What Does A “Right To Appeal In Accordance With The Provisions Of The Arbitration Act” Mean?

This question seems very straightforward, but when the Arbitration Act provides several rights of appeal, depending on what the parties have or have not agreed upon, then which of those rights of appeal apply? Only the right to appeal that applies if the parties have not agreed to further rights of appeal? Or, all the rights of appeal as if the parties had agreed to them?

In 6524443 Canada Inc. v. Toronto (City), 2017 CarswellOnt 9006, 2017 ONCA 486, the Ontario Court of Appeal has held that it is the former, and that by these words the parties do not engage the appeal rights that they could have engaged by specific agreement.

The Ontario Arbitration Act, 1991 (the present Act)

Section 45(1) of the Ontario Arbitration Act, 1991 provides that, if the arbitration agreement does not deal with appeals on questions of law, a party may appeal an award to the court on a question of law with leave, which the court shall grant only if it is satisfied that (a) the importance to the parties of the matters at stake in the arbitration justifies an appeal; and (b) determination of the question of law at issue will significantly affect the rights of the parties.

In addition, the present Act allows the parties to agree to appeals on questions of law, fact or mixed fact and law: sections 45(2) and (3). The lead-in to both those sub-sections states: “If the arbitration agreement so provides….”

To which rights of appeal did the parties agree to: the 45(1) rights (that is, on questions of law with leave); or the section 45(2) and (3) rights (that is, on questions of law, fact or mixed fact and law, without the necessity of leave)?

This question becomes more important since the decision of the Supreme Court of Canada in Creston Moly Corp. v. Sattva Capital Corp., (2014), 2014 SCC 53, 2014 CarswellBC 2267. In that decision, the Supreme Court held that, except in the exceptional case where a question of pure law arises, the interpretation of a contract is a question of mixed fact and law. Therefore, if section 45(1) applies, and if no pure question of law arises, an appeal cannot be taken from an arbitral award interpreting a contact.

Interestingly, the Arbitrations Act, R.S.O 1970 contained broad rights of appeal.  As the motion judge noted:

  “The 1970 Act provided for full rights of appeal. It did not differentiate between appeals on questions of law, fact or mixed fact and law. Section 16(1) of the 1970 Act reads: Where it is agreed by the terms of the submission that there may be an appeal from the award, an appeal lies to the Divisional Court.”

The Appeal Rights In The Agreements

The present case arose from a lease under which the renewal rent was to be set by arbitration if the parties could not agree on the amount of the renewal rent. The parties entered into two contracts affecting the rights of appeal. In the lease the appeal rights were described as follows:

“The decision of the arbitrators shall be subject to appeal in accordance with the provisions of The Arbitrations Act, R.S.O. 1970, as amended, or any successor Act.”

Then, after the arbitration had been launched, and for the purposes of the arbitration itself, they entered into another agreement which stated:

“The decision of the arbitrators shall be subject to appeal in accordance with the provisions of the Arbitration Act, 1991, S.O. 1991, c. 17 as amended, or any successor Act.”

The Decision Of The Superior Court Of Justice

After the arbitrator’s award, the numbered company (referred to in the judgments as Brookfield) appealed the award to the Ontario Superior Court of Justice. Brookfield filed affidavit evidence to argue that broader rights of appeal had been agreed between the parties, and the City filed evidence in response. The motion judge refused to consider the affidavit evidence, and held that: the arbitration agreement was a stand-alone agreement that provided only for appeals on questions of law, with leave; even if the lease were considered, it did not provide for broader rights of appeal; and that Brookfield’s notice of appeal raised only questions of fact or mixed fact and law. The appeal was accordingly quashed.

The Decision Of The Ontario Court Of Appeal

The Ontario Court of Appeal dismissed the appeal. It held as follows:

  1. The motion judge’s decision was reviewable on a standard of reasonableness. It involved the interpretation of the relevant arbitration statutes, which did not involve an “extricable” legal issue to be reviewed on a standard of correctness.
  1. The motion judge correctly refused to consider the affidavit evidence. That evidence really concerned the parties’ respective negotiation stances, not their mutual commercial objectives. The subjective intentions or objectives of each party were not helpful in interpreting the appeal provisions.
  1. The motion judge reasonably concluded that the second arbitration agreement was intended to be a stand-alone agreement governing the arbitration and the appeal rights from the award. The Court of Appeal said:

“The Lease provisions concerning arbitration are very brief, consisting of four clauses. The parties chose to enter into a detailed Arbitration Agreement, which included a comprehensive procedure for the arbitration, that in certain respects differs from what was provided for under the Lease (for example, in the manner of appointment of the arbitrators). There is no reason to conclude that, having set out in some detail the procedure for the arbitration, including addressing an appeal from the Award, the parties assumed that any provision of the Lease respecting the arbitration would continue to apply, especially where inconsistent with the Arbitration Agreement. And there is no merit to the appellant’s argument that, because the Arbitration Agreement referred to article 1(d) of the Lease, it must have intended the arbitration to be governed by the terms of the Lease. This is simply a recital of the circumstances in which the arbitration is taking place — “for the determination of Fair Market Rental for the Second Rental Period as those terms are defined in the Lease”. We agree with the motion judge that “there is no need to refer back to the Lease in order to interpret any of the terms of the Arbitration Agreement”.” (underlining added)

