{"id":274722,"date":"2023-09-01T11:00:00","date_gmt":"2023-09-01T09:00:00","guid":{"rendered":"https:\/\/blog.jusmundi.com\/?p=274722"},"modified":"2023-08-28T11:14:02","modified_gmt":"2023-08-28T09:14:02","slug":"still-a-good-place-to-arbitrate-no-apology-necessary","status":"publish","type":"post","link":"https:\/\/dailyjus.com\/index.php\/2023\/09\/01\/still-a-good-place-to-arbitrate-no-apology-necessary\/","title":{"rendered":"Still a Good Place to Arbitrate, No Apology Necessary"},"content":{"rendered":"\n
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This article was featured in our 2023 Mining Arbitration Report, which is part of a series of industry-focused arbitration reports<\/strong><\/a> edited by Jus Mundi<\/strong><\/a> and Jus Connect<\/a>.<\/strong> <\/p>\n\n\n\n

This issue explores the mining industry and presents a goldmine of information based on data available on Jus Mundi<\/a> and Jus Connect <\/a>as of February 2023<\/strong>. Discover updated insights into mining arbitration and exclusive statistics & rankings, as well as in-depth global and regional perspectives on mining projects, disputes, & arbitration from leading lawyers, arbitrators, experts, and in-house counsel. <\/p>\n\n\n\n

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Download it now<\/a><\/div>\n<\/div>\n<\/blockquote>\n\n\n\n
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THE AUTHORS:<\/strong>
George Karayannides<\/strong>, Partner at Clyde & Co<\/a> Canada LLP
Yuki Qiu<\/strong>, Associate at Clyde & Co<\/a> Canada LLP<\/p>\n\n\n\n

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Canada\u2019s mining industry is a key contributor to the economy and major employer in communities across the country. Two recent mining industry cases provide further evidence that Canada remains an arbitration-friendly jurisdiction, where the courts generally adopt a \u201chands off\u201d approach and respect the parties\u2019 decision to arbitrate.<\/p>\n\n\n\n

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Baffinland v Tower -EBC, 2022 ONSC 1900<\/a><\/h2>\n\n\n\n

Baffinland entered into two contracts with Tower-EBC (the \u201cContracts\u201d<\/strong>) to perform earthworks for the construction of a rail line, together with related infrastructure, to transport iron ore from its mine in Nunavut to Milne In let where it is shipped. The project suffered lengthy and unanticipated delays and Baffinland terminated the contracts. Tower-EBC commenced an arbitration challenging Baffinland\u2019s right to terminate the Contracts and seeking damages arising from the termination.<\/p>\n\n\n\n

The Arbitral Tribunal (constituted under the ICC Rules<\/a>) (the \u201cTribunal\u201d<\/strong>) issued a Partial Final Award on Liability and Remedy<\/a>, unanimously dismissing Baffinland\u2019s objection to the scope of its jurisdiction (over a related company) and finding that the Contracts had been wrongfully terminated. The Tribunal was divided on the issue of damages. The Majority awarded approximately $70 million in damages (the \u201cMajority Award\u201d<\/strong>), while the Minority would have awarded approximately $16 million. Thereafter, the Tribunal issued its Final Award on Costs<\/a>.<\/p>\n\n\n\n

Baffinland applied to the Ontario Superior Court of Justice [Commercial List], pursuant to the Arbitration Act, 1991, S.O. 1991, c.17 (the \u201cAct<\/em>\u201d<\/strong>), for, amongst other things, an order setting aside the Majority Award (s.46), an order granting it leave to appeal the Majority Award (s.45), and, if leave to appeal was granted, an order granting the appeal and setting aside or varying the Majority Award as necessary (s.45). Section 46 of the Act empowers the court to set aside an arbitration award on one or more of ten enumerated grounds. Generally speaking, these grounds do not address the substance of the dispute, but rather issues such as the formation of the tribunal, adherence to the law of Ontario, and procedural fairness.<\/p>\n\n\n\n

Relying on s.46(1)3 of the Act, Baffinland argued that the Tribunal exceeded its jurisdiction given the nature and quantum of damages awarded. While there is some conflict as to the standard of review on a question of jurisdiction since the Supreme Court of Canada\u2019s decision in Canada (Minister of Citizenship and Immigration) v. Vavilov, 2019 SCC 65<\/em>, Justice Pattillo held that the standard of review, if applicable, was correctness, and not reasonableness. That said, he found that Baffinland had failed to raise any objection to the Tribunals\u2019 jurisdiction to deal with the disputed claims during the arbitration, and accordingly, pursuant to ss. 4 and 17(5) of the Act and Article 40 of the ICC Rules<\/a>, it was deemed to have waived its right to object to the Tribunal\u2019s alleged excess of jurisdiction.<\/p>\n\n\n\n

Baffinland also relied on ss. 19(1), 46(1)6 and 46(1)9 of the Act (natural justice and procedural fairness) in arguing that it was treated unfairly. It alleged that the Tribunal\u2019s President\u2019s conduct during the hearing interfered with the proceeding and was improper, and that the Majority relied upon \u201chighly dubious legal arguments<\/em>\u201d. Justice Pattillo noted that the standard of review regarding procedural fairness is whether the requisite level of procedural fairness has been afforded, having regard to the fact that the proceeding is an arbitration agreed to by the parties where both parties are sophisticated and had legal representation throughout. He found that the questioning at issue by the President was not improper, and that Baffinland had an opportunity to address all the issues raised by the Tribunal, that it now complained of, at the hearing.<\/p>\n\n\n\n

