In a recent arbitration decision, Baffinland Iron Mines LP v Tower-EBC G.P., S.E.N.C (Baffinland),[1] the Ontario Court of Appeal (the ONCA) upheld the application judge’s decision that the arbitration agreement between the parties precluded appeals of an arbitral award.
The appealing party, Baffinland Iron Mines (the Appellant), sought leave under the Arbitration Act, 1991 (the Act)[2] to appeal the tribunal award decided against them in arbitration, arguing that the tribunal had committed errors of law. The application judge denied them leave on the basis that the material contracts between the parties (the Contracts), which included an arbitration agreement, meant that there were no appeals on questions of law pursuant to section 45(1) of the Act, specifically due to the arbitration agreement language that stated arbitration “finally settled” the dispute. [3]
On appeal, the Appellant argued that the application judge had failed to properly apply the “presumption of consistent expression:” the contractual interpretation principle that language used consistently in a contract is understood to have the same meaning and so it follows that the use of different language indicates the intention of different meanings.[4] In the matter at hand, the phrase “final and binding” had been used in parts of the Contracts to refer to the adjudication board’s decisions, which differed from the phrase that had been used in relation to arbitration: “finally settled.” The Appellant argued that the application judge’s holding that the two phrases had the same meaning was a misapplication of the principle.
The ONCA rejected this argument, pointing to the common sense approach to contractual interpretation espoused by the Supreme Court of Canada in Sattva Capital Corp. v. Creston Moly Corp: the interpretation of contracts should be practical, rather than dominated by technical rules, and the intent of the parties should be given effect by giving words their ordinary meaning.[5] The ONCA found that, in context, the ordinary meanings of the phrases “final and binding” and “finally settled” were the same. Contrary to the Appellant’s argument, the ONCA found that applying the “presumption of consistent expression” pulled towards giving consistent meaning to the words “final” and “finally” in both phrases, whether they are used with “binding” or with “settled.”
Exception to the rule against appeals when a Superior Court refuses leave to appeal
Of further interest is that the responding party (the Respondent) brought a motion to quash the appeal, which the ONCA dismissed. The Respondent moved to quash, arguing that there is no right to appeal to the ONCA from a denial of leave to appeal by a judge of the Superior Court. Their argument was two-pronged, based on (1) the absence in the Act of any right to appeal from a denial of leave to appeal and (2) the general rule that there is no appeal to the ONCA from a refusal of leave to appeal by the Superior Court.
Where the Superior Court had decided an appeal, either because the Court granted leave or because there was an appeal as of right, section 49 of the Act provides for a further appeal to the ONCA, with leave. As the Respondent emphasized, however, that is only available when the Superior Court has heard and decided an appeal; the Act does not provide for an appeal where the Superior Court had never heard an appeal at all.
The ONCA rejected the Respondent’s argument on the basis that the matter met an established exception to that general rule: the application judge, having decided that the Contracts precluded appeal, had declined to exercise any jurisdiction to consider whether leave to appeal should be granted. On this basis, an appeal on the question of whether jurisdiction was mistakenly declined is appropriate.
Husky Food Importers & Distributors Ltd v JH Whittaker & Sons Limited: the ONCA upholds another arbitration agreement
Days following this decision, the ONCA released a further decision which also upheld an arbitration agreement: Husky Food Importers & Distributors Ltd v JH Whittaker & Sons Limited (Husky).[6]
In Husky, JH Whittaker & Sons Limited sought to stay an Ontario court proceeding on the basis that the matter was the subject of an arbitration agreement, while Husky Food Importers & Distributors Ltd. contended that no such agreement existed. The dispute was an international one: the action was commenced in Ontario by a Canadian company due to an alleged breach of a commercial agreement against a New Zealand company. JH Whittaker & Sons Limited, the New Zealand company, moved for an order to stay the action in favour of arbitration, pursuant to section 9 of the International Commercial Arbitration Act, 2017 (ICAA).[7] The ONCA upheld the motion judge’s finding that the parties’ distribution agreement arguably contained an arbitration clause, and therefore must be referred to arbitration, under the ICAA.
Significance
Both of these recent decisions of the ONCA underline the importance of careful attention to arbitration provisions in commercial agreements. Courts in Ontario will show deference to and uphold valid arbitration agreements. The ONCA has demonstrated that it will use flexible and common sense approaches to give effect to arbitration agreements. Drafters of arbitration agreements should also take note from Baffinland that the use of clear and consistent language throughout an agreement may help to avoid disputes on proper interpretation altogether.
For more information on this topic, please contact the authors Marina Sampson and Nicole Tzannidakis.
The authors would like to thank articling student, Ashleigh Graden for her assistance with this article.
[3] The Contracts also included International Chamber of Commerce Rule 35(6) the (ICC Rule) which precludes appeals.
[4] The Appellant also argued a second contractual interpretation principle: that apparently inconsistent terms in a contract should be reconciled with priority to terms to which the parties have expressly agreed. The Court rejected this argument; the provision in the Contracts was not actually inconsistent with the ICC Rule, as they both related to finally settling disputes.
[5]2014 SCC 53, at para 47.