  1. Even if the arbitration provisions of the lease were considered, the motion judge conclusion was reasonable. The lease referred to the arbitral award being “subject to appeal in accordance with the provisions of [the 1970 Act], or any successor Act” ). As the Court of Appeal said:

“By its terms the Lease anticipated an appeal would be governed by the arbitration legislation in force at the time of the arbitration. We see no merit in the appellant’s argument that the reference to the 1970 Act addressed substantive rights to appeal an arbitrator’s award, while “any successor Act” would only apply to the arbitration procedure. Both the Lease and the Arbitration Agreement provide for the parties’ appeal rights to be governed by the 1991 Act.”

  1. The wording of both appeal provisions did not include any further rights of appeal than an appeal on a question of law with leave. For any further rights of appeal to exist:

requires the agreement to specify whether the parties have the right to appeal questions of law, fact or mixed fact and law, failing which they are entitled to appeal only on questions of law, with leave”. The parties chose to enter into the Arbitration Agreement which included a specific appeal provision that referenced the 1991 Act, without saying anything more.” (underlining added)


This decision raises a number of interesting issues:

  1. The Court of Appeal’s interpretation of section 45 of the present Act seems logical, but it also seems to contravene one rule of contractual interpretation.

One fundamental rule of contractual interpretation is the rule against tautology. Every provision in a contract is intended to be effective. Here, the appeal provision in each of the agreements is rendered ineffective by the courts’ interpretation. If those provisions did not exist, the parties would have the right to seek leave to appeal on a question of law, the very right that the parties have been found to have agreed to by those provisions. In the result, the appeal provisions are of no use or effect.

  1. The Court of Appeal discounted the fact that the lease referred to the 1970 version of the arbitral statute. The Court of Appeal has held that the parties intended that the wording of the arbitral statute from time to time in force would apply to any arbitration under the lease. That is obviously so, but one might have thought that in interpreting the wording of appeal provisions in both the lease and the arbitration agreement, one should have regard to the fact that under the original lease and the arbitral statute then applicable, there were full rights of appeal.

The combined effect of a rule of contractual interpretation (the rule against tautology) and the history of the Arbitration(s) Act were not sufficient to overcome what the Court of Appeal found to be the plain meaning of the arbitration agreements.

In the result, the Court of Appeal has decided that, under the present Act the parties must specifically state that there is to be a right of appeal (not just an appeal with leave) and specifically state that the right of appeal is on questions of fact, law and mixed fact and law, if that is what the parties intend.

Again, there is a lesson to be learned. When an arbitral agreement refers to the arbitral statute “or successor statute” or words to that effect, any time the arbitral statute is changed, so is the arbitral agreement. With impending amendments to the Arbitration Act, 1991 on the horizon, practitioners should be examining arbitral agreements carefully, as they may be about to be amended by statute.

  1. When an arbitration appointment agreement is entered into for the purpose of a specific arbitration, the parties do not usually intend to amend the arbitral rights under their original commercial agreement. They think that they are just making specific arrangements between themselves and with the arbitrator respecting that arbitral appointment and that arbitration. In that arbitration appointment agreement, they may insert a reference to the contemporary arbitral statute as a matter of rote. But this case tells us that, by inserting that reference, the parties are over-ruling and replacing the arbitration agreement in that commercial agreement.

So the parties should be very careful to consider how that arbitral appointment agreement may later be seen to affect the arbitral appeal rights, and indeed all other rights, in the original commercial agreement.

See Heintzman and Goldsmith on Canadian Building Contracts, 5th ed., chapter 11, part 11(a).

6524443 Canada Inc. v. Toronto (City), 2017 CarswellOnt 9006, 2017 ONCA 486

Arbitration – appeal – arbitral appointment agreements – appeals on questions of law, fact, and mixed fact and law

Thomas G. Heintzman O.C., Q.C., LL.D(Hon.), FCIArb                       July 23, 2017





Review Of Arbitral Awards: Where Is Sattva Taking Us?

The decision of the Supreme Court of Canada in Creston Moly Corp. v. Sattva Capital Corp., 2014 SCC 53 (Sattva) is a seminal decision in the review of arbitral awards. That decision apparently set a wide net of protection around arbitral awards. It did so by ruling that an arbitral award interpreting a contract should usually be considered to be based upon mixed fact and law. Accordingly, such an arbitral decision may not be appealed if the only ground of appeal is an error of law. Moreover, if the decision is otherwise reviewable by the court, then the standard of review is reasonableness, not correctness. However, the Supreme Court said that, if a separate issue of law can be discerned in the arbitral award, then the decision can be reviewed on a standard of correctness. The Sattva decision has been reviewed in my previous article dated August 10, 2014.

