July 25, 2024
Most arbitrations in Ontario are governed by the Arbitration Act, 1991.
Some are governed by the International Commercial Arbitrations Act, a topic for another day.
THE ISSUE
Are you aware of you’re appeal rights if you chose to arbitrate?
We see many arbitration agreements where the parties did not consider or understand the rights of appeal.
Even worse, many people disappointed by the result at arbitration find that the appeal rights are not what they expected. Or the winner of an arbitration discovers that they face an unexpected appeal.
THE LAW
As discussed in the case of Schickedanz v. Wagema Holdings Limited, section 45 of the Arbitrations act 1991 sets out appeal rights.
The first thing to note is that sub-sections 2 and 3 are more important than sub-section 1.
Sub-section 2 provides that if the agreement so states, the parties may agree that appeals to the Superior Court are permitted on questions of law.
Sub-section 3 goes on to provide that the parties can go further and provide rights of appeal on a question of fact or a mixed question of fact and law. This power potentially gives wider appeal rights than from a Superior Court trial.
Which leaves sub-section 1. People get confused because it comes first and says that leave to appeal is required. Schickendanz suggests that leave is NOT required where the arbitration agreement provides for a right of arbitration.
The confusion in that case arose because the case was an arbitration about costs of litigation and section 133 of the Courts of Justice Act requires leave to appeal costs. The significance of the case is that it correctly points out that the Arbitrations Act ,1991 governs, not the Courts of Justice Act. This is the sort of confusion that arises when people, or their lawyers, are not conscious about the Arbitrations Act.
The confusion is added to by the fact that this is only a Superior Court decision, and there are older cases at the same level which say that leave IS required.
This needs the Court of Appeal, or at least the Divisional Court, to speak out. But the odds of that happening are remote, as most arbitration appeals end at the Superior Court level.
THE MORAL OF THE STORY
Why is this important if the law is unsettled?
Because addressing the problem starts at the drafting stage by defining the rights of appeal. This is YOUR opportunity to balance cost and uncertainty versus “correctness”. How much do you trust the arbitration process, and arbitrators generally? Do you want there to be more or less appeal rights than if there was a trial in court?
Following the arbitration, what parties need are lawyers conscious of the nuances of arbitration appeals.
HOW WEILERS LLP CAN HELP YOU
At Weilers LLP, our corporate commercial and dispute resolution lawyers have experience drafting and interpreting arbitration clauses in agreements and do our best to make sure our clients understand them, but in order for that to work, our clients need to be open with us about their understanding of the terms, and of course, need to read the fine print.
If you are dragged into a complex commercial arbitration, Weilers LLP has lawyers well-suited to represent you at a realistic cost, with realistic advice and strong representation. We work closely with our own commercial drafting colleagues within the firm to provide clear and concise opinions. We are able to share the same cooperation with many outside lawyers who appreciate our commitment to our mutual clients.
And at Weilers LLP, we love it when clients ask, “What does it mean?”