The Importance Of The Standard Of Review In Judicial Appeals Of Arbitration Awards

In 2017, the Supreme Court of Canada issued two separate decisions regarding appeals of arbitration awards: Attorney General of Quebec v. Ronald Guérin, [2017] 2 SCR 3 ("Guérin") and Teal Cedar v. British Columbia, [2017] 1 SCR 688 ("Teal Cedar").

Both cases dealt with the basic starting question for appeals - what is the standard of review that the appellate court must apply?

Teal Cedar

Teal Cedar involved a dispute regarding compensation payable by the Province of British Columbia to Teal Cedar for reducing access to certain roads and bridges it was using to harvest timber. According to the B.C. Forestry Revitalization Act, the dispute had to be submitted to arbitration, at which Teal Cedar was successful.

The prevailing law on appellate review of an arbitration award is a three-part analysis1:

Jurisdiction: whether the appellate court has jurisdiction to review the alleged error. Standard of review: whether the standard for the review is reasonableness or correctness. Review: whether the arbitration award withstands scrutiny under that standard of review. On the issue of jurisdiction, the Supreme Court reaffirmed the principle that statutory limitations on the scope of appellate review of arbitration awards are absolute. Given that section 31 of the B.C. Arbitration Act limits the jurisdiction for appeal reviews solely to questions of law, the Supreme Court held that any questions on appeal that are not questions of law were not within the Court's jurisdiction to review.

The courts have generally found that legislative or contractual arbitration provisions that broadly exclude the jurisdiction of civil courts for all questions will, for policy reasons, not actually be held to do so. However, more precise exclusions of court jurisdiction for certain questions, such as precluding review for all questions except questions of law, will be held to completely preclude any judicial appeal for all but those questions.

Appeal restrictions limiting court review to only questions of law exists in the following provincial arbitration legislation: Alberta Arbitration Act, section 8; Saskatchewan Arbitration Act, section 9(2); Manitoba Arbitration Act, section 8; Ontario Arbitration Act, section 8; New Brunswick Arbitration Act, section 8; and Nova Scotia Commercial Arbitration Act, section 10.

Determination of the applicable standard of review is accomplished by establishing legislative intent; in other words, by reviewing the text of the statute that grants the arbitrator his or her authority.2 The reasonableness standard of review is by far the most common standard of review used by courts to review arbitration decisions. It is defined as requiring the arbitrator's decision to "fall within the range of possible, acceptable outcomes which are defensible in respect of the facts and law."3 The reasonableness standard, as compared to the correctness standard, typically results in courts giving greater deference to arbitration awards as the arbitrator's findings are only required to be "possible" and...