Top 4 Considerations When Appealing Commercial Arbitration Awards

• Published date: 13 July 2022
• Subject Matter: Litigation, Mediation & Arbitration, Real Estate and Construction, Arbitration & Dispute Resolution, Landlord & Tenant - Leases
• Law Firm: Torkin Manes LLP
• Author: Mr Marco P. Falco

Commercial arbitration has two primary goals: efficiency and finality.

Parties who enter into private domestic arbitration do so in part to avoid the lengthy delays associated with civil litigation. The purpose is to ensure that a matter is brought to a final resolution, without the need for lengthy Court proceedings.

This is why Ontario's Arbitration Act, 1991, S.O. 1991, c.17 (the 'Act') limits the circumstances in which the Courts will allow an appeal from a commercial arbitral award.

Appellate rights are deliberately circumscribed under the Act, to ensure that parties are largely bound by the outcome of the arbitral process to which they agreed.

A recent decision of the Ontario Superior Court, D Lands Inc. v. KS Victoria and King Inc., 2022 ONSC 1029, serves as a helpful reminder of the main considerations a party wishing to appeal a commercial arbitral award ought to take into account.

Disputed Valuations

D Lands arose out of a dispute between a commercial landlord and tenant regarding their 99-year lease of land in Toronto (the 'Lease').

The landlord owned the lands and the tenant owned the building on the land. Both landlord and tenant were successors to the parties who entered into the Lease in 1968.

Under the Lease, if the parties were unable to agree to rent payable for a particular term, the rent would be determined by a panel of commercial arbitrators, whose task was to calculate the 'appraised value of the Demised Premises'.

After the parties could not agree to the rent payable for the following 25-year term of the lease, arbitration ensued. The Majority of the arbitral panel concluded that the value of the 'Demised Premises' at the relevant date was $63 million. The minority held it to be $95 million.

The landlord then sought leave to appeal the Majority's award to the Ontario Superior Court pursuant to subsection 45(1) of the Act, which provides a right of appeal on questions of law where the arbitration agreement does not set out an express right of appeal, provided the test for 'leave' to appeal the decision is met:

45(1) If the arbitration agreement does not deal with appeals on questions of law, a party may appeal an award to the court on a question of law with leave, which the court shall grant 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) determination of the question of law at issue will significantly affect the rights of the parties.

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