The recent decisions of the Supreme Court of Canada in Canada (Minister of Citizenship and Immigration) v. Vavilov, 2019 SCC 65, and its companion case, Bell Canada v. Canada (Attorney General), 2019 SCC 66, have created some confusion as to the standard of review applicable to commercial arbitrations. The longstanding standard of review of a commercial arbitration decision on appeal to a court has been the deferential reasonableness standard. Reasonableness was justified based on contextual factors, including the choice of arbitrators and the aim of arbitration to maximize efficiency and finality.
Vavilov holds that courts hearing statutory appeals from administrative tribunals should decide those cases on a correctness standard. This raises the question of whether appeals from commercial arbitration tribunals are now also to be reviewed on the correctness standard, or whether the reasonableness standard remains applicable.
Manitoba applies the correctness standard
In Buffalo Point First Nations v. Cottage Owners Association, 2020 MBQB 20, the Court of Queen’s Bench of Manitoba held that the standard of review for domestic commercial arbitration awards is now correctness. This decision relies on Vavilov, and departs from years of settled precedent.
Alberta and Ontario apply the reasonableness standard
Conversely, in Cove Contracting Ltd. v. Condominium Corporation No. 012 5598 (Ravine Park), 2020 ABQB 106 and Ontario First Nations (2008) Limited Partnership v. Ontario Lottery and Gaming Corporation, 2020 ONSC 1516, the Alberta Court of Queen’s Bench and the Ontario Superior Court of Justice both held that reasonableness remains the standard of review and that Vavilov did not change the standard of review for appeals of arbitral decisions.
It is unclear whether the Supreme Court of Canada anticipated or intended this development to flow from Vavilov. Subjecting commercial arbitration decisions to a correctness review will undermine many of the benefits of commercial arbitration that have been recognized by the courts and highlighted in this newsletter series.
While the standard of review in Ontario remains unchanged, the differing opinions of the lower courts may see this issue come before the Supreme Court of Canada for resolution.