We recently wrote about the Supreme Court of Canada’s Vavilov trilogy (referred to as “Vavilov”), found here.
Since Vavilov, courts across the country have been applying the new administrative law framework, some with unintended consequences. Below, we briefly discuss the apparent impact of Vavilov on the following analyses: procedural fairness, patent unreasonableness, and reasonableness in the context of commercial arbitration.
Procedural Fairness and Patent Unreasonableness
The Ontario Superior Court and the Federal Court have both determined matters dealing with the question of procedural fairness using the Vavilov framework. As was intended by the Supreme Court of Canada, these courts confirmed that Vavilov has not altered the Dunsmuir approach to determining whether an applicant’s procedural fairness rights have been met (see: Zhou v. Cherishome Living, 2020 ONSC 500; and Trboljevac v. Canada (Minister of Citizenship and Immigration), 2020 FC 26).
With respect to the patent unreasonableness analysis, Justice Francis at the British Columbia Supreme Court confirmed that the meaning of patent unreasonableness under the Administrative Tribunals Act, SBC 2004, c 45 remains unchanged by Vavilov (see: College of New Caledonia v. Faculty Assn. of the College of New Caledonia, 2020 BCSC 384).
Commercial Arbitration Appeals
Unlike with the procedural fairness and patent unreasonableness analyses, there have been conflicting decisions by courts applying the reasonableness standard in the context of commercial arbitrations, highlighting some the unintended consequences of Vavilov.
Before Vavilov, courts applied the reasonableness standard of review to commercial arbitration appeals per Sattva Capital Corp. v. Creston Moly Corp., 2014 SCC 53 [Sattva] and Teal Cedar Products Ltd. v British Columbia, 2017 SCC 32 [Teal Cedar].
However, in January 2020, the Manitoba Court of Queen’s Bench held that as a result of Vavilov, the standard of review for arbitral decisions on extricable questions of law is now correctness (see: Buffalo Point First Nation v. Cottage Owners Association, 2020 MBQB 20 [Buffalo Point])
This departure from Sattva and Teal Cedar may have been short lived. In February of 2020, the Alberta Court of Queen’s Bench took the opposite approach of the court in Buffalo Point and, relying on Sattva and Teal Cedar. The Court held the standard of reasonableness is still applied to commercial arbitration appeals post-Vavilov, unless constitutional questions or issues of central importance to the legal system as a whole are raised (see: Cove Contracting Ltd. v. Condominium Corporation No. 012 5598 (Ravine Park), 2020 ABQB 106 [Cove Contracting]).
In Cove Contracting, Justice Dunlop provided two reasons why, in his view, Vavilov does not change the standard of review applied to commercial arbitration appeals. First, the Supreme Court of Canada does not refer to the earlier decisions of Sattva and Teal Cedar in its reasons for Vavilov, suggesting they are not altered. Second, the Vavilov framework is based on the intention of the legislature in the creation of “administrative bodies”, and commercial arbitrators are not “administrative bodies” because parties contractually agree to arbitration and arbitrators are not legislatively mandated.
While the Vavilov trilogy was intended to create more certainty, the decisions appears to have given rise to unintended consequences, including in relation to arbitration appeals.
The jury is still out as to which of the conclusions taken in Buffalo Point or Cove Contracting will prevail. In the interim, lawyers and parties should take note of the potential uncertainty regarding the proper standard of review on commercial arbitration appeals.