BC Court Of Appeal Weighs In On Standard Of Review Of International Arbitral Awards

• Published date: 02 December 2021
• Subject Matter: Government, Public Sector, Litigation, Mediation & Arbitration, Constitutional & Administrative Law, Arbitration & Dispute Resolution
• Law Firm: Lawson Lundell LLP
• Author: Ms Meg Gaily, Scott Lucyk and Craig A. B. Ferris, QC

Earlier this year, we wrote about how questions about the applicable standard of review of arbitral awards had been re-opened by two decisions of the Supreme Court of Canada ("SCC"), Canada (Minister of Citizenship and Immigration) v. Vavilov¹ ("Vavilov") and Wastech Services Ltd. v. Greater Vancouver Sewerage and Drainage District² ("Wastech").

On November 12, 2021, as we anticipated, the BC Court of Appeal ("BCCA") took the opportunity to address the appropriate standard of review in lululemon athletica Canada inc. v. Industrial Color Productions Inc.³ ("lululemon BCCA"), a case involving an award under the International Commercial Arbitration Act⁴ (the "ICAA"). The BCCA has concluded that the standard of review is correctness and that the SCC's decision in Vavilov is "not helpful."⁵

Although lululemon BCCA was heard in October 2021, after Wastech was released, the BCCA did not mention Wastech in its reasons or consider the SCC minority's comments that the differences between arbitration and administrative law decisions do not affect the standard of review.

The result of lululemon BCCA does not increase the prospects of success on applications to set aside arbitral awards and does not mean that the courts will now afford little or less deference to awards. Like the Ontario Court of Appeal before it in Cargill, the BCCA again emphasized that the correctness standard "does not give courts broad scope for intervention in the decisions of international arbitral tribunals"⁶ and judicial intervention is restricted to matters specifically identified in the ICAA.⁷

The lower court in lululemon ("lululemon BCSC") had concluded that the reasonableness standard is the appropriate standard on applications to set aside awards under the ICAA, finding that this standard "aligned with the general framework" for the judicial review of a decision of a statutory tribunal set out in Vavilov and with the "general framework for domestic commercial arbitration" set out by the SCC in Sattva Capital Corp. v. Creston Moly Corp.⁸ ("Sattva").

Although the BCCA dismissed lululemon's appeal, it expressly rejected the lower court's conclusion on the standard of review, finding that the Ontario Court of Appel's 2011 decision in United Mexican States v. Cargill Inc.⁹ ("Cargill") remains the leading case on the standard of review for applications to set aside awards under the ICAA and that the standard of review is correctness.¹⁰

The lower court had distinguished Cargill on the basis...