Manifest Unfairness ' The Alberta Court Of Appeal Clarifies The Test

• Published date: 19 August 2022
• Subject Matter: Litigation, Mediation & Arbitration, Arbitration & Dispute Resolution
• Law Firm: McCarthy Tétrault LLP
• Author: Ms Jocelyn Turnbull Wallace and Amanda J. Cha

Overview

In ENMAX Energy Corporation v TransAlta Generation Partnership, 2022 ABCA 206, the Alberta Court of Appeal (the "Court") provided insight into what constitutes "manifest unfairness" within an arbitration procedure sufficient to deprive a party of presenting a case and warranting set aside of the arbitration award pursuant to section 45(1)(f) of the Arbitration Act, RSA 2000, c A-43 (the "Act").

The Court found in this instance that the Appellants' complaints did not rise to the significant standard required to meet the test, as the procedure selected did not challenge the fundamental validity of the process or undermine the fairness of the arbitration itself.

Background

TransAlta Generation Partnership (the "Respondent") owns and operates the Keephills Generating Units ("Keephills"). The Respondent was the owner of a Power Purchase Arrangement ("PPA") with ENMAX Energy Corporation ("ENMAX") to supply electrical power from Keephills to ENMAX as the buyer. The Balancing Pool has financial obligations under the PPA, entitling it to participate in any arbitration in relation to the PPA (together, ENMAX and the Balancing Pool are the "Appellants").¹

In March 2013, one of the Keephills units "tripped" and shutdown for seven months. The Respondent claimed the shutdown was a force majeure event which relieved the Respondent of its obligation to pay ENMAX for the offline unit and require the Balancing Pool to pay the Respondent's fixed and variable costs of generation. The Appellants disagreed and challenged the Respondent in relation to which party was responsible for the losses suffered.

In accordance with the PPA, the dispute was referred to arbitration under the Act. The arbitration tribunal concluded that the shutdown of the Keephills unit was an event of force majeure as defined in the PPA and the Respondent had acted in accordance with its obligations. ENMAX and the Balancing Pool sought to challenge the award, and the chambers judge concluded no appeal of the arbitration award was available based on the language of the PPA. That decision was not appealed to the Court.

Queen's Bench Decision

The Appellants applied to set aside the award pursuant to section 45(1)(f) of the Act which states:

45(1) On a party's application, the court may set aside an award on any of the following grounds:

(f) the applicant was treated manifestly unfairly and unequally, was not given an opportunity to present a case or to respond to another party's case, or was not...