|
Arbitration - Commercial Arbitration Act (CAA). Clayton v. Canada (Attorney General)
In Clayton v. Canada (Attorney General) (Ont CA, 2024) the Ontario Court of Appeal dismisses an appeal from a NAFTA application, here "to set aside an arbitration award made pursuant to Chapter 11 of the NAFTA".
Here the court reviews aspects of the Commercial Arbitration Act's 'Commercial Arbitration Code':The legislation and standard of review
[12] There is no right of appeal from the tribunal’s award. An application to set aside the award is the exclusive recourse and is governed by s. 34 of the Commercial Arbitration Code, Schedule I to the Commercial Arbitration Act, R.S.C. 1985, c. 17, which provides in relevant part as follows:(1) Recourse to a court against an arbitral award may be made only by an application for setting aside in accordance with paragraphs (2) and (3) of this article.
(2) An arbitral award may be set aside by the court specified in article 6 only if:
(a) the party making the application furnishes proof that:
(i) a party to the arbitration agreement referred to in article 7 was under some incapacity; or the said agreement is not valid under the law to which the parties have subjected it or, failing any indication thereon, under the law of Canada; or
(ii) the party making the application was not given proper notice of the appointment of an arbitrator or of the arbitral proceedings or was otherwise unable to present his case; or
(iii) the award deals with a dispute not contemplated by or not falling within the terms of the submission to arbitration, or contains decisions on matters beyond the scope of the submission to arbitration, provided that, if the decisions on matters submitted to arbitration can be separated from those not so submitted, only that part of the award which contains decisions on matters not submitted to arbitration may be set aside; or
(iv) the composition of the arbitral tribunal or the arbitral procedure was not in accordance with the agreement of the parties, unless such agreement was in conflict with a provision of this Code from which the parties cannot derogate, or, failing such agreement, was not in accordance with this Code; or
(b) the court finds that:
(i) the subject-matter of the dispute is not capable of settlement by arbitration under the law of Canada; or
(ii) the award is in conflict with the public policy of Canada
[emphasis added]. [13] Section 34 imposes strict limits on the ability of courts to interfere with arbitration awards. Subsection 34(2)(a)(iii) makes clear that a court may set aside the tribunal’s award only if the appellants establish that it determined matters beyond those that were submitted to the tribunal for arbitration. “True jurisdictional questions” is a term that has been used to describe the limited nature of reviewable error under s. 34(2)(a)(iii), and the standard of review for such errors is correctness. However, as I will explain below there is good reason to stick to the wording of the legislation that authorizes the court to set aside an arbitration award under s. 34(2)(a)(iii).
[14] An award may also be set aside if it is in conflict with the public policy of Canada under s.134(2)(b)(ii) [sic: should be 34(2)(b)(ii)]. This is a mixed question of law and fact and is subject to review on the deferential palpable and overriding error standard.
....
The limited nature of jurisdictional intervention
[16] This court emphasized the limited scope of judicial oversight under s. 34(2)(a)(iii) in Cargill, at para. 47:[C]ourts are to be circumspect in their approach to determining whether an error alleged under art. 34(2)(a)(iii) properly falls within that provision and is a true question of jurisdiction. They are obliged to take a narrow view of the extent of any such question. And when they do identify such an issue, they are to carefully limit the issue they address to ensure that they do not, advertently or inadvertently, stray into the merits of the question that was decided by the tribunal.
[17] In Alectra the court was concerned with domestic rather than international arbitration but considered an almost identical provision in the Arbitration Act, s. 46(1)(3). Again, the court emphasized the limited scope of judicial oversight, paras. 25-27:In order to succeed on an application to set aside an arbitration award, an applicant must establish either that the award deals with a dispute that the arbitration agreement does not cover or contains a decision on a matter that is beyond the scope of the arbitration agreement.
....
In short, s. 46(1)3 requires that arbitrators act within the bounds of the authority granted by the arbitration agreement pursuant to which they are appointed – no less, but no more. Section 46(1)3 is not an alternate appeal route and must not be treated as such. [18] There is no room for doubt as to this court’s approach to commercial arbitration: review under s. 34(2)(a)(iii) of the Code or s. 46(1)(3) of the Arbitration Act is not an appeal. It is not an occasion for courts to review final and binding arbitration awards for either correctness or reasonableness. In order to intervene, the court must identify what Cargill described as a “true jurisdictional question”. That term, and in particular the modifier “true”, is intended to emphasize the limited scope of judicial oversight. The modifier “true” is necessary because of the problems inherent in the concept of jurisdiction itself, in particular its amenability to manipulation.
[19] Courts must not permit final and binding arbitration awards to be undermined by spurious jurisdictional arguments. The limited review contemplated by s. 34(2)(a)(iii) of the Code cannot be permitted to expand beyond its legitimate boundaries. There's more of these rarely heard matters at paras 20-40.
|
