Ontario – The standard of review to be applied by a judge hearing an appeal from an arbitration award is reasonableness unless a legal principle is readily extricable.  ONCA declined to consider whether the “reasonableness” standard of review is overtaken by “correctness” standard in Vavilov because that was not an issue necessary to decide this appeal.

CASE #009E
Ontario First Nations (2008) Limited Partnership v.
Ontario Lottery and Gaming Corporation,
2021 ONCA 592 (CanLII), <https://canlii.ca/t/jhw06>,
Fairburn A.C.J.O., Lauwers and Jamal JJ.A.
September 1, 2021

The Court of Appeal (“ONCA”) dismissed an appeal from a judge (‘the appeal judge”) of an appeal of the award of a three-arbitrator tribunal.  The arbitration concerned the rights of OLG and OFNLP, a partnership of 132 First Nations, as to their rights under a gaming revenue sharing and financial agreement (“the GRSFA”).  Both the appeal judge and the Court of Appeal upheld the arbitration award, which decided, in a 2-1 decision, that OLG breached the GRSFA and were liable to OFNLP.

The case addresses two issues of interest to arbitration lawyers;

1. What is the standard of review of a judge hearing an appeal from an arbitral panel?
2. Did the appeal judge err in interpreting the agreement?

Jamal J.A. (as he then was) held that the appeal judge correctly applied the reasonableness standard of review to the arbitral award, relying on Sattva Capital Corp. v. Creston Moly Corp., 2014 SCC 53, [2014] 2 S.C.R. 633, and Teal Cedar Products Ltd. v. British Columbia, 2017 SCC 32, [2017] 1 S.C.R. 688.

ONCA held that the appeal judge correctly held the arbitral tribunal “had not allowed the factual matrix to overwhelm the words of the contract” and the appeal judge did not ignore the terms of the agreement to reach a commercially absurd interpretation. [paras. 51-52 et seq.]

OLG asked ONCA to address whether the reasonableness standard of review in an appeal from an arbitral tribunal has been overtaken by the SCC decision in Canada (Minister of Citizenship and Immigration) v. Vavilov, 2019 SCC 65, 441 D.L.R. (4^th), (“Vavilov”)  where the majority ruled that an administrative decision subject to a statutory right of appeal should be reviewed under the appellate standard: correctness for questions of law, and palpable and overriding error for questions of fact and questions of mixed fact and law where the legal principle is not readily extricable: at paras. 36-38, 44. [para. 34].

However, ONCA refused to address whether the Vavilov principle has overtaken Sattva for two reasons: 1) the appeal judge did not err in upholding the arbitral award.  Having decided that matter, ONCA should not decide issues of law unnecessary to the resolution of an appeal. [para. 38]; and 2) the appeal addressed mainly matters of contract interpretation, which attract a deferential standard of appellate review.[para. 40]

Jamal J.A. noted that ONCA recently granted leave to appeal in another case involving an appeal from a commercial arbitration award that may consider whether Vavilov changed the standard of review principles:  Tall Ships Landing Devt. Inc. v. City of Brockville, 2019 ONSC 6597 and Tall Ships Devt. Inc. v. City of Brockville, 2020 ONSC 5527, leave to appeal to Ont. C.A. granted, M51065 (July 22, 2021).

ONCA also [para. 46] reviewed principles applicable to contract interpretation based on the SCC’s decisions in Sattva and in Corner Brook (City) v. Bailey, 2021 SCC 29, [summarized in this blog as Case #004E]

Jamal J.A. held that where parties agree on the applicable principles of contractual interpretation but disagree on how those principles should be applied to the contractual facts, consisting of the agreement itself and the factual matrix or surrounding circumstances.  Absent an extricable error of law, such an exercise of contractual interpretation by a first-instance decision maker — whether a court or an arbitrator — attracts appellate deference. [para. 42]

(This appeal also holds that the appeal judge did not err in applying “honour of the Crown” doctrine but that issue is not addressed in this summary. [paras. 71 et seq.]