The Sattva decision was recently applied by the British Columbia Court of Appeal in Teal Cedar Products Ltd. v. British Columbia. The Teal decision is important because the two decisions in Sattva and Teal both arose from appeals from decisions of the British Columbia Court of Appeal. The Teal case was sent back by the Supreme Court of Canada to the B.C. Court of Appeal to be re-considered in light of the Sattva decision.  

The Background To The Teal Decision

The Teal decision was reviewed by me in an article dated December 1, 2013 relating to an earlier decision of the Supreme Court of Canada relating to the award of compound interest.

Teal had been issued timber licenses by the province of British Columbia under the B.C. Forest Act. By ministerial order, Teal’s allowable annual cut and cut areas were reduced. Teal was entitled to compensation and its claim was submitted by the parties to arbitration. That claim included a claim for interest. In the original decision of the B.C. Court of Appeal, the majority of that court held that the arbitrator had mis-interpreted the statutory provisions applicable to Teal’s substantive claim and the provisions relating to interest. That decision was appealed to the Supreme Court of Canada. In light of its decision in Sattva, the Supreme Court ordered that the appeal in Teal v. B.C. be re-heard by the B.C. Court of Appeal.

Second Teal Decision

The B.C. Court of Appeal noted that Sattva involved an arbitrator’s interpretation of a contract, not a statute. The court said that, according to Sattva, an arbitrator’s decision interpreting a statute should be reviewed on a standard of reasonableness when “the error of law is within the expertise of the arbitral tribunal and is not a question of law of central importance to the legal system as a whole.” Teal argued that the decision of the arbitrator in the present case fell into neither exception and that therefore the arbitrator’s decision should be given deference and only set aside if it was unreasonable.

The B.C. Court of Appeal disagreed. It said:

“None of the criteria that might justify the deference associated with the reasonableness standard of review in respect of statutory interpretation is present here. Specifically, it is not suggested the arbitrator had any specialized expertise in forest legislation or forestry tenures and it certainly could not be said the Act was his “home” statute. Although the parties chose the arbitrator (the Court is not privy to the reasons for his selection), it is significant that arbitration was statutorily required (Act, s. 6(6)). As the Province says, the statutory interpretation question that arose — the meaning of compensation in s. 6(4) — was an issue of importance to compensation statutes generally, and arose for the first time under the Act in this arbitration. We agree with the Province these factors point to a standard of correctness…”

Furthermore, the B.C. Court of Appeal said:

“In any event, Sattva did not explicitly restrict, or provide an exhaustive list of, the exceptional circumstances in which an arbitrator’s award based on a question of law would be reviewable on a standard of correctness. The Court was providing examples that cannot be read as excluding the interpretation of a statute.”

In the result, the court held that the interpretation of the Forestry Act was a question of law to which a correctness standard applied. Since the arbitrator’s interpretation of the Act was not correct, it was properly set aside in the prior decision.

In any event, the court held that the arbitrator’s decision was unreasonable and should be set aside under the unreasonableness test. According to the court, the arbitrator’s decision “provides for a substantial publicly financed windfall, which would serve no purpose”. The arbitrator’s award was based upon “the depreciated replacement value of all of the improvements made to Crown land in the affected areas of each of Teal’s three tenures” while the proper interpretation of the Act only provided compensation for the holder’s “actual financial loss.”

In determining what a “reasonable” decision of an arbitrator is, the B.C. Court of Appeal adopted its prior decision in  British Columbia Hydro and Power Authority v. British Columbia (Workers’ Compensation Board), 2014 BCCA 353, in which it had given the following meaning to the word “reasonable”:

“A reasonable decision must be both factually and legally defensible. Where the legal issue under examination is one of statutory interpretation, the common objective of both administrative decision makers and courts must be to ascertain the intent of the legislature by applying the “modern principle” of statutory interpretation. This requires an examination of the words of the provision under consideration according to their grammatical and ordinary sense, in their entire context, and in harmony with the scheme and object of the Act. The fact that the choice between reasonable interpretations falls to the administrative decision maker does not absolve it from following this cardinal principle…”.

Since the Forestry Act provided for “compensation”, the arbitrator’s award of an amount which was “in no way linked to Teal’s actual financial loss” was not consistent with this principle and was therefore unreasonable.

The B.C. Court of Appeal then turned to the question of whether its prior decision dealing with interest should be upheld in light of the Sattva decision. The arbitrator had allowed interest despite a clause in the arbitration agreement that the Province submitted precluded interest. The Chambers judge had held that the arbitrator’s interpretation of the contract was based upon a consideration of the surrounding circumstances, and therefore amounted to a question of mixed fact and law, not a question of law. Since the arbitration statute in British Columbia only permits an appeal on a question of law, there was no right of appeal.

In its prior decision, the B.C. Court of Appeal had held that the decision of the arbitrator raised a pure question of law. It had held that the arbitrator’s decision had changed the plain meaning of the arbitration agreement, which precluded the award of interest, and that decision therefore amounted to an error law. Accordingly, the court had set aside the arbitrator’s decision.

