ADR Institute of Canada (ADRIC) Conference

Alessandra Harkness

On September 23, 2020, the ADR Institute of Canada organized an event co-hosted by Bill Horton (William G. Horton Professional Corporation, Toronto) and Michael Schafler (Dentons Canada LLP, Toronto). The event featured four separate panels, on: (1) Corruption Defence in International Arbitration, (2) Correctness and Robust Reasonableness, (3) Confidentiality, Consolidation, and Concurrent Disputes, and (4) The New ADRIC Med-Arb Rules.

Panel 1: Corruption Defence in Investment Arbitration

The two speakers in the first panel were Barton Legum (Dentons Europe LLP (Paris) and Sophie Nappert (3VB, London). Both speakers agreed that claims of corruption are challenging to address because of their covert nature. Tribunals must possess a degree of powers of investigation and it must be within the scope of the tribunal’s jurisdiction to consider allegations of corruption. Otherwise, parties may be at a loss for procedural remedies. Legum described four main challenges in dealing with claims of corruption: (1) the absence of expertise of arbitrators in dealing with criminal matters, (2) the limited tools available for compelling the production of evidence, (3) confusion on the necessary standard of proof, and (4) the concern of arbitrations being used as a means to launder money. 

Both Nappert and Legum mentioned that corruption cases also present a challenge because the case may begin as a contractual dispute and, subsequently, transform into a case with completely different facts and required skillsets. Next, they focused on the difficulty of determining the standard of proof for corruption. Nappert expressed some frustration with the high but uncertain standard of proof for allegations of corruption; the standard of proof has been described in cases as “concrete and decisive”[1], “substantiated facts”[2], and “clear and convincing.”[3] Legum shared Nappert’s frustration, but noted that the real issue has been the fact that the respondent does not have to prove corruption and can rely on evidence that in normal circumstances would be insufficient. He went on to say that with a serious allegation like corruption, no judge is going to arrive at a conclusion without being convinced that criminal conduct in fact occurred.

Panel 2: Correctness and Robust Reasonableness

This panel focused on judicial scrutiny of arbitration awards since the Supreme Court of Canada’s decision in Canada (Minister of Citizenship and Immigration) v Vavilov.[4] The keynote speaker was former Supreme Court Justice The Honourable Thomas Cromwell (BLG, Toronto) who addressed three main questions: (1) Does (should) Vavilov apply to judicial review of arbitration awards? (2) How does the newly articulated reasonableness standard differ from the correctness standard? and (3) Does the abolition of the concept of “true question of jurisdiction” turn every question of contract interpretation in an arbitration into a question of jurisdiction?

Justice Cromwell argued that the main problem Vavilov poses for commercial arbitration arises when there is a statutory right of appeal from a commercial arbitration award to a court; what is the standard of review? Ultimately, the question is whether the changes Vavilov made to the standard of review have any impact on the judicial review of commercial arbitration awards. The relevant passage in Vavilov states: “It should therefore be recognized that, where the legislature has provided for an appeal from an administrative decision to a court, a court hearing such an appeal is to apply appellate standards of review to the decision.”[5]

Since a commercial arbitration award is not (or at least not obviously) an administrative decision, the extent to which Vavilov is relevant to commercial arbitration remains unclear. Justice Cromwell argued that we should not just transpose administrative law standards relating to standards of review into the standard of review for commercial arbitration awards on appeal; and further, if statutory appeal mechanisms are “clear signals of legislative intent” and if “appeal” means the same thing in all contexts, it is hard to see why it would mean something different for arbitration.

Ultimately, Justice Cromwell concluded that some statutes do provide parties to an arbitration agreement with the ability to appeal questions of both fact and law to provincial superior courts, but if the agreement is silent on rights of appeal, the parties may only appeal a question of law, and only from a domestic arbitration. He mentioned five cases that have applied Vavilov. Two held that Vavilov applies to commercial arbitration awards and the standard of review is correctness.[6] Two held that Vavilov applies only to administrative decisions, which do not include arbitral awards, so Sattva continues to apply.[7] The last case held that Vavilov applies and imposes a reasonableness standard for judicial review of arbitral awards.[8] Justice Cromwell concluded that it is hard to think that, according to the plain meaning of the Supreme Court’s decision in Vavilov, it should not apply to statutory rights of appeal from arbitral awards. Finally, he flagged the ongoing case of Wastech Services Ltd. v Greater Vancouver Sewage and Drainage District, SCC #38601; when released, it is likely to provide more clarity on the application of Vavilov to commercial arbitration awards.

Panel 3: Confidentiality, Consolidation, and Concurrent Disputes

This panel included three speakers: Craig Chiasson (BLG, Vancouver), Ben Hanuka (Law Works, Toronto), and Jameel Madhany (Lerners, Toronto). Each focused on a slightly different topic.

