The Ins And Outs Of Statutory Appeals Of Arbitration Decisions

Many, if not most, construction contracts contain dispute resolution clauses referring any and all disputes to arbitration. Parties who use standardized Canadian Construction Documents Committee ("CCDC") contracts for their projects are undoubtedly familiar, to some degree, with the arbitration process.

Given the prevalence of arbitrations, it is important to understand the available means of recourse in the event you are the unsuccessful party in an arbitration decision. This article will discuss the criteria for a statutory appeal of an arbitration decision.

In Alberta, appeals of arbitration decisions are governed by section 44 of the Arbitration Act, R.S.A. 2000, c. A-43 (the "Arbitration Act"). Equivalent legislation in other provinces, with some variations, are section 31 of the British Columbia Arbitration Act, section 45 of the Saskatchewan Arbitration Act, section 44 of the Manitoba Arbitration Act and section 45 of the Ontario Arbitration Act.

Right to Appeal

Under subsection 44(1) of the Arbitration Act, a party is permitted to appeal all questions, whether they be questions of law, fact or mixed fact and law, if the arbitration agreement specifically allows for it:

44(1) If the arbitration agreement so provides, a party may appeal an award to the court on a question of law, on a question of fact or on a question of mixed law and fact.

If there is no arbitration agreement or the dispute resolution clause in the construction contract is silent on the issue of appeals, then a party may appeal an award but only on a question of law and only with leave of the court under subsection 44(2) of the Arbitration Act:

44(2) If the arbitration agreement does not provide that the parties may appeal an award to the court on a question of law, a party may, with the permission of the court, appeal an award to the court on a question of law.

In order for leave to be granted, a party must establish both elements of subsection 44(2.1) of the Arbitration Act:

44(2.1) The court shall grant the permission referred to in subsection (2) only if it is satisfied that

(a) the importance to the parties of the matters at stake in the arbitration justifies an appeal, and

(b) the determination of the question of law at issue will significantly affect the rights of the parties.

The validity of arbitration agreements or dispute resolution clauses prohibiting all appeals, even appeals on questions of law, varies depending on the province. Under section 3 of the Arbitration Act, parties are not permitted to vary or exclude subsection 44(2) of the Arbitration Act. A similar restriction can be found in section 3 of the Manitoba Arbitration Act.

By comparison, under section 3 of the Ontario Arbitration Act, section 4 of the Saskatchewan Arbitration Act and section 35 of the British Columbia Arbitration Act, parties are permitted to agree to exclude the appeal provisions of those statutes. Although not the focus of this article, interestingly enough, Ontario courts have, in fact, gone so far as to state that an agreement that there be no appeal from a "final and binding" arbitration decision includes a prohibition against applications for leave to appeal, even if the agreement itself does not contain express contractual language to that effect.1

Question of Law

The following general definitions provide a handy starting point for assessment2:

(a) Questions of law: These are questions regarding whether the correct legal principle was applied, whether the correct legal test or standard was articulated, whether the test was...