In its present decision, the B.C. Court of Appeal held that nothing in Sattva required its prior decision to be changed, for three reasons:

  1. In Sattva, the Supreme Court had adopted the B. C Court of Appeal’s approach to identifying a question of law. In the present decision, the B. C. Court of Appeal said:

“It seems clear that what the Court did in Sattva was to largely endorse the approach to ascertaining what constitutes a question of law and of mixed fact and law in contractual interpretation that has in recent years been taken by some courts as reflected in the authority cited which includes the Hayes Forest Services and Otter Bay decisions of this Court. As indicated, that is the authority upon which the reasons given for the majority [in the previous Teal decision] are predicated in determining that the arbitrator’s interpretation of the Settlement Framework Agreement and Addendum #2 raise a question of law.”

In other words, the B.C. Court of Appeal held that the Supreme Court in Sattva endorsed the B.C. Court of Appeal’s approach to identifying a discrete point of law in an arbitrator’s decision, thereby entitling a reviewing court to review the decision based upon an error of law.

  1. In Sattva, the Supreme Court had not suggested or found that an error of law cannot be found in an arbitrator’s decision just because the arbitrator had regard to the surrounding circumstance. The B.C. Court of Appeal said:

“To the contrary, it is because contractual interpretation is an exercise in applying legal principles to the express language of an agreement considered in the circumstances that questions of law can arise.”

Accordingly, the B.C. Court of Appeal held that in its prior decision it had been correct in identifying a question of law even though the arbitrator’s interpretation of the agreement was based upon the surrounding circumstances.

  1. In Sattva, the Supreme Court had reiterated that the extraneous circumstances cannot over-ride the plain meaning of the contract. That is the principle that the B.C. Court of Appeal had applied in its prior decision.

Accordingly, the B.C. Court of Appeal upheld its prior decision setting aside the arbitrator’s award of interest on the ground that that decision was contrary to the plain meaning of the Settlement Framework Agreement.


The initial impression of Sattva was that it would substantially reduce the scope of review of arbitral decisions because the Supreme Court held that the interpretation of an agreement is normally a matter of mixed fact and law. Many arbitration statues only permit appeals on a question of law, not mixed fact and law. Accordingly, it was thought that Sattva had substantially eliminated appeals from arbitral decisions interpreting agreements.

This decision of the B.C. Court of Appeal in Teal v. B.C. may lead to the opposite conclusion for numerous reasons:

  1. The B.C. Court of Appeal has confirmed that Sattva has opened wide the evidence that must be considered in interpreting a contract. Now, the surrounding circumstances may and should be considered in interpreting the contract. While those circumstances cannot “overwhelm” the plain meaning, they may be considered, and once considered it is obvious that there is a wider basis for controversy or dispute, and uncertainty, about the real meaning of the contract.
  1. The B.C. Court of Appeal has held that if the arbitrator is considering a statute, then the standard of review is correctness, not reasonableness. So now there are two different standards of review, one for contracts and one for statutes.
  1. The B.C. Court of Appeal has adopted a very strict test of “reasonableness”. The test appears to adopt almost all the ingredients of the correctness test. It is hard to imagine an interpretation of a statute that, under its test, will be found to be an incorrect but reasonable interpretation.
  1. Even though the arbitrator has considered the surrounding facts, that does not preclude the court from finding or identifying an error of law. It is not the arbitrator’s process that is important. It is not a question of whether the arbitrator found or operated upon a principle of law that is incorrect. Rather, it is a question of whether the court can identify in, or distill from, the arbitral decision an error of law. If it can, then that decision may be set aside. Indeed, the B.C. Court of Appeal found that in Sattva, the Supreme Court had approbated its prior approach in identifying errors of law in arbitral decisions.
  1. The B.C. Court of Appeal has said that the decision in Sattva does not provide an “exhaustive list” of those circumstances in which an arbitral award may be reviewed on the basis of correctness. This means that courts may find other grounds for applying the correctness standard.

When all these ingredients are added up, the principles applied by the B.C. Court of Appeal seems to be very much the same as those which courts have historically applied in reviewing arbitral decisions. So perhaps, plus ca change….

Teal Cedar Products Ltd. v. British Columbia, 2015 BCCA 263, 2015 CarswellBC 1550

Arbitration – Appeal and Review of Arbitral Decisions – Standard of Review – Error of Law

Thomas G. Heintzman O.C., Q.C., FCIArb                                   July 7, 2015



Grounds For Reviewing Arbitration Decisions Are Narrow: B.C. Court of Appeal

A recent decision of the British Columbia Court of Appeal warned that the grounds for reviewing an arbitral award are narrow. In Boxer Capital Corp. v. JEL Investments Ltd., the court noted that arbitral dispute had gone through two separate arbitrations and nine (yes, nine) judicial proceedings already. The Court of Appeal said: “Surely that procedural history is inconsistent with the objectives of commercial arbitration.” The court held that the motion judge had no basis to over-turn the last arbitral award and re-instated that award.


The issue in the appeal was whether the second arbitrator was bound by principles of res judicata arising from the award of the first arbitrator or the decision of the judge who heard an appeal from that first award. The second arbitrator held that he was not bound by those decisions by reason of res judicata. The judge hearing an appeal from that decision held that the second arbitrator was so bound. I wrote about that decision in my article of February 17, 2014.

