March 23, 2020

You Had Your Chance: Counsel Failing to Make Further Submissions Not a Ground for Arbitral Error 

Daniel Moholia & Shane Sukerman  

Goel v Sangha(Goel) involved judicial review of an arbitrator’s cost award. Warren J of the British Columbia Supreme Court found that the rules of natural justice do not require arbitrators to ask parties to address issues they failed to make submissions on when given the opportunity.

Analysis of the Court 

The BCSC heard a petition from parties to a Joint Venture Agreement, after a dispute arose as to whether the respondents had “under-contributed to the project.” Upon the resolution of the matter through arbitration, costs were awarded to the prevailing respondents t hrough a summary process. The petitioners then applied for, among other things, an order setting aside the cost order against them on the grounds that the arbitrator had committed an error in “failing to provide the petitioners with the opportunity to make submissions on the type of costs that ought to be awarded”.^[1]

The case was resolved on the basis of timing, in that Warren J refused to grant an extension to the deadline (which the appellants missed) for appealing the cost order. The Court nonetheless went on to address the issue of the alleged arbitral error. It noted that the British Columbia Arbitration Act, s. 1, includes in its definition of “arbitral error” the “failure to observe the rules of natural justice.” It also cited Syndicat des employés de production du Québec & de l'Acadie v. Canada (Human Rights Commission), in which the Supreme Court of Canada held that “[t]he scope and content of the rules of natural justice and the duty of fairness are variable, determined in the specific context of each case.”^[2]Courts should “decide the content of these rules by reference to all the circumstances”.^[3]In all cases, “[n]atural justice requires an arbitrator to act with a certain level of procedural fairness.”^[4]

Section 30(2) of the Arbitration Actprovides that awards may be set aside on the basis of “arbitral error”, including a violation of the rules of natural justice. British Columbia courts have found that not permitting parties to make submissions on costs amounts to a breach of the rules of natural justice and have set aside costs awards on that basis.^[5]

Warren J’s decision in Goel follows this line of precedent. The Court found that the parties had been given an opportunity to address costs yet chose to not do so. It was “reasonable and fair” for the arbitrator to assume there was no dispute as to the type of costs when the petitioners’ submissions focused exclusively on arguing for the deferral of consideration of costs.^[6]The arbitrator was not obligated to request that the petitioners address type of costs, “particularly in the absence of an express request by the petitioners.”^[7]

Takeaways 

Courts continue to emphasize arbitration as an avenue to achieve a speedy, economical, and fair dispute resolution avenue. Counsel must be mindful of these principles. If the arbitrator does not find an issue in written submissions, no alternative submissions are made during arbitration, and counsel does not raise a point to make further submissions in arbitration, a court may be unlikely to find an arbitrator acted erroneously to fail to facilitate further opportunities to make submissions.

CJCA blog posts represent the individual opinions and perspectives of their authors. The Canadian Journal of Commercial Arbitration does not maintain or publish a collective or institutional view on any legal or political issue.