Vavilov Strikes Again: The Debate Over Standards Of Review In Commercial Arbitration Reaches Ontario

• Published date: 13 July 2020
• Subject Matter: Corporate/Commercial Law, Litigation, Mediation & Arbitration, Corporate and Company Law, Arbitration & Dispute Resolution, Trials & Appeals & Compensation
• Law Firm: McCarthy Tétrault LLP
• Author: The International Arbitration Blog, Meghan S. Bridges and Lauren Weaver

Once again, a lower court has applied the Vavilov test when determining the appropriate standard of review of an arbitral decision. The Court's decision in Freedman v Freedman Holdings Inc., 2020 ONSC 2692 makes Ontario the third province to weigh in on a debate that has revealed divergent opinions and introduced some uncertainty into the standard of review for arbitral decisions.

Earlier this year, Courts in Manitoba and Alberta released decisions considering whether the Supreme Court of Canada's decision in Canada (Minister of Citizenship and Immigration) v. Vavilov, 2019 SCC 65 (and its companion, Bell Canada v. Canada (Attorney General), 2019 SCC 66) applied to the standard of review on an appeal of an arbitral decision. However, those courts reached opposite conclusions.

In Buffalo Point First Nation v. Cottage Owners Association, 2020 MBQB 20, the Manitoba Court of Queen's Bench concluded that, in the wake of Vavilov the standard of review for an arbitral decision on an extricable question of law is now correctness. Our review and analysis of that decision may be found here. The Buffalo Point Court applied the Vavilov framework without hearing full arguments from the parties about whether those cases applied to commercial arbitrations.

Shortly after the Buffalo Point ruling, the Alberta Court of Queen's Bench issued a decision to the contrary in Cove Contracting Ltd. v. Condominium Corporation No 012 5598 (Ravine Park), 2020 ABQB 106, holding that Vavilov did not change the standard of review for appeals of arbitral decisions. As we explained in our analysis of that decision here, the Alberta Court concluded that extricable questions of law should continue to be reviewed on a reasonableness standard unless they raise constitutional issues or issues of central importance to the legal system as a whole that fall outside the adjudicator's expertise.

In Freedman, the Ontario Superior Court considered the impact of Vavilov on s. 46(1) of Ontario's Arbitration Act, 1991. Pursuant to s. 46(1), a Court may set aside an arbitral award on various grounds. Although the Court did not cite Vavilov as a conclusive authority on the matter, it reasoned by analogy and applied the Vavilov framework indirectly when concluding that reasonableness is the appropriate standard of review under s. 46(1). This decision adds further uncertainty to the question of whether Vavilov's framework applies to arbitral awards on appeal or review.

The Ontario Court's use of the Vav...