From that latter decision an appeal was taken to the British Columbia Court of Appeal.

The B.C. Court of Appeal’s decision

The B.C. Court of Appeal agreed with the arbitrator. The issue turned upon whether the issue before the second arbitrator was the same as the issue before the first arbitrator or the court which heard the appeal from the first award. The Court of Appeal held that it was not:

“Respectfully, Mr. Justice Abrioux erred in characterizing the issues so broadly, and in finding that they had been the same throughout. When the issues are properly framed, it becomes apparent that they are quite different. The issue before [the firs] Arbitrator….., as defined by the parties who chose to submit their dispute to him, was whether the shotgun purchase price under the [Co-Owner’s Agreement, or COA] was $1.425 million or $2.19 million. The issue before[the court on appeal from the second arbitral award], as defined by this Court’s decision granting leave to appeal, was whether [the second] Arbitrator “erred in failing to have regard to established principles of law in deciding that a term should be implied”. Finally, the issue before [the second] Arbitrator, again as defined by the parties, was whether the Boxer Parties had a continuing interest in the venture. These are different issues.”

  The B.C. Court of Appeal then concluded:

“It was open to [the second] Arbitrator to construe the COA afresh on the continuing interest issue. It is not for this Court to review the merits of his decision in this regard. His decision is the last word on the interpretation of the COA.”

In the course of making its decision the court made a number of comments about the decision of the Supreme Court of Canada in Creston Moly Corp. v. Sattva Capital Corp., 2014 SCC 53.

First, it distinguished the role of a court in an appeal from an arbitral award from its role in an appeal from another judicial decision; the former role is much more limited than the latter. It said:

Like the present appeal, Sattva dealt with an issue of contractual interpretation. Mr. Justice Rothstein explained that in most cases, issues of contractual interpretation will be important only to the parties themselves, and will not have a broader impact….. However, the role of appellate courts (including the B.C. Supreme Court, when sitting on appeal from an arbitral award) is generally not to provide “a new forum for parties to continue their private litigation” but rather to ensure “the consistency of the law” and decide legal issues of public importance (ibid.). Accordingly, “our legal system leaves broad scope to tribunals of first instance to resolve issues of limited application”…. In sum, “the goals of limiting the number, length, and cost of appeals, and of promoting the autonomy and integrity of trial proceedings … weigh in favour of deference to [arbitrators] on points of contractual interpretation”.”

Second, it said that if the principles in Sattva had been applied in the present case, there might have been no appeal from the first arbitral award and the matter might have ended there:

Sattva held that questions of contractual interpretation should almost always be regarded as questions of mixed fact and law…. (Historically they were seen as questions of law.) This means that, after Sattva, leave will rarely be granted to appeal an arbitral award on a question of contractual interpretation. (If Sattva had been decided earlier, leave arguably would not have been granted to appeal the parties’ initial arbitral award and this lengthy saga would have been avoided.)”


As in most debates, defining the question largely defines the answer. The Court of Appeal said this about the exercise involved in defining the question in an appeal from an arbitral award:

“This appeal serves as a reminder of the importance of judicial restraint in the review of arbitral awards, at least in the commercial context. When sitting on appeal from an arbitral award, a court’s jurisdiction is narrow. The inquiry differs fundamentally from a trial, and even from a judicial review of an administrative decision.”

As a result of the new test in Sattva for reviewing arbitration decisions, and the narrow definition of the question involved in the appeal from the second arbitral award, the Court of Appeal held that that question was not the same as the questions in the first arbitration or the appeal from the first arbitral award.

This decision does not mean that the doctrine of res judicata should be applied narrowly by arbitral tribunals. It means that, in reviewing a decision by an arbitrator about that doctrine, the court has a very narrow jurisdiction. If the arbitrator has the jurisdiction to determine whether the doctrine applies or not – and that was not doubted in the present case – then the conclusions of the arbitrator must be accepted, unless the arbitrator’s errors about those matters result in a complete loss of jurisdiction or an error on a pure question of law.

In any event, this decision can go down as Exhibit A about how arbitration can lead to expense and delay if the procedures get out of hand. As I said in my February 12, 2014 article about the lower court decision in this case, “proponents of arbitration may wonder if there are better ways to find speedy justice. The parties selected arbitration presumably to avoid the costs and delays of the court system. That objective was not achieved in the present case.”

See Heintzman and Goldsmith on Canadian Building Contracts, 5th ed., chapter 11, part 3.

Boxer Capital Corp. v. JEL Investments Ltd., 2015 CarswellBC 96, 379 D.L.R. (4th) 712

Arbitration – Appeal – Res Judicata – Standard of Review – Shot-gun agreements

Thomas G. Heintzman O.C., Q.C., FCIArb                                                                                                March 13, 2015



No Appeal From Order Appointing An Arbitrator: Ontario Court of Appeal

In a recent decision, the Ontario Court of Appeal has held that there is no appeal from an order appointing an arbitrator. This decision highlights the legislative policy in Canada that the courts should take a hands-off approach to arbitration.