Regarding s.45 of the Act (appeals), the preliminary issue facing the court was a question of contractual interpretation, namely, whether the arbitration agreement, either expressly or by implication, prohibited appeals on a question of law. Justice Pattillo found no substantive difference in the ordinary and grammatical meaning of the terms \u201cfinal and binding\u201d and \u201cfinally settled\u201d as found in the contracts, or in the meaning of \u201cbinding\u201d and \u201csettled\u201d in the context of the resolution of a dispute. Both terms showed the parties\u2019 clear intent with respect to the finality of the process. Further, the Contracts incorporated the ICC Rules, including Article 35(6)<\/a>, which provides, amongst other things, that the tribunal\u2019s award is binding, and the parties are deemed to have waived their right to \u201cany form of recourse\u201d; and there is none under the ICC Rules. Accordingly, Justice Pattillo held that there could be no appeal of the Majority Award on a question of law, or otherwise. Baffinland\u2019s application was dismissed.<\/p>\n\n\n\n

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MDG Contracting Services Inc. v Mount Polley Mining Corporation, 2022 BCSC 1078<\/h2>\n\n\n\n

MDG entered into a contract to provide dredging work to remove tailings from an area within the Mount Polley mine (the \u201cContract\u201d<\/strong>). A dispute arose concerning the Contract which the parties referred to arbitration. The initial hearing addressed questions of liability only. MDG\u2019s claim alleging liability on the part of Mount Polley was unsuccessful, while Mount Polley\u2019s counterclaim was successful.<\/p>\n\n\n\n

MDG applied to the Supreme Court of British Columbia for leave to appeal the award on the basis of s. 30 (errors of law) and to set aside the award on the basis of section 31 (failing to observe the rules of natural justice) of British Columbia\u2019s former Arbitration Act, RSBC 1996, c 55 (the test for leave to appeal under the new\/current Arbitration Act, SBC 2020, c 2 is unchanged, the bar remains high).<\/p>\n\n\n\n

Regarding the high bar required for leave to appeal, Justice McDonald noted that the modern \u201chands off\u201d view is that arbitration is an autonomous, self-contained, and self-sufficient process where parties agree to have their disputes resolved by an arbitrator, not courts. Courts must show due respect to the parties\u2019 decision to arbitrate, and the test for leave to appeal an arbitration award is not easily met. Identifying a question of law for appellate review is a threshold requirement for granting leave. Questions of law must be clearly perceived and delineated.<\/p>\n\n\n\n

Citing the Supreme Court of Canada\u2019s decision in Teal Cedar Products Ltd. v British Columbia, 2017 SCC 32<\/em>, Justice McDonald held that courts must be vigilant when faced with strategic drafting. It is an extricable question of law when a party alleges that \u201ca legal test may have been altered in the course of its application<\/em>\u201d. On the other hand, it is a mixed question of fact and law when a party alleges that \u201ca legal test, which was unaltered, should have, when applied, resulted in a different outcome<\/em>.\u201d<\/p>\n\n\n\n

Once again, relying on Teal Cedar<\/em>, Justice McDonald found that MDG\u2019s submission that despite the arbitrator making a correct statement regarding the law, he should have reached a different conclusion on the issues of negligent misrepresentation and breach, raised questions of fact or mixed fact and law. As a result, it did not meet the requisite threshold for leave to appeal, namely, an extricable question of law, for leave to appeal.<\/p>\n\n\n\n

Justice McDonald also rejected MDG\u2019s argument that the Arbitrator had failed to follow the rules of natural justice, having found that the award contained ample details regarding the arbitrator\u2019s findings, relevant authorities, and reasonings.<\/p>\n\n\n\n

It is often suggested that Canadians are too polite and overly apologetic. That might be the case in some circumstances, but not often when arbitration and arbitrators are challenged. Canadian statutes are, generally, supportive of domestic and international arbitration. So too are Canadian courts who continue to enforce arbitration agreements and the jurisdiction of arbitral tribunals.<\/p>\n\n\n\n

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ABOUT THE AUTHORS:<\/strong><\/p>\n\n\n\n

George Karayannides<\/strong> is an experienced advocate who represents clients in litigation and arbitration on a wide range of complex and high-stake business disputes, including class actions. Since his call to the bar in 1986, George has represented various businesses, leading multinational companies, individuals, and government bodies in the financial, energy, transportation, telecommunications, manufacturing, infrastructure, and construction sectors. Regularly working with foreign counsel on cross-border issues, he has significant experience in a broad range of disputes. George has appeared before Federal and Provincial Courts, as well as arbitral (international and domestic) and administrative tribunals.<\/p>\n\n\n\n

Yuki Qiu<\/strong> was called to the Ontario Bar in 2021 after completing her articles at Clyde & Co<\/a><\/strong>\u2019s Toronto office. Since joining Clyde & Co, Yuki is involved in a wide range of commercial and insurance litigation matters, including tort claims, negligence actions, contract disputes, insurance coverage, commercial liability, professional liability, and product liability. She also has a special interest in, and worked on, domestic and international commercial arbitrations.<\/p>\n\n\n\n

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Find more data-backed insights in our 2023 Mining Arbitration Report<\/p>\n\n\n\n

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Download the full Report<\/a><\/div>\n<\/div>\n<\/blockquote>\n","protected":false},"excerpt":{"rendered":"

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