In my article on April 24, 2016, I commented upon the important decision of the Ontario Superior Court in Popack v. Lipszyc, 2015 CarswellOnt 8001, 2015 ONSC 3460. That decision has been recently upheld by the Ontario Court of Appeal.

The Court of Appeal did not address the various legal issues dealt with in my article on April 24, 2016. Rather, the Court of Appeal decided the appeal by reviewing the Superior Court’s discretion to set aside the arbitral award. The Court of Appeal held as follows:

  1. The Superior Court has a discretion, not a duty, to set aside an arbitral award if the award contravenes the UNCITRAL Model Law or the Ontario International Commercial Arbitration Act (ICAA).

 

  1. In exercising this discretion, there is no bright line test to determine whether an arbitral award should or should not be set aside.

 

  1. In exercising her discretion, the Superior Court judge was entitled to take into account the conduct of the parties and the effect of setting aside the award. In her decision, the Superior Court judge considered: that the party now complaining to the court about the award corresponded with the arbitral tribunal during its deliberations, without telling the other party, and did not expressly object to the tribunal undertaking activity of which it now complained; and the fact that a witness had died since the arbitration hearing and would not be available for a re-hearing if the arbitral award was set aside. The Court of Appeal held that the Superior Court judge was entitled to consider those matters in exercising her discretion.

 

  1. The Superior Court judge was not obliged to put the complaining parties’ arguments, or these other factors, into separate compartments relating to each Article of the Model Law relied upon by the applicant. Rather, the court was entitled to look at the matter from an overall perspective. The Court of Appeal said:

 

“I do not see how the outcome of that balancing exercise can depend on the specific label placed on the procedural error giving rise to the Article 34(2) complaint. For example, characterizing the procedural failure as a breach of Ontario “public policy” if it could be so characterized, would not, in my view, automatically make the breach more serious or tip the scale in favour of setting aside the award. Whatever label is placed on the procedural error, and whichever subsection of Article 34(2) is invoked, the essential question remains the same — what did the procedural error do to the reliability of the result, or to the fairness, or the appearance of the fairness of the process?….The application judge made no error in choosing not to give separate consideration to each of the provisions of Article 34 advanced on behalf of Mr. Popack.” (emphasis added)

See Heintzman and Goldsmith on Canadian Building Contracts, 5th ed., chapter 11, parts 3(d), 6 and 11(b).

Popack v. Lipszyc, 2016 CarswellOnt 2243, 2016 ONCA 135

Arbitration – International Commercial Arbitration – review of arbitral award – discretion to set aside an arbitral award

Thomas G. Heintzman O.C., Q.C., FCIArb                                     May 18, 2016

www.constructionlawcanada.com

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