In Toronto Standard Condominium Corporation No. 2130 v. York Bremner Developments Limited, the parties had entered into an agreement called the Complex Reciprocal Agreement (the “CRA”). The CRA related to the management of the common facilities, areas and services of a condominium in a development called Maple Leaf Square. The CRA contained an arbitration clause.

The Condominium Corporation issued a notice of arbitration seeking arbitration under the CRA and the Arbitration Act, 1991 and proposed a named arbitrator. The CRA required the respondents to give notice whether or not they accepted the proposed arbitrator. The responding parties failed to give such notice. The Condominium Corporation then applied to the court for the appointment of an arbitrator, nominating two persons.

Decision of application judge

Before the application judge, the respondents took no issue with the process of proposing an arbitrator and did not object to the individuals proposed by the Condominium Corporation to act as arbitrator. Rather, they submitted that the issues proposed to be arbitrated did not fall within the arbitration agreement, and so there was no point in appointing an arbitrator. The application judge held that there was at least one issue that arguably fell within the jurisdiction of the arbitrator and that an arbitrator should be appointed and determine his jurisdiction, and appointed one of the nominees as arbitrator.

Decision of Ontario Court of Appeal

In the appeal, the respondents sought to argue that the application judge was required to assess each of the issues raised in the notice of arbitration and to refer only those that she determined were arbitrable or at least potentially arbitrable under the arbitration agreement. However, they accepted that the application judge had authority to appoint an arbitrator. They only took issue with the scope of the matters to be referred to the arbitrator.

The Court of Appeal held that the respondents in the application were not entitled to appeal the order appointing the arbitrator. That is because section 10(2) of the Arbitration Act, 1991 states that “[t]here is no appeal from the court’s appointment of the arbitral tribunal.” Accordingly, the respondents appeal was quashed.

The Court of Appeal distinguished its prior decision in Brennan v. Dole (2005), 11 B.L.R. (4th) 169. There, the court held the purported arbitration agreement was not enforceable by the respondents against the appellants. Accordingly, there was no basis for an arbitration proceeding against the respondent, and accordingly jurisdiction at all to appoint an arbitrator.


This decision highlights two features of the Ontario Arbitration Act, 1991.

First, the Act states in a number of places that there is no appeal from an order made by the court relating to arbitration. Thus, as noted in this decision section 10(2) says there is no appeal from an order appointing an arbitrator. Section 7(6) says that there is no appeal from a court decision about staying an action when there is an arbitration agreement between the parties. Section 15(6) says that there is no appeal from an order removing an arbitrator (except for an order concerning fees or compensation). Section 17(9) says that there is no appeal from the court’s review of a preliminary decision by the arbitral tribunal as to its jurisdiction.

Clearly, these sections represent a policy that the courts should not be involved in the arbitral process. So if there is to be a review of the arbitral decisions mentioned in these sections, then there is to be only “one kick at the can”, and no more. Since these sections do not involve matters going to the merits of the dispute, the policy is to let the matter rest with no more than one level of court review.

Second, this decision reflects another feature of arbitral law in Canada, namely deference to the arbitral tribunal’s jurisdiction, and respect for the tribunal’s competence to decide its own competence – known as the competence-competence principle. In the present case, the Ontario Court of Appeal held that, as long as it was arguable that the arbitral tribunal had authority over something in relation to the dispute, it was the arbitral tribunal – and not the court – which should first decide what that authority was. Then, a party could seek review of that decision by the court. But in the first instance, the respondent could not require the court to define the jurisdiction of the arbitral tribunal during the arbitral-appointment process.

There is a limit to that deference, however. The courts have allowed appeals if the legal issue or jurisdictional issue is clear. Thus, if a stay of a court proceeding is refused on the ground that no arbitration agreement is in place, then an appeal may be taken since the issue is entirely legal or jurisdictional. And as the Brennan v. Doyle case shows, if on a correct view of the facts and law there is no arbitration agreement applicable to the dispute, then an appeal may be taken from an order appointing an arbitrator.

All of which shows that in Ontario, both the statute and judicial policy are in favour of letting the arbitrator make the first decision about the jurisdiction of the arbitrator, but only if there is an arguable basis for that jurisdiction.

Toronto Standard Condominium Corporation No. 2130 v. York Bremner Developments Limited, 2014 ONCA 809

arbitration – appointment of arbitrators – appeal – competence-competence

Thomas G. Heintzman O.C., Q.C., FCIArb                                                         January 15, 2015



May An Order Dismissing A Stay Motion Be Appealed?

In Canada, there has been a controversy about appeals from stay motion decisions in the context of arbitration clauses.  The issue is whether a decision of a motion judge denying the stay of an action, when the moving party relies on an arbitration agreement, may be appealed to the Court of Appeal. The controversy arises from a sub-section found in the Uniform Arbitration Act drafted by the Uniform Law Conference of Canada and adopted in many Canadian provinces.

