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We have reviewed a few decisions relating to arbitration clauses
in intellectual property license agreements (see
here ). Courts in the US have shown that they are willing
to uphold arbitrator's decisions. What is the law in
Alberta?
The court in TheraVitae Ltd. v. Kwalata Trading
Limited, 2011 ABQB 626 (CanLII) dealt with alleged
breaches of stem cell therapy licencing agreements. The
licensing agreements contained arbitration clauses and a
dispute arose between the parties, which was referred to
arbitration.
Under the Arbitration Act (Alberta), a party
must demonstrate that they are entitled to appeal an
arbitrator's decision. If the arbitration agreement
includes the right of appeal to court, then either party can appeal
the arbitrator's decision on a question of law, on a question
of fact or on a question of mixed law and fact. If the arbitration
agreement is silent on the topic of appeal, then Section 44(2) of
the Act allows for appeals on questions of law, provided
certain criteria are met. Those criteria are:
the importance to the parties of the matters at stake in the
arbitration justifies an appeal, and
whether the determination of the question of law at issue will
significantly affect the rights of the parties.
In those two situations, a court may review the
arbitrator's decision. However, Section 44(3) prohibits a court
from granting leave where the question being appealed was
specifically referred to the arbitral tribunal for decision. In
other words, where the arbitrator was asked to rule on a particular
question of law, the decision of the arbitrator will not be
reviewed by the court. In the TheraVitae decision, the
court decided that the question was specifically referred to the
arbitrator, so the decision was not reviewable by the court.
Lessons for business?
Arbitrator's decisions will be given deference, so if you
want to refer your disputes to binding arbitration, be aware that
there may be no right of appeal to the courts if you are not happy
with that decision.
Arbitration clauses and agreements must be reviewed carefully
to ensure that the parties are aware of the scope of the
arbitrator's authority, and the rights of appeal that may be
available.
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