Canada: Ontario Court Provides A Helpful Primer On Judicial Intervention In Arbitration Awards In Canada

In FCA Canada Inc. v. Reid-Lamontagne, 2019 ONSC 364, Justice Spies of the Ontario Superior Court of Justice provided a helpful overview of the current state of the law in Canada with respect to three core aspects of judicial intervention in an arbitration award: (1) when to challenge the arbitrator's jurisdiction; (2) the standard of review on questions of jurisdiction; and (3) the setting aside of final arbitration awards generally.

While the Court's reasons were issued in the context of an arbitration that proceeded under a domestic arbitration act,1 the principles highlighted by the Court remain relevant to the enforcement, consideration, and setting aside of international arbitration awards in Canadian courts. Indeed, the Court relied directly on Canadian cases considering international arbitration awards in giving its reasons.

Background and Decision

The case concerned an application by FCA to set aside an award of an arbitrator under an arbitration agreement designed to resolve disputes between consumers and major automotive vehicle manufacturers. The controlling arbitration agreement dictated that the decision of the arbitrator was final and binding on both parties, subject to the "very limited rights" for court review under applicable provincial legislation.2

The issues before the court concerned: (a) a preliminary issue relating to whether FCA, as the applicant, was estopped from challenging the jurisdiction of the arbitrator for failing to object to jurisdiction in the arbitration proceedings; (b) whether the arbitrator had jurisdiction to make certain findings in his award; and (c) whether the arbitrator's final award was unreasonable such that it should be set aside.3

The Court made it abundantly clear that in Canadian courts, "arbitrators must be afforded significant deference and that judicial intervention in arbitrations must be very narrow" – "This is not an appeal".4 Ultimately, the Court found that the applicant was estopped from challenging jurisdiction after the merits of the arbitration had been resolved, that the arbitrator did not exceed his jurisdiction in rendering his award, and that the final award was reasonable and should not be set aside.

Takeaways

By way of either express statements, or remarks from which general tenets can be inferred, the Court provided a helpful summary of the various applicable principles when assessing jurisdiction and attempts to set aside an arbitration award by application in Canadian courts.

(1) Jurisdictional Challenges

Absent legislation or an agreement indicating the contrary, it is typically permitted, and indeed commonplace, that arbitrators may rule on their own jurisdiction to conduct the arbitration at issue.5

Similarly, absent legislation or an agreement indicating the contrary, should a party wish to challenge an arbitrator's jurisdiction, whatever the grounds, it is generally advisable that it be challenged at the front end of the proceedings, ideally well before they are initiated, but at latest, at the start of the hearings. Should a party sleep on its rights to challenge jurisdiction as a preliminary issue, it may very well be estopped from raising the issue in any further forum for review. As the Court reiterated in this case, parties should be prevented from "seeking the benefit of arbitration and proceeding without objection and then attempting to contest the jurisdiction of the arbitrator once the result is known".6

Moreover, failure to challenge jurisdiction as a preliminary issue generally results in the issue, or those related to it, being submitted to the arbitrator on the merits – at which point it is too late to challenge the issue on a preliminary basis.7

(2) Standard of Review for Questions of Jurisdiction

In order to determine whether the arbitrator operated within his jurisdiction, the Court first had to determine the standard of review to be applied to that question. In United Mexican States v. Cargill Inc.2011 ONCA 622, which considered an appeal by Mexico from the dismissal of its application to set aside an arbitration award made under Chapter 11 of the North American Free Trade Agreement, the Ontario Court of Appeal advised that the standard of review is correctness, "in the sense that the tribunal had to be correct in its determination that it had the ability to make the decision it made".8 But in such analyses, courts should intervene only "in rare circumstances where there is a true question of jurisdiction", for which a "narrow view" should be taken.9

In Cargill, the Ontario Court of Appeal summarized the approach to be taken when assessing a true question of jurisdiction by asking three questions, while ensuring no review on the merits is done:

a) What was the issue that the tribunal decided? 

b) Was that issue within the submission to arbitration? 

c) Is there anything in the arbitration agreement, properly interpreted, that precluded the tribunal from making the award?10