In Hopkins v. Ventura Custom Homes Ltd., the Manitoba Court of Appeal has recently held that such a motion judge’s decision may be appealed if that decision is based upon the motion judge finding that arbitration agreement does not apply to the dispute. This decision is consistent with earlier decisions of the Courts of Appeal of New Brunswick, Ontario and Alberta. These decisions appear to now consistently hold that an appeal is not statutorily barred if the motion judge’s decision to deny the stay is based upon a determination that the arbi

Can You Change Horses When Appealing From An Arbitration Decision?

Arbitration and court proceedings may be different, but can a party substantially change its position when it appeals from an arbitration award to the court?  At the very least, it seems like questionable strategy to do so.  The British Columbia Court of Appeal held that the appellant could not do so in VIH Aviation Group Ltd v. CHC Helicopter LLC.

The Background

VIH asserted the right to terminate a joint venture between the parties.  CHC referred the matter to arbitration.  The arbitral tribunal held that the termination was invalid and that the joint venture agreement continued in force.  VIH sought leave to appeal from that decision.  Leave to appeal was denied by the BC Supreme Court and that decision was upheld by the BC Court of Appeal.

VIH had asserted the right to terminate the joint venture because it said that CHC had gone through a corporate re-organization that constituted the sale or transfer of all or substantially all of its assets.  VIH said that such a sale or transfer triggered its right to terminate the joint venture agreement under a specific term of that agreement.

Before the arbitral tribunal, both VIH and CHC took the position that the term ought to be interpreted to require the arbitral tribunal to determine whether the re-organization had, in a “qualitative” way, changed the nature of CHC’s business.  The real issue before that tribunal was whether one should look at the integral nature of CHC’s assets and business (as VIH submitted) or the ability of CHC to fulfil its obligations under the agreement (as CHC submitted).  The arbitral tribunal accepted CHC’s view of this issue, and held that the transfer of assets to CHC’s subsidiary and affiliate did not interfere with its ability to carry out its obligations under the agreement.

In seeking leave to appeal from the BC Supreme Court, VIH took the position that the term in the joint venture agreement should be interpreted in accordance with its plain meaning.  Basically, it said that there was no need to resort to a “qualitative” analysis:  there was either a “sale or transfer” or there wasn’t, and the arbitral tribunal erred in applying the “qualitative” test and holding that there had not been a sale.

The Decision

The BC Supreme Court held that, on a motion for leave to appeal from an arbitral award, a party should not be able to change its position, and on that ground it refused leave to appeal.  The BC Court of Appeal agreed with that view for a number of reasons.

The Court of Appeal noted that there must be an issue of law before leave could be granted under section 31(2) (a) of the BC Commercial Arbitration Act.  It also acknowledged that the application of an improper principle of interpretation to a contract is an error of law.

However, if a party could create an issue of law by asserting one legal principle to the arbitral tribunal and another to the court, that would create mischief.  As the judge of the BC Supreme Court said:  “during the arbitration the petitioners in fact urged on the arbitrators that they were required to follow the very approach that is now criticized by the petitioners as wrong in law.”  The Court of Appeal held that the court correctly exercised its discretion not to permit VIH to raise a point of law for appeal by changing its legal position.

The Court of Appeal said that, even in a motion seeking leave to appeal from one court level to another, the judge hearing that motion normally ought not to allow an inconsistent position to be the basis for the appeal.  It is one thing to argue a new position.  It is another thing to argue a completely inconsistent position and to assert that the lower court erred in adopting the very position asserted by the would-be appellant in the lower court.

The Court of Appeal said that this principle is even more important in a motion for leave to appeal from an arbitral award.  It said:  “Where parties have deliberately preferred arbitration as the method for resolving disputes, it is to be expected that they will fully argue their cases in that forum.” In the Court’s view, “allowing a party to change positions too readily on an arbitration appeal risks subverting the goals of the arbitration process, which is designed to be expeditious and provide finality.”

This decision is a welcome clarification of the power of a court to grant leave to appeal from an arbitral award.  That power does not exist in all jurisdictions.  In Canada, it exists in British Columbia and in those provinces which have adopted the Uniform Arbitration Act of the Uniform Law Conference (Alberta, Saskatchewan, Manitoba, Ontario, New Brunswick and Nova Scotia).  That right to obtain leave to appeal is considered by some to allow the court system to intrude into the arbitration process.

But the VIH decision discounts that fear on two bases:

First, the BC Court of Appeal has affirmed that there is a residual discretion not to grant leave to appeal even if the would-be appellant meets the strict terms of the section permitting leave to appeal.

Second, that court affirmed that the residual discretion can be exercised by considering whether granting leave to appeal supports or subverts the goals of the arbitration process.  If consistently applied, that principle will go a long way toward both upholding the integrity of arbitration and protecting it from unnecessary incursions by the court system.

Potential Impact on “As-of-Right” Appeals

The VIH decision may also raise an interesting issue if a party has a right to appeal to the courts from an arbitration decision.  Such a right exists in Prince Edward Island if the arbitration agreement so provides.  Other provinces have adopted the provision in the Uniform Arbitration Act of the Uniform Law Conference of Canada allowing the parties to insert a right of appeal (and not just appeal with leave) into their arbitration agreements.  Alberta, Saskatchewan, Manitoba, Ontario, New Brunswick and Nova Scotia have adopted that provision.

