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Courts Continue to Grapple with the Standard of Review of Appeals of Arbitral Awards in a Post-Vavilov World

Why This Decision Matters

J.E.A. v V.J.A, 2022 BCSC 171 (“J.E.A.”) is the most recent of a series of decisions grappling with the issue of what standard of review applies to the appeal of arbitral decisions.

In the 2019 decision of Canada (Minister of Citizenship and Immigration) v. Vavilov, 2019 SCC 65 (“Vavilov”), the Supreme Court of Canada overhauled the standard of review in the context of administrative decisions. It ruled that administrative decisions subject to a statutory right of appeal should be reviewed under the appellate standard: correctness for questions of law, and palpable and overriding error for questions of mixed fact and law.

Since the Supreme Court of Canada did not address the standard of review of arbitral awards in Vavilov, and the majority in Wastech Services Ltd. v. Greater Sewerage and Drainage District2021 SCC 7 (“Wastech”) also opted not to weigh-in on the issue, lower courts have been left guessing whether Vavilov also applies to arbitration decisions, and if so how?

While the Court in J.E.A. opted not to provide guidance on the issue, it did provide a helpful summary of how other courts, both at first instance and at the appellate level, have considered the standard of review of appeals of arbitral awards post-Vavilov.

The Court’s Summary of Post-Vavilov Standard of Review Findings

J.E.A. involved a petition to review an arbitration award granted in a family law dispute. The petitioner, J.E.A. petitioned to the BCSC on the grounds that the arbitrator had made errors of law and errors of mixed law and fact. The petitioner challenged the arbitration process on several grounds, including that the decision was unfairly decided because written reasons had not been granted, and that the arbitrator misapprehended the evidence and incorrectly calculated the division of property.

While the Court ultimately determined that the petitioner would be unsuccessful on either a standard of correctness or reasonableness, a determination of which standard applied was unnecessary. Nevertheless, the Court summarized the recent jurisprudence on this issue:

  • To date only one appellate level decision has applied Vavilov to the arbitration context - the Northwest Territories Court of Appeal decision in Northland Utilities (NWT) Limited v. Hay River (Town)2021 NWTCA 1. In contrast, the British Columbia Court of Appeal in lululemon athletica canada inc. v. Industrial Color Productions Inc.2021 BCCA 428, found that Vavilov did not address the field of arbitration.
  • In Bay Developments Limited Partnership v. Scala Developments Consultants Ltd.2021 BCSC 1415, the Court determined that although Wastech left some uncertainty, Vavilov had not displaced the standard of review in the arbitration context.
  • Other decisions have simply declined to address the issue, including the Ontario of Appeal and British Columbia Court of Appeal in the decisions of Nolin v. Ramirez2020 BCCA 274, and Ontario First Nations (2008) Limited Partnership v. Ontario Lottery and Gaming Corporation2021 ONCA 592. Both courts found that under any standard of review, their decision would be the same, so it would be unnecessary to determine whether Vavilov would apply to arbitration decisions. In declining to address the issue, they reasoned that courts should generally refrain from deciding issues of law that are unnecessary to the resolution of an appeal.
  • The majority of the Supreme Court of Canada made a similar ruling in Wastech. As set out above, the majority of the court found it was not necessary to the determination in that case. They therefore declined to provide guidance on what standard should apply to arbitration decisions. Justices Brown and Rowe dissented on this point, finding that Vavilov would apply.

After summarizing the above cases, the Court agreed with the approach taken in Wastech, Nolin, and lululemon, and opted not to determine which standard of review applied, as the petitioner would fail on either standard.

Concluding Thoughts

J.E.A. represents another instance where the court has opted not to determine which standard of review applies to appeals of arbitral awards. Absent guidance from appellate level courts, including the Supreme Court, we can expect this trend to continue. 

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