A Waiting Game: The Standard of Review for Arbitral Appeals
By Alison Burns
Since the Supreme Court of Canada’s decision in Canada (Minister of Citizenship and Immigration) v. Vavilov, uncertainty has arisen regarding the standard of review applicable to arbitral appeals. This important issue continues to divide lower courts, and yet appellate courts across Canada have consistently refused to provide much needed guidance directly addressing the issue.
Introduction
“Conflicting lines of authority have arisen concerning the application of [Vavilov] to arbitration appeals…This question ought to be resolved.”
Those were the words of Justices Côté, Brown and Rowe in their concurring judgment in Wastech Services Ltd. v. Greater Vancouver Sewerage and Drainage District[1] more than two years ago. They reflect an ongoing dispute across the country’s courts. While practitioners are familiar with the reasonableness standard ostensibly established by Sattva Capital Corp. v. Creston Moly Corp.[2] and Teal Cedar Products Ltd. v. British Columbia,[3] the Supreme Court of Canada’s decision in Canada (Minister of Citizenship and Immigration) v. Vavilov[4] raised new questions about the applicable standard. The Supreme Court of Canada held that when the legislature has provided for appeal from an administrative decision to a court, the appellate standards of review outlined in Housen v. Nikolaisen[5] apply. This is particularly so given the finding of the concurring justices in Wastech that, in light of Vavilov, the standards of review in Housen govern arbitral appeals.
Since the concurring judgment in Wastech, this question has unfortunately not been resolved. In the last year, trial courts across the country continued to take different approaches, with some maintaining that the reasoning in Sattva and Teal Cedar is still good law while others found that Vavilov displaced those decisions. Meanwhile, appeal courts have taken a page from the majority’s book in Wastech, refusing to provide much needed guidance to trial courts by directly addressing the issue.
Lower Court Approaches
Over the past year, there has been a noticeable lack of uniformity in the decisions of provincial trial courts addressing this topic, both between courts of different jurisdictions and even between judgments of the same court.
A good example of the latter is the decision of the Ontario Supreme Court in D Lands Inc. v. KS Victoria and King Inc..[6] There, Justice Dietrich, relying on the concurring remarks in Wastech, found that Vavilov had altered the applicable standard for arbitral award appeals. Rather than the reasonableness standard outlined in Sattva and Teal Cedar, the appellate standards of review from Housen applied. This means that the standard of review for an appeal of an extricable question of law was correctness. Less than a month later, that same Court, in Serbcan Inc. v. National Trust Co.,[7] held that the reasoning in Sattva and Teal Cedar was still good law and maintained that, until otherwise stated by the Supreme Court of Canada, the applicable standard of review was reasonableness.
Both inconsistent lines of reasoning applied in those Ontario Supreme Court decisions have been applied in other provincial courts as well. The Alberta Court of King’s Bench took a similar approach to the Ontario court in D Lands in its recent decision in Esfahani v. Samimi.[8] In a departure from previous decisions of the same Court, it was decided in Esfahani that the reasoning in Vavilov should be followed. However, the Court noted in its decision that the standard of review could vary by jurisdiction depending on the respective arbitration legislation.
On the other hand, in Christie Building Holding Company, Limited v. Shelter Canadian Properties Limited[9] the Manitoba Court of King’s Bench recently applied reasoning similar to that used by the Ontario court in Serbcan. The Court found the applicable standard to be reasonableness, saying that Sattva and Teal Cedar are binding subject to clarification by the Supreme Court of Canada about the effects of Vavilov.
Provincial Courts of Appeal
If superior provincial courts are divided on the issue, courts of appeal have made an art of deferring it. There is an observable pattern across jurisdictions of courts of appeal refusing to take a firm stance on what the appropriate standard of review should be.
The British Columbia Court of Appeal has consistently refrained from giving a clear answer about the applicable standard of review. For example, in Escape 101 Ventures Inc. v. March of Dimes Canada[10] the Court declined to resolve this issue finding that it was not necessary for its judgment. The same approach was taken by the Ontario Court of Appeal in Ontario First Nations (2008) Limited Partnership v. Ontario Lottery and Gaming Corporation.[11]
Most recently, in Efsahani v. Samimi,[12] the Alberta Court of Appeal dismissed an appeal of the King’s Bench’s decision in Efsahani. Unsurprisingly, the Court did not directly address the comments by the court below about the applicability of Sattva and Teal Cedar in decisions issued post-Vavilov. Instead, the Court again found that the application of a different standard would not have changed the outcome. As a result, we continue to be left without guidance as to the applicable standard of review.
Takeaways
Post-Vavilov, the appropriate standard of review for appeals of arbitral awards remains uncertain. While the issue was raised in Wastech, the Supreme Court of Canada provided no further guidance and appeal courts have consistently avoided answering the question, leaving trial courts to continue to rely on their own interpretations of the Supreme Court of Canada’s comments in Vavilov and Wastech. This matter is ripe for a direct and clear answer by an appellate court. Until then, lawyers should consider how the jurisdiction and corresponding legislation could impact any potential arbitral award appeals they may deal with.
Justice Marion’s commentary in Esfahani sums things up nicely: “Everyone will have to wait for further clarification, and in the meantime provincial courts are divided on, or deferring, the issue”. One wonders how long we will have to wait…
[1] Wastech Services Ltd. v. Greater Vancouver Sewerage and Drainage District, 2021 SCC 7 [Wastech].
[2] Sattva Capital Corp. v. Creston Moly Corp., 2014 SCC 53 [Sattva].
[3] Teal Cedar Products Ltd. v. British Columbia, 2017 SCC 32 [Teal Cedar].
[4] Canada (Minister of Citizenship and Immigration) v. Vavilov, 2019 SCC 65 [Vavilov].
[5] Housen v. Nikolaisen, 2002 SCC 33 [Housen].
[6] D Lands Inc. v. KS Victoria and King Inc., 2022 ONSC 1029 [D Lands].
[7] Serbcan Inc. v. National Trust Co., 2022 ONSC 2644 [Serbcan].
[8] Esfahani v. Samimi, 2022 ABKB 795 [Esfahani].
[9] Christie Building Holding Company, Limited v. Shelter Canadian Properties Limited, 2022 MBKB 239.
[10] Escape 101 Ventures Inc. v. March of Dimes Canada, 2022 BCCA 294.
[11] Ontario First Nations (2008) Limited Partnership v. Ontario Lottery and Gaming Corporation, 2021 ONCA 592.
[12] Efsahani v. Samimi, 2023 ABCA 220.
Alison Burns is a litigation associate at Blake, Cassels & Graydon LLP. She maintains a broad civil litigation and dispute resolution practice, with experience in domestic and international arbitrations and complex commercial disputes.