated the arbitration agreement in written submissions made just before the arbitration hearing. Saskatchewan’s position was that these submissions denied one of the recitals in the parties’ arbitration agreement that showed agreement on a matter which CSC then put in issue in the arbitration. Saskatchewan challenged the arbitrator’s jurisdiction as a result of CSC’s alleged repudiation of the arbitration agreement. The arbitrator dismissed the application and Saskatchewan then applied to the Court “to decide the matter” under s. 18(9) of The Arbitration Act, 1992, SS 1992, c A-24.1, which states that, “[i]f the arbitral tribunal rules on an objection as a preliminary question, a party may, within 30 days after receiving notice of the ruling, make an application to the court to decide the matter.” Justice Clackson found that the standard of review of an arbitrator’s preliminary decision on jurisdiction, where one party alleged the other repudiated the arbitration agreement, was correctness. He held that the arbitrator was correct in finding there was no repudiation because there was no anticipatory breach. The alleged breach did not deprive Saskatchewan of any of the rights that it had under the arbitration agreement.

August 30, 2021May 4, 2022

B.C. – Whole award to be considered when examining for patent unreasonableness – #525

In Potherat v, Slobodian, 2021 BCSC 1536, Justice Crabtree of the British Columbia Supreme Court found that the decision of an arbitrator of the B.C. Residential Tenancy Branch was neither patently unreasonable nor wrong when read as a whole. In determining whether a decision is patently unreasonable, the court is required to examine both the reasons and the outcome. Justice Crabtree quoted extensively from the arbitrator’s reasons; while sentences or paragraphs are sometimes quoted by courts when reviewing arbitral awards, it is rare that large portions of the arbitrator’s reasons are quoted. Justice Crabtree followed Sherstobitoff v. British Columbia (Workers’ Compensation Appeal Tribunal), 2019 BCSC 1659, which held that that reasons “are to be read as an organic whole, not parsed or dissected in search of error”. Justice Crabtree found that the petitioner’s submissions were a parsing of the decision.

August 18, 2021May 4, 2022

Ontario – Court application stayed; jurisdictional issues required analysis of contract’s factual matrix, should be decided by arbitrator – #522

In 743584 Ontario Inc. v. LAC Otelnuk Mining Ltd., 2021 ONSC 5255, Master Jolley stayed a court application in favour of arbitration. Applying the competence-competence principle and the general rule adopted by the Supreme Court of Canada in Dell Computer Corporation v. Union des consommateurs 2007 SCC 34, she held that the question of the arbitrator’s jurisdiction should be decided by the arbitrator, except if the challenge to jurisdiction is based solely on a pure question of law or a question of mixed fact and law that requires only a superficial consideration of the documentary evidence in the record. She stayed the application in favour of arbitration, because the jurisdictional issues raised were questions of mixed fact and law that could not be determined on superficial consideration of the evidence.

August 6, 2021January 10, 2023

B.C. – Portion of arbitral award set aside; re-hearing to be conducted by different arbitrator – #518

In Spirit Bay Developments Limited Partnership v Scala Developments Consultants Ltd., 2021 BCSC 1415, Justice Davies set aside a portion of an arbitral award and ordered a re-hearing on the basis that the arbitrator had erred in his application of the law of unjust enrichment to a construction contract. However, he found that it was necessary to have a different arbitrator conduct the re-hearing because the arbitrator had made findings of credibility adverse to Petitioner (Spirit Bay) representatives and also made several determinations of credibility that were critical of Spirit Bay’s evidence as well as its motivation in advancing some arguments. The arbitrator had “harshly criticized” Spirit Bay’s conduct not only in relation to the disputes in issue, but also within the arbitration, referring to “accounting tactics or tricks” and “tricks by Spirit Bay [which] continued into the hearing”, and characterizing Spirit Bay’s position in respect of one issue as a “ruse or a fiction”.

July 22, 2021May 4, 2022

Ontario – Court application under Model Law Art. 16(3) to “decide the matter” of the tribunal’s jurisdiction is a hearing de novo and not a “review” of the tribunal’s decision – #513

In Russian Federation v. Luxtona Limited, 2021 ONSC 4604, the Divisional Court heard an appeal by Russia of an interlocutory decision of Justice Penny of the Ontario Superior Court of Justice, Russia Federation v. Luxtona Limited, 2019 ONSC 7558. Justice Penny had declined to allow Russia to adduce fresh evidence on an application brought under Model Law Art. 16(3) to set aside an interim arbitral award finding that Russia had consented to arbitrate Luxtona’s claims and that the tribunal therefore had jurisdiction. The proposed fresh evidence related to the jurisdictional issue and had not been before the tribunal. The appeal turned on whether the application before Justice Penny was a “review” of the tribunal award on jurisdiction or a hearing de novo. The Divisional Court, in a decision written by Justice D.L. Corbett, held that Russia was entitled to adduce fresh evidence as of right because the application was a hearing de novo. The court relied upon two key decisions raised by the parties. Mexico v Cargill, 2011 ONCA 622 held that a set aside application brought in the Superior Court of Justice under Art. 34 of the Model Law is a “review” and not a hearing de novo, but in that case there was no challenge to the tribunal’s jurisdiction to hear and decide the dispute. Therefore, the Divisional Court was not bound by it. The English Supreme Court decision of Dallah v Pakistan, [2011] AC 763, held that the court’s role where one party took the position that it had not consented to the arbitration was “to reassess the issue [of jurisdiction] itself” and not to “review” the tribunal’s decision. The Divisional Court found that this approach is supported by the language in the Model Law and the weight of international authority and Art. 2A of the Model Law, which promotes the uniformity of the application of the Model Law internationally.