Want to Appeal a Commercial Arbitration Award? Make Sure You Secure Broad Rights of Appeal.

One of the main purposes of commercial arbitration is to provide the parties with a final and binding resolution of their dispute. For this reason, section 45 of the Ontario Arbitration Act, 1991, S.O. 1991, c.17 limits appeals from arbitral awards, making it clear that if the parties want broad rights of appeal on questions of law, fact or mixed fact and law, their arbitration agreement must expressly say so. Otherwise, the parties will be stuck with the narrow appellate rights set out in the Arbitration Act.

A decision of the Ontario Court of Appeal, 652443 Canada Inc. v. Toronto (City), 2017 ONCA 486, establishes the Court's unwillingness to get involved in appeals from arbitral awards. The case affirms that the policy underlying commercial arbitration, i.e. to promote an efficient and final resolution of the dispute between the parties, would be undermined by broad appellate review.

Facts

652443 Canada Inc. involved a dispute between the City of Toronto, as landlord, and the appellant commercial tenant. Both were parties to a 99-year lease (the "Lease") relating to a retail property in downtown Toronto.

The Lease provided that during the second rental period, i.e. between December 1, 2011 to November 30, 2037, the parties were to agree on what amounted to the "fair market rental" for the property. If the parties could not agree, the matter was to be submitted to arbitration.

The Lease further provided that the "decision of the arbitrators shall be subject to appeal in accordance with the provisions of The Arbitrations Act, R.S.O. 1970, as amended, or any other successor Act".

The City commenced arbitration when the parties failed to agree on the "fair market rental" cost for the property.

The parties entered into an arbitration agreement (the "Arbitration Agreement"). This Agreement provided that the "decision of the arbitrators shall be subject to appeal in accordance with the provisions of the Arbitration Act, S.O. 1991, c.17 as amended, or any other successor Act".

Following a sixty-eight day arbitration before a tribunal which resolved, amongst other things, the issue of "fair market rental" for the property, the tenant sought to appeal the award to the Superior Court on the basis that that the tenant was denied procedural fairness and that the tribunal erred in its determination of "fair market rental".

Motion Judge Quashes Appeal

The City brought a motion to dismiss the appeal on the basis that the Arbitration Agreement between...

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