Craig Chiasson began by discussing the consolidation of arbitration disputes and the relevance of consent of the parties to the consolidation process. He argued that the principle of consent is important prior to consolidation. Specifically, he cited the case South Coast British Columbia Transportation Authority v BMT Fleet Technology Ltd. as upholding the principle of confidentiality.[9]  The issue of consolidation is being debated around the world. The issue of whether a dispute is governed by a set of rules under which consolidation can be ordered; the debate turns to whether, when the party agreed to the rules, it simultaneously agreed to the potential for consolidation at a later date. The new Vancouver International Arbitration Centre (VanIAC) has affirmed that the principles of consent remain necessary for consolidation.

Next, Ben Hanuka described some of the problems that accompany concurrent arbitrations in the context of a franchising dispute. He addressed a concern courts have raised that a party may be able to appoint an arbitrator and control the process even if they are not a party to the arbitration.[10] Further, issues have arisen where there is one agreement of purchase and sale but multiple arbitration agreements. He cited 3GS Inc. v Altus Group Ltd. as an example.[11] There, the court held that two arbitrators should be appointed, on the grounds that (1) specialized financial matters were to be heard by a specialized auditor, (2) the auditor did not have the expertise to hear non-financial disputes, such as misrepresentations, (3) there was little risk of inconsistent findings, (4) and finally, the decision of the financial arbitrator could render the non-financial issues moot, which would reduce the costs to the parties. Lastly, Hanuka mentioned that affiliated parties may be deemed parties to an arbitration but that their consent is still required in order to consolidate the dispute.

The last speaker was Jamil Madhany. He described some of the challenges of maintaining confidentiality in arbitration proceedings involving professional negligence, or directors’ and officers’ liability. He argued primarily that given the broad scope of confidentiality, a plaintiff may not be able to choose the counsel that they would like or have access to the resources needed to effectively argue their case. Further, there may be a need for different arbitrators to preside over related arbitrations, witnesses may only be able to testify in one proceeding, and the cost to litigants would likely rise, as they would have to argue each dispute individually.

Panel 4: The New ADRIC Med-Arb Rules

The final panel of the day saw David McCutcheon (Arbitration Place, Toronto) and Mary E. Comeau (Calgary Energy & Commercial Arbitrators, Calgary) discussing the new ADRIC Med-Arb Rules. These rules are national, are consistent with provincial laws, and can be used in both domestic and international disputes. Further, they are designed to integrate and supplement ADRIC’s existing Mediation Rules and Arbitration Rules. The Med-Arb Rules incorporate the two existing bodies of rules, but prevail over them in cases of conflict.[12]

Comeau detailed some of the advantages of med-arb, including: it keeps the power with the parties to come to a resolution, clients speak highly of the fact that the process gives them a chance to speak about the case, and that the process provides parties the opportunity to build a foundation in mediation prior to arbitration proceedings. The ADRIC Med-Arb Rules can apply in two cases: (1) when the parties have agreed that the rules apply, or (2) when the parties agree to ADRIC-administered med-arb.

Lastly, McCutcheon highlighted the recently-established designation of Chartered Mediator-Arbitrator now offered by ADRIC. Anyone in qualifying for the designation can speak with anyone on the board of the Institute. He stated that the designation is meant for those who are among the most experienced in the whole range of ADR practices. 

[1] Belokon v Kyrghyz Republic, UNCITRAL, 24 October 2014 (“money laundering”).

[2] Niko Resources (Bangladesh) Limited v. People’s Republic of Bangladesh et al, ICSID Cases No ARB/10/11 and ARB/10/18, Decision on Jurisdiction, 19 August 2013.

[3] EDF (Services) Ltd. v Romania, ICSID Case no. ARB/05/13, 8 October 2009 and Himpurna California Energy Ltd (Bermuda) v PT (Persero) Perusahaan Listruk Negara (Indonesia), UNCITRAL, 4 May 1999. “Clear and convincing” was also used in Bariven SA v Wells Ultimate Service LLC, The Hague Court of Appeal, 22 October 2019. However, in Bariven the court found that the standard was “too stringent”.

[4] Canada (Minister of Citizenship and Immigration) v Vavilov, 2019 SCC 65.

[5] Canada (Minister of Citizenship and Immigration) v Vavilov, 2019 SCC 65, para 17.

[6] Buffalo Point First Nation v. Cottage Owners Association 2020 MBQB 20; Allstate Insurance Company v Her Majesty the Queen, 2020 ONSC 830

[7] Cove Contracting Ltd. v. Condominium Corporation No. 0125598, 2020 ABQB 106; Ontario First Nations (2008) Limited Partnership v Ontario Lottery and Gaming Corporation, 2020 ONSC 1516.

[8] Freedman v Freedman Holdings Inc., 2020 ONSC 2692.

[9] South Coast British Columbia Transportation Authority v. BMT Fleet Technology Ltd., 2018 BCCA 468.

[10] Eggiman v Martin, 2019 ONSC 1388.

[11] 3GS Inc. v Altus Group Ltd., 2011 ONSC 5755.

[12] ADRIC Med-Arb Rules, Rule 2.7.