Changes to the Standard of Review in Appealing Arbitrations

In a recent decision from the Supreme Court of Canada, titled Canada (Minister of Citizenship and Immigration) v. Vavilov (“Vavilov“), the rules regarding appeals of arbitration awards was significantly overhauled.

In the past, decisions of arbitrators that were brought before the courts for an appeal on a question of law could only be considered on a standard of “correctness”, as opposed to the traditional standard of “reasonableness”.

Under this historical standard, the courts were required to pay a significant level of deference to the decision of an arbitrator. In so doing the appellate courts were obligated to limit the scope of the review to simply determining whether the decision of the arbitrator was intelligible, transparent, and justified, as well as within the range of possible outcomes given the applicable facts and law in question.

Vavilov Brings an Unprecedented Change to the Standard of Review

Under Vavilov, a court considering an appeal of an arbitrator’s decision is now required to conduct a review of the decision with a view to correctness. This represents a significant change to the powers of a court in considering appeals of arbitration awards. This standard removes the reviewing court’s obligation towards deference and instead requires the reviewing court to effectively conduct a fresh analysis of the legal question that was that before the arbitrator. If the reviewing court, upon their new analysis, arrives at a different decision than the arbitrator, it will typically be determined that the arbitrator’s decision was in error and the reviewing court has the authority to then replace the arbitrator’s decision with its own.

There has been some suggestion that the decision of Vavilov does not apply to appeals of decisions arising from “consensual” arbitrations, such as those in family law where the parties agree to take their matters to arbitration. In fact, only one decision from Alberta’s Court of Queen’s Bench did hold that Vavilov does not apply to consensual arbitrations. However, this decision is contrary to similar cases in other provinces and is recognized as having failed to consider certain provisions of the Arbitration Act in Alberta that would appear to make Vavilov applicable to consensual arbitrations. It is the expectation of many family law practitioners that this recent Court of Queen’s Bench decision will not be upheld and the standard of review of Vavilov will ultimately be held to apply to family law arbitrations.

How does this impact family law litigants bringing their matters before an arbitrator?

While the standard of review might have changed, the fact is that there still remains a limited right of appeal under the Arbitration Act, unless the parties agree otherwise. If the parties do not agree otherwise, then they are restricted to only appealing on the basis of pure questions of law. However, there is even a restriction in this regard, as the Arbitration Act goes even further to prevent parties from appealing an award to the court on a question of law that the parties expressly referred to the arbitrator for decision.

As a result, Vavilov has not changed the statutory restrictions on appealing arbitration decisions under the Arbitration Act. However, the shift in the standard of reviewing an arbitrator’s decision has made it such that, if an appeal is granted, a reviewing court has much broader discretion to review the decision of an arbitrator and substitute the arbitration award with a decision from the court.

While some have voiced complaints that this change to the standard of review has effectively removed the presumed benefit of arbitration – that of less expense and faster resolution, the reality is that arbitration is often more expensive than the court process as a result of the additional cost of retaining an experienced arbitrator. Further, the resolution is also often not particularly streamlined because skilled arbitrators often have significant waiting lists.

The complaint that Vavilov will diminish the benefits of arbitration appears to also be predicated upon the idea that it will encourage parties to appeal decisions of arbitrators more frequently. As set out above, the right of appeal under the Arbitration Act has not been modified in any way and still creates restrictions and hurdles for parties to appeal decisions of arbitrators.

Far from encouraging parties to frivolously appeal decisions of arbitrators, the decision in Vavilov could be seen as creating security for individuals who choose to arbitrate. The new standard of review could help to ensure that an arbitrator applies the same level of reasoning and diligence that a court otherwise would, had the matter been placed before a judge instead. This is because Vavilov has created a minimum standard for arbitrators to meet in providing reasons for their decisions. While Vavilov set out a non-exhaustive list of such standards that arbitrators must meet in crafting awards, it is not the individual factors that make up the standard that are so important, but rather the fact that this standard effectively requires arbitrators to provide coherent, logical, and supported reasons for their decisions. This is nothing more than requiring arbitrators to be able to support and justify their decisions logically and intelligently.

In a province where any individual may hold themselves out as an arbitrator, and many untrained and unqualified individuals do, the case of Vavilov does not weaken the purpose of arbitration, rather it strengthens the rights of parties who are relying upon arbitration by creating standards for the decisions, where no such specific standards existed before.

For Questions About Family Matters and Arbitration, Contact Mincher Koeman

The family law lawyers at Mincher Koeman are exceptionally experienced with respect to all family matters following the breakdown of a relationship. We will work with you to ensure that you pursue your matter in a way that makes the most sense for your circumstances. Contact our office today by calling us at 403-910-3000 or contact us online.