The Ontario Court of Appeal reaffirmed these principles in Cargill when it considered the grounds for judicial intervention in international arbitration awards under the United Nations Commission on International Trade Law (UNCITRAL) Model Law, in Consolidated Contractors Group S.A.L. (Offshore) v. Ambatovy Minerals S.A. 2017 ONCA 939.11

Indeed, as the Court pointed out with reference to Supreme Court of Canada precedent, it may be queried whether a "true question of jurisdiction" even exists; if they do, they are "confined to instances where the decision maker must determine whether it has the authority to 'enter into the inquiry before it' and that in this sense 'true' questions of jurisdiction involve a far narrower meaning of 'jurisdiction' than the one ordinarily employed".12

In this case, no such true question of jurisdiction was triggered, such that a correctness standard did not apply. Even if it did exist, the Court found the arbitrator was correct in his assumption of jurisdiction.13

(3) Setting Aside a Final Award

Finally, and perhaps most importantly, given the Court's refusal to apply a correctness standard to its review of the arbitrator's final award, the award was reviewed on the standard of reasonableness. The Court echoed precedent to remark that "if the arbitrator asked the correct questions a reasonableness standard applies in assessing whether the arbitrator's award should be set aside".14 The question before the Court was, "not whether it would have reached the same decision as the Arbitrator. The fact that an alternative interpretation may exist does not make the Final Award unreasonable."15

In this vein, the reviewing Court will not intervene where an applicant is seeking to re-cast the facts on review.16 When assessing reasonableness of the award, it is typical for the court to consider the award, the facts, the evidence, the applicable arbitration agreement, and the ordinary meaning of the terms therein.17 Indeed, as the Court confirmed, when a reasonableness standard is employed, if the award is "justifiable, transparent and intelligible", it will likely be maintained as reasonable by the reviewing court, as it was in this case.18

Conclusion

Ultimately, the Court's relatively short decision provides an excellent roadmap for parties considering judicial intervention following the issuance of an arbitration award where issues of unreasonableness or jurisdiction arise.

Footnotes/

1 The application to set aside the award proceeded under s. 46 of the Ontario Arbitration Act, 1991, S.O. 1991, c. 17, s. 4(1), which provides this Court may set aside the award if it deals with a dispute that the applicable arbitration agreement does not cover, or contains a decision on a matter that is beyond the scope of the arbitration agreement.

2 FCA Canada Inc. v. Reid-Lamontagne, 2019 ONSC 364 at paras. 1-2 [FCA].

3 FCA at para. 33.

4 See FCA at para. 32.

5 See FCA at para. 36.

6 See FCA at paras. 37-40, citing Piazza Family Trust v. Veillette2011 ONSC 2820 (Div. Ct.) at paras. 70-71.

7 See FCA at para. 42, citing Nasjjec Investments Ltd. v. Nuyork Investments Ltd., 2015 ONSC 4978 at para. 152

8 See FCA at paras. 45-47, citing United Mexican States v. Cargill Inc.2011 ONCA 622 at para. 42 [Cargill].

9 Cargill at paras. 44-45.

10 Cargill at paras. 52-53.

11 See FCA at para. 48, citing Consolidated Contractors Group S.A.L. (Offshore) v. Ambatovy Minerals S.A.2017 ONCA 939.

12 See FCA at para. 48, citing Canada (Human Rights Commission) v. Canada (Attorney General), 2018 SCC 31 at para. 31.

13 See FCA at paras. 51-52.

14 FCA at para. 57, citing Smyth v. Perth & Smith Falls District Hospital2008 ONCA 794.

15 at para. 59.

16 See FCA at para. 62.

17 See FCA at para. 64.

18 See FCA at para. 72, citing Dunsmuir v. New Brunswick2008 SCC 9 at para. 47, and Creston Moly Corp. v. Sattva Capital Corp., 2014 SCC 53 at para. 119.

To view the original article click here

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
Similar Articles
Relevancy Powered by MondaqAI
Osler, Hoskin & Harcourt LLP
 
In association with
Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
Osler, Hoskin & Harcourt LLP
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Mondaq Sign Up
Gain free access to lawyers expertise from more than 250 countries.
 
Email Address
Company Name
Password
Confirm Password
Country
Position
Industry
Mondaq Newsalert
Select Topics
Select Regions
Registration (please 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