In Enmax Energy, TransAlta Generation Partnership and
Enmax Energy Corporation were parties to a power purchase
arrangement (the "Arrangement"). The Arrangement provided
for "final, binding and non-appealable" arbitration of
disputes. Under this provision, the parties were involved in a
prior arbitration as a result of updates made by Statistics Canada
to certain indices TransAlta used in its billings to Enmax. That
arbitration determined that the updated indices were to be applied
on a go-forward basis and not linked to the previous indices (or,
if linking was required, it was already provided for in the updated
Subsequently, another dispute arose between the parties
concerning other Statistics Canada indices that were updated in
2010 and used to calculate present-values for certain rate
calculations. TransAlta asserted that the relevant provisions of
the Arrangement had already been considered in the context of
substantially similar facts in the first arbitration, and that the
first arbitration gave rise to res judicata and issue
estoppel. Res judicata (and issue estoppel, a type of
res judicata) prevent parties from relitigating an issue
previously decided in litigation between the same parties.
The Arrangement provided for the commencement of litigation
regarding any question of law, which enabled the issue to come
before the court. At first instance, a chambers judge held that
"res judicata does not apply to private
arbitrations". However, he ruled that an arbitration panel
could admit the prior arbitration decision as evidence, after
determining its relevance and admissibility, and assess its
On appeal, the Court of Appeal reversed the decision and held
that, as a matter of law, res judicata and issue estoppel
can apply to arbitration awards.
The Court first noted that section 37 of Alberta's
Arbitration Act provides that an award binds the parties
unless set aside or varied, and also noted that the Arrangement
provided that an arbitration decision is "final, binding and
non-appealable". The Court further found that "there is
ample authority for the proposition that the doctrine of res
judicata and issue estoppel apply to arbitration
proceedings", and canvassed BC, Manitoba and Ontario case law
in support. The Court held that potentially contrary Supreme Court
of Canada authority did not apply, and found support for its view
by more recent Supreme Court of Canada authority considering the
rationale for the doctrines.
In response to arguments made by Enmax, the Court indicated that
allowing reliance on res judicata and issue estoppel would
not permit parties to "cherry pick" prior arbitration
decisions while disregarding others, since either party can plead
issue estoppel, and both parties are bound only where the tests are
met. Further, arguing prior arbitral decisions have
"precedential weight" is "well established" and
either party can put such precedents before an arbitration panel.
Such decisions, however, are "authorities" rather than
"evidence", contrary to the decision of the chambers
judge. While the doctrine of staredecisis
– or the "rule that lower courts are bound by the
decisions of higher courts" – does not apply to
arbitrations, there is still merit in having "like cases
decided in a like manner".
Although the chambers judge had stated that "panels do not
have to apply the law or find facts based on evidence", the
Court of Appeal disagreed, holding that arbitration panels are
bound by the law unless the parties expressly agree otherwise. The
Court also found that applying issue estoppel did not require fact
finding or determining questions of mixed fact and law so as to
exceed the Court's jurisdiction, and referred the scope of any
issue estoppel on the facts of the case to the arbitration
Enmax Energy provides clarification and appellate
support for applying res judicata and issue estoppel to
arbitrations. In ongoing contractual relationships, parties should
carefully consider the effect of asserted legal positions and
resulting decisions in arbitration proceedings. Enmax
Energy also clarifies the role that other arbitral decisions,
beyond those that raise issues of res judicata, may play
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.
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