If a party has a right of appeal, should the appeal court allow the appellant to assert a position before the appeal court that is contrary to the position it asserted before the arbitral tribunal?  Should the appeal court treat the matter as though it were an appeal from another court?  Or does the appeal court have a discretionary power to dismiss the appeal because, to do otherwise, would subvert the arbitration process?  For an answer to those questions, we must wait for a party to be brave or unwise enough to change its position in an as-of-right appeal from an arbitration decision.

Arbitration   –   Appeal   –   Change of Position

VIH Aviation Group Ltd v. CHC Helicopter LLC, 2012 BCCA 125

Thomas G. Heintzman O.C., Q.C., FCIArb                                                                               April 10, 2012



Have You Chosen The Right Forum For A Construction Arbitration?

Construction Law –Arbitration – Appeal – Quebec  – Civil Procedure

My article on May 24, 2011, on Arbitration Appeal Rights:  Think About Them Before Signing A Contract, dealt with the rights of appeal from arbitration awards. That blog made reference to the appeal rights from arbitration awards in most Canadian provinces, but did not deal with the province of Quebec. This blog will address the appeal rights in Quebec.

In Quebec, the rights arising from an arbitration award are found in Book VII of the Code of Civil Procedure.  The Code provides for arbitration awards to be registered (“homologated”) in the Superior Court by way of a motion to the court. The court can only refuse to homologate the award upon certain specific grounds, including invalidity of the arbitration agreement, procedural irregularity, jurisdictional grounds, the dispute is not subject to arbitration under Quebec law or the award is contrary to public order. Article 946.2 states that a court examining a motion for homologation cannot inquire into the merits of the award.

Article 947 states that the only possible recourse against an arbitral award is by way of an application for annulment. The grounds for annulling an arbitral award effectively reflect the same grounds upon which the court may refuse to homologate an award.

So, in these ways, the Code states that an arbitration award cannot be appealed nor the merits of the award questioned.  Article 940 states that these provisions of the Code, among others, are peremptory and not subject to agreement otherwise by the parties.

Similarly, a court considering an application for recognition and enforcement to homologate a foreign arbitration award cannot enquire into the merits of the dispute.

Foreign, international and domestic arbitrations are all dealt with under the same regime in Book VII of the Code.  In essence, all arbitration awards are not subject to appeal, are all subject to similar homologation procedures and all may be attacked on the grounds reflecting the grounds for homologation.

This review of Quebec Arbitral law leads nicely to a comparison of the appeal rights from international arbitral awards in the United Kingdom.  There, as in Quebec, domestic and international arbitrations are dealt with under one statutory regime, the U.K. Arbitrations Act, 1996.  But the effect has been the opposite, so far as appeal rights are concerned.  The U.K. Act permits the court to grant leave to appeal.  That appeal right is derived from statutory provisions which originally related to domestic arbitrations.   However, in Shell Egypt West Manala et al v. Dana Gas Egypt Ltd, [2009] EWHC 2097, [2010] EWHC 465, the English court granted leave to appeal from an international arbitral award conducted under the UNCITRAL rules.  Those rules provide that arbitral awards are “final and binding”.  The English court held that those words were insufficient to preclude the appeal rights under the U.K. Arbitration Act, 1996.

Returning to the Canadian landscape, there are in essence four appeal regimes relating to arbitral awards.  The most common regime relating to domestic arbitral awards is found in Alberta, Saskatchewan, Manitoba, Ontario, New Brunswick and Nova Scotia. That regime generally provides (with some variations) for an appeal to the provincial superior court with leave of that court, or if the parties have so agreed, on matters of fact, law and mixed fact and law.  In those jurisdictions, a further appeal to the provincial appeal court, or an appeal of a decision relating to an application to set aside the award or declare it invalid, is only permitted with leave.

The second regime provides for no appeal rights from arbitral awards, but imposes no specific limit on appeals from other decisions of the superior court relating to arbitral awards (such as setting aside, or declaring invalid, arbitral awards, or relating to homologation in Quebec).  That regime applies to all provincial regimes relating to international commercial arbitrations, and to domestic awards in Quebec and Newfoundland and Labrador.

The third regime is found in Prince Edward Island where, if the parties consent to an appeal in their arbitration agreement, the appeal is directly to the Appeal Division.

The forth regime is found in British Columbia, where the parties may provide for, or the court may permit by way of leave, an appeal on a question of law.

This review of appeal rights in Canada underscores the point which was made in my article of May 24, 2011.  The parties to a construction contract which contains an arbitration clause should carefully consider the rights of appeal before they sign the contract.  If the arbitration involves a serious issue of law, or if there are other good reasons to do so, consider whether to include a right of appeal.  As importantly, insert into the contract an arbitral law that allows for an appeal. The law of neighbouring provinces – for instance, Ontario and Quebec – are completely different so far as appeals are concerned. So choosing the appropriate arbitral regime is crucial.

Construction Law- Arbitration – Appeal – Quebec – Civil Procedure

Thomas G. Heintzman                                                                                   June 12, 2011