Older Uniform Acts

Judicial Interpretation of the Uniform Arbitration Act 1995

APPENDIX II - APPEALS AND SETTING ASIDE

JURISPRUDENCE

Alberta Jurisprudence

Pachanga Energy Inc. v. Mobil Investments Canada Inc. [1993] A.J. No. 140 (QL) (Court of Queen's Bench)

Applicant sought leave to appeal an arbitrator's award under s.44(2) of the Arbitration Act. Court refused leave on two bases:

1)    The question was not a question of law but one of mixed law and fact, therefore s.44(2) does not apply.

2)    If question was one of law alone, then leave is denied on the basis of s.44(3) ie. it is the very question of law that was referred to the arbitrator for determination.

Pachanga Energy Inc. v. Mobil Investments Canada Inc. [1994] 3 W.W.R. 350 (Alta. C.A.)

Court of appeal decision from Pachanga, supra. Arbitrator reached decision on damage assessment using different criteria than normally used. Appellant challenged on the basis that the arbitrator committed an error of law. Court found that the arbitrator's decision (ie. on the criteria to be used) was one of mixed fact and law and therefore found it unnecessary to look further at s.44(2) or (3).

Willick v. Willick [1994] A.J. No. 592 (QL) (Court of Queen's Bench)

Arbitrator was asked to arbitrate different issues in marriage dissolution including spousal support. Arbitrator awarded wife spousal support for period of 12 months. Wife sought leave to appeal under s.44(2) on the basis that the arbitrator erred on a question of law. Court finds that the issue of spousal support is a question of law but denies the leave to appeal on the basis that it was the very issue that was sent to the arbitrator to be determined (therefore barred under s.44(3)). Court goes on to say in obiter dictum that s.44(3) of the Arbitration Act cannot completely bar judicial review of arbitrators' decisions (ie. a patently unreasonable standard of review still applies to catch gross errors of law by the arbitrator).

Aztec Construction Ltd. v. Frocan Industrial Contractors Ltd. [1994] A.J. No. 814 (QL) (Court of Queen's Bench)

Application to have an award set aside under s.45(1)(c) of the Arbitration Act. Arbitration agreement between the parties had no provisions to appeal the arbitrator's award on the basis of law, fact or mixed law and fact. The arbitrator found that the contract between the two parties was voided. This decision was based on his interpretation of the law of unilateral mistake. In coming to his conclusion about unilateral mistake, the arbitrator consulted outside legal authorities, some of which were not presented by either party to the arbitration. The applicant challenged the arbitrator's decision on two grounds:

1)    The arbitrator should only have relied on the submissions before him and not consulted any outside authorities;

2)    The arbitrator exceeded his jurisdiction and ordered the contract void on another principle beside the law of unilateral mistake.

Andrekson, J. ruled that the arbitrator was free to consult outside legal sources to aid in reaching a decision and that the arbitrator had not exceeded his jurisdiction but merely interpreted the law of unilateral mistake. Therefore, issue 2 could not be appealed on the basis of s.44(3).

Canadian Western Natural Gas Co. v. Alberta Energy Co. [1995] A.J. No. 310, (QL) (Queen's Bench)

Application for leave to appeal brought under s.44(2) of the Arbitration Act. Canadian Western Natural Gas (CWNG) disputed the arbitral tribunals determination of the gas price based on their method of calculating the price. The tribunal followed section 12 of the Natural Gas Marketing Act when determining which factors should be taken into account (including prices for Alberta gas outside the Alberta market). CWNG argued that the tribunal misinterpreted s.12 of the Natural Gas Marketing Act by including the prices for gas in other markets as a factor. Alberta Energy Co. argues that the question of price is one of mixed fact and law therefore leave to appeal cannot be granted under s.44(2). Mason, J. finds that the issue of the tribunal's interpretation of s.12 of the Natural Gas Marketing Act is one of law alone, but that the tribunal has unfettered discretion as long as it considers the factors listed in s.12. Mason, J. also finds that the actual determination of the price of gas is a question of mixed fact and law. Therefore, Mason, J. denies leave to appeal on the basis that the requirements of s.44(2) are not met (ie. not a question of law alone).

Ontario Jurisprudence

Metropolitan Separate School Board v. Daniels Lakeshore Corp. [1993] O.J. No. 2375 (QL) Ontario Court (General Division)

Issue of application of s.45(1) of the Arbitration Act which says "if the arbitration agreement does not deal with appeals on question of law". Parties agreed that the arbitrator's decision should be final and binding, and no mention was made with respect to appeals in law or otherwise. Steele, J. finds that even though parties agreed that the arbitrator's decision would be final and binding, "there is no express or implied provision that the right of appeal granted under s.45 would be excluded". Therefore, Steele, J. grants leave to appeal on the basis the arbitration agreement does not "deal with" appeals on questions of law.

