Canada: Supreme Court Of Canada Confirms Sattva Approach To Review Of Commercial Arbitration Decisions In British Columbia

Last Updated: July 3 2017
Article by Craig A. B. Ferris, QC

On June 22, 2017, the Supreme Court of Canada (the "SCC") delivered its decision in Teal Cedar Products Ltd. v. British Columbia, 2017 SCC 32 ["Teal Cedar"]. The decision affirms the SCC's prior ruling that narrowly construes the types of issues which are questions of law for the purpose of an appeal to a court from an arbitration ruling in British Columbia, and mandates a high degree of deference to the decisions of arbitrators. This case provides clarity on the statutory role of commercial arbitrators in British Columbia, and serves as a reminder that arbitration of disputes under contract or statute almost completely ousts the jurisdiction of courts, subject to narrow exceptions.

Sattva

In Sattva Capital Corp. v. Creston Moly Corp., 2014 SCC 53 [ Sattva]1, a dispute arising from a finder's fee agreement was submitted to arbitration under the Arbitration Act. Sattva introduced Creston to an opportunity to acquire a mine. The parties entered into a finder's fee agreement that required Creston to pay Sattva a certain amount of shares valued at a maximum amount of US$1.5 million. The parties disagreed on the appropriate date for valuation of the shares. The arbitrator found in favour of Sattva, resulting in a payment of shares valued around $8 million.

After a long series of appeals, the British Columbia Court of Appeal ultimately overturned the arbitrator's decision as "incorrect". The SCC overturned this decision.

Rothstein J., writing for the SCC, abandoned the historical approach which labelled contract interpretation as a question of law. He found that contract interpretation requires examination of the factual matrix in which the contract was made to determine the intention of the parties. By its nature, this analysis is one of mixed fact and law. As such, the arbitrator's decision could not have been appealed under section 31 of the Arbitration Act which limits appeals to pure questions of law. Furthermore, an arbitrator's decision will generally be reviewable on a reasonableness, not correctness, standard.

The key to Sattva is the policy rationale for commercial arbitration; efficiency and finality.

Teal Cedar

In Teal Cedar, a forestry company with operations in British Columbia commenced arbitration under the Forestry Revitalization Act, SBC 2003, c 17 (the "FRA"),because compensation owing to it due to the Province of British Columbia's ("BC") decision to reduce its allowable harvest and deleted certain areas from its land base. The arbitrator reached a decision on valuation method and entitlement to compensation. Both parties appealed the decision.

As in Sattva, the British Columbia Court of Appeal reversed the arbitrator's decision. The SCC, again, allowed the appeal and reinstated the arbitrator's decision.

Gascon J. confirmed that, generally, issues of contractual interpretation are questions of mixed fact and law and are not reviewable under section 31 of the Arbitration Act. Statutory interpretation issues, such as which methods of valuation are permissible under the FRA, are reviewable questions of law; however, the question of which method is preferable is linked to the evidentiary record at the arbitration hearing, where various experts opined on the virtues of conflicting valuation ideologies, and is an unreviewable question of mixed fact and law. The correct application of valuation method to the facts in issue is similarly a question of mixed fact and law.

As such, the only reviewable question was which valuation methods are permissible under the FRA. The SCC corrected the Court of Appeal's implicit finding that questions of law necessarily attract a correctness standard of review. The policy goals of arbitration, finality and efficiency, suggest that in most cases, review will be on a standard of reasonableness.

Gascon J. found no reason to depart from the presumed reasonableness standard: the question was not one of central importance to the legal system, a constitutional question, or one outside the arbitrator's expertise. On this latter point, Gascon J. presumed expertise as the parties chose the arbitrator to adjudicate that very dispute. In this case, the arbitrator's interpretation was defensible, and therefore upheld as reasonable.

Discussion

Teal Cedar cements the Sattva approach to review of commercial arbitration decisions in British Columbia such that appeal rights are very limited as there will rarely be pure questions of law. The SCC also confirmed that the standard of review of commercial arbitration decisions is "almost always reasonableness'.

In Teal Cedar, the SCC has sent a strong message that courts will respect the decision of parties to resolve disputes through arbitration, and will rarely permit a party to circumvent that procedure, even where arbitration is required by statute. Parties to arbitration are well advised to put their best foot forward at arbitration – in British Columbia, there may be no second chance.

With thanks to articling student Jim Boyle for his assistance.


Footnotes

1 Read our earlier blog post about this topic: Finally, the Supreme Court of Canada puts some finality into Arbitrations

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.

Authors
Craig A. B. Ferris, QC
Similar Articles
Relevancy Powered by MondaqAI
Lerners
 
In association with
Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
Lerners
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
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).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions