Two of the main benefits of private arbitration are said to be
speed and finality. However, the long running case of Sattva Capital Corporation v. Creston Moly
Corporation has been a prime example of how court
intervention into the arbitration process can lead to arbitration
being anything but speedy or final. I first blogged about this case
on May 9, 2011 when it had been before the
British Columbia Supreme Court ("BCSC") twice and was
headed to its second hearing before the British Columbia Court of
Appeal ("BCCA"). At that time, more than three years had
passed since the arbitrator had supposedly issued a "final
The dispute was over the valuation of a finder's fee. The
arbitrator found that Creston was obligated to pay Sattva
$4,140,000 plus costs in connection with the acquisition of
Creston's molybdenum mining property in Mexico. The dispute was
arbitrated under the Arbitration Act (British Columbia).
Section 31 granted what had been thought to be limited appeal
rights from an arbitrator's decision where the appeal was based
on a "question of law." Those appeal rights required that
the court first grant "leave" or permission for an appeal
to be taken. In this case, the BCSC denied leave, which was
overturned by the BCCA who granted leave. It went back to the BCSC
which dismissed the appeal, but this decision was also overturned
by the BCCA which allowed the appeal and reduced the amount of the
finder's fee. By this point, the parties were still litigating
an issue which had been decided by the arbitrator some 5 years
The Supreme Court of Canada ("SCC") finally weighed in
on August 1, 2014. It allowed the appeal and restored the
arbitrator's decision. In doing so, the Court significantly
limited the right to appeal an arbitrator's decision and
clarified the standard to be applied to appeals from trial court
decisions involving contractual interpretation.
The SCC found that the construction of the finder's fee
agreement did not constitute a "question of law."
Importantly, the Court held that the historical approach to
determining the legal rights and obligations under a written
contract as a question of law should be abandoned because
contractual interpretation involves issues of mixed fact and law.
Contractual interpretation involves the application of principles
of law to the words of a written contract considered in light of
the factual matrix of the contract. As a result, it is not a
question solely of law and no appeal rights under the
Arbitration Act arise.
The Court further found that permission to appeal an
arbitrator's decision should only be granted under the
Arbitration Act where the issue is material (in the sense
that a different decision would have affected the outcome) and
where the appeal has some possibility of succeeding (a type of
preliminary merits test). Courts retain a residual discretion to
deny leave even if all the statutory prerequisites are met.
If leave is ultimately granted, the appellate court should almost
invariably defer to the arbitrator and only review the decision to
determine if it is "reasonable" as opposed to reviewing
it to determine if it is "correct."
All of the Court's conclusions go to one end – making
an arbitrator's decision final. Going forward, parties should
expect that arbitration decisions are final and that the scope of
any right of appeal is exceedingly narrow. If parties want broader
appeal rights, they should be written into the arbitration
agreement at the outset of the relationship.
Furthermore, the Court's statement that issues of
contractual interpretation are mixed fact and law will be
meaningful for the standard of appellate review from trial court
decisions and will likely make appeals of that kind more difficult.
But that is a subject for another blog...
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
To print this article, all you need is to be registered on Mondaq.com.
Click to Login as an existing user or Register so you can print this article.
It's not often that our little blog intersects with such titanic struggles as the U.S. presidential race – and by using the term "titanic" I certainly don't mean to suggest that anything disastrous is in the future.
J.J. v. C.C., is an interesting case in which the court held that an automotive garage owes a duty to minor children to secure the vehicles on the premises by locking the cars and safely storing the car keys...
In Irwin v. Alberta Veterinary Medical Association, 2015 ABCA 396, the Alberta Court of Appeal found that the "ABVMA" failed to afford procedural fairness to a veterinarian undergoing an incapacity assessment.
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).