Dascon Investments Ltd. v. 558167 Ontario Ltd. [1993] O.J. No. 731 (QL) Ontario Court (General Division)

Determination of market rental price on commercial lease was sent to arbitration. Lease contained no provision for appeals therefore the landlord sought leave to appeal under s.45(1) of the Arbitration Act. McNeely, J. grants leave to appeal under s.45(1) on the basis that:

1)    there is a question of law (ie. the arbitrator's interpretation of the lease for dealing with "prevailing market rental";

2)    the determination of the question will both (a) significantly affect the rights of the parties and (b) its importance justifies an appeal.

Bramalea Ltd. v. T. Eaton Co. [1994] O.J. No. 38 (QL) Ontario Court (General Division)

Issue of whether a right to seek leave to appeal was available under s.45(1) of the Arbitration Act. Arbitration clause in agreement read:

Bramalea, Eatons and Eatons Realty agree that the award of the arbitrator shall be final and binding upon the parties and there shall be no appeal therefrom and any amounts payable and interest thereon resulting from the arbitrator's decision shall be payable forthwith after the award. The parties reserve the right to proceed on an issue of law should such arise in the context of the proceedings.

The applicant for leave to appeal argued that the last sentence of the clause reserved the right for appeal on issues of law. The respondent argues the last sentence is referring to questions of law which arise in the course of the hearing which the arbitrator might want to refer to a court for guidance. D. Lane, J. found that the clause barred any appeals therefore leave to appeal under s.45(1) is denied as the arbitration agreement "deals with" appeals.

Labourer's International Union of North America, Local 183 v. Carpenter's and Allied Workers Local 27 [1994] O.J. No. 274 (QL) Ontario Court (General Division)

Union jurisdiction agreement between two unions. Applicant seeking leave to appeal the arbitrator's award (the Labourers union) argued that the arbitrator had made an error of law and misinterpreted the jurisdiction agreement. Matlow, J. grants leave to appeal under s.45(1) and in so doing, makes two findings:

1)    Common practice, not the Arbitration Act, requires the applicant under s.45(1) to show good reason to doubt the correctness of the arbitrator's decision, before s.45(1) can be invoked.

2)    A clause in the agreement stating that the arbitrator's decision is "final and binding" does not preclude an appeal under s.45(1).

Environmental Export International of Canada Inc. v. Success International Inc. [1995] O.J. No. 453 (QL) Ontario Court (General Division)

Commercial contract between two parties which agreed to submit all disputes through arbitration rather than the courts with arbitration clause as follows:

The arbitration award shall be given in writing and shall be final, binding on the parties, not subject to any appeal, and shall deal with the question of costs of arbitration and all matters related thereto.

Environmental Export Inc. (EEI) wants some of the arbitrator's awards set aside under s.46 of the Arbitration Act on the basis that it was treated unfairly or unequally and that the arbitrator should be removed for bias. MacPherson, J. refused to set aside the awards of the arbitrator as he found that EEI essentially abandoned the arbitration process when they received a ruling unfavourable to them, then sought to invoke s.46 to set aside the award. MacPherson, J. found that this was not a sufficient reason to set aside the award.

Petrolon Distribution Inc. v. Petro-Lon Canada Ltd. [1995] O.J. No. 1142 (QL) Ontario Court (General Division)

Arbitration regarding interpretation of a commercial contract (ie. whether or not a termination clause was implied). MacDonald, J.'s discussion of s.45 of the Arbitration Act is done as a comparison to the old Arbitration Act. The arbitration agreement was written when the old Act applied, therefore contained a provision for appeals upon issues of law "in accordance with the Arbitration Act, R.S.O. 1990, c.A-24". The respondents argued that the appeal in this case was a question of mixed fact and law, therefore the appeal was barred under the new Arbitration Act. MacDonald, J. found that "the appeal should not be defeated by the fact that the language of s.45 of the new Act is more specific than the language of s.16 of the old Act". Instead, MacDonald, J. was willing to interpret the arbitration agreement to include questions of mixed law and fact based on the wording of s.16 of the old Act, which was in the minds of the parties at the time of the agreement.

Saskatchewan and New Brunswick Jurisprudence

No jurisprudence was found relating to s.45 and 46 of the Uniform Act.

AREAS OF CONCERN

Alberta

Willick v. Willick (supra)

A slight problem with the obiter comments about judicial review (ie. the Arbitration Act cannot completely bar judicial review).

In general, the courts in Alberta seem to be interpreting the legislation strictly and denying leaves to appeal unless they fall within the exception noted in section 44(2). The courts do not appear to be twisting the definition of what is a question of law in order to review the decisions of arbitrators.

Ontario

The addition of the term "deal with" in the Ontario legislation seems to have triggered some confusion regarding terminology used in arbitration agreements or clauses. There are two differing lines of authority:

1)    the phrase "final and binding" does not "deal with" appeals on questions of law, therefore s.45(1) could apply. See:

Metropolitan Separate School Board v. Daniels Lakeshore Corp.

(supra)

LIUNA, Local 183 v. Carpenter's and Allied Workers, Local 27

(supra)

2)    the phrase "final and binding" does "deal with" appeals on questions of law (ie. it prohibits them), therefore s.45(1) could not apply. See:

Bramalea Ltd. v. T. Eaton Co. (supra)

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