The British Columbia Court of Appeal recently released a decision that considers the meaning of an "award" for the purposes of a domestic Canadian arbitration, and specifically whether a finding of res judicata constitutes an award.
In Bollhorn v. Lakehouse Custom Homes Ltd.1, Mr. Bollhorn entered into an agreement with a construction company for work on a residential property. The contract contained an arbitration clause providing that disputes regarding deficiencies would be settled through arbitration.2
Mr. Bollhorn commenced an action in the British Columbia Supreme Court seeking specific performance of the construction contract following disputes over change directives, contract specifications, and payment. The Court allowed the claim and ordered specific performance.3
During a walk-through inspection of the property, Mr. Bollhorn identified deficiencies that had been the subject of the action for specific performance.4 The contractor refused to rectify the deficiencies. Mr. Bollhorn then brought an arbitration before the Vancouver International Arbitration Centre (the "Centre").5
The arbitrator released a decision, styled as an "award". The arbitrator dismissed the proceedings because the issues were res judicata, having been decided by the Court.6
In a unanimous decision written by Newbury J.A., the B.C. Court of Appeal refused Mr. Bollhorn's application for leave to appeal.7
A Decision finding Res Judicata Can be an Award
Section 59(3) of the domestic arbitration legislation in B.C. states that leave to appeal is required from an "award".8 Mr. Bollhorn argued that the arbitrator's decision was not an "award" because it failed to address the substantive question presented, which concerned deficiencies.9 He contended that a finding of res judicata was a significant departure from the arbitrator's assigned task and was not closely connected to the dispute. The Court of Appeal disagreed.
Section 59 of the domestic arbitration legislation in B.C. says that there is generally no appeal from an arbitral "award", except with consent from all parties or with leave. Leave may be granted, unless the arbitration agreement expressly prohibits it, based on factors like the significance of the arbitration's result or the importance of the legal issue to a group or the public. Notably however, neither s. 59 nor the Centre's rules define an "award".
The Court of Appeal analyzed English case law, which set out several features of an arbitral award, including:
- Prioritizing substance over form,
- The finality of the decision rendering the tribunal functus officio,
- The nature of the issues addressed,
- The explicit labeling of the decision as an "award," and
- Whether a reasonable recipient would perceive it as such.10
Applying these criteria, the Court of Appeal held that the arbitrator's determination that the matters in the arbitration were res judicata constituted an "award".11 The arbitrator's decision was substantive and effectively terminated the entire arbitral process, save for costs. The decision was styled as an "award" and was received and regarded as an award by all parties. The decision was also accompanied by thorough and reasoned justifications.
The Award was Shielded from Appeal
Section 59(4) of the domestic arbitration legislation in B.C. states that leave may be granted if the determination of the question:
- May prevent a miscarriage of justice,
- Is of importance to the class of person in which the applicant is a member of, or
- Of general public importance.
The Court of Appeal concluded that Mr. Bollhorn had raised a legal issue of significant importance warranting an appeal to the court. Newbury J.A. went so far as to express that had a court ruled similarly to the Arbitrator, she would have granted leave to appeal.12
However, the Centre's Domestic Arbitration Rules provide that for arbitrations in which the expedited procedures apply, an award is shielded from appeal on matters of law unless the parties consent to the appeal. Mr. Bollhorn's claim was below the $250,000 threshold and therefore the expedited procedures applied. For this reason, his application for leave to appeal was dismissed.
Key Takeaways
- Bollhorn provides helpful guidance on when an arbitral decision will constitute an "award", which can have important implications for subsequent appeal routes and timelines.
- An arbitrator's decision that the issues raised in the arbitration are res judicata may constitute an "award".
- Careful consideration should be given to appeal rights before signing commercial agreements containing arbitration clauses. Parties should consider whether they wish to modify the default rules set out in provincial arbitration statutes (which differ by province) or whether to adopt or modify arbitration centre rules.
Footnotes
1. 2024 BCCA 192 [Bollhorn].
2. Ibid at para 6.
3. Ibid at para 4.
4. Ibid at para 7.
5. Ibid at para 12.
6. Ibid at para 15.
7. Ibid at para 63.
8. Arbitration Act, 1991, SO 1991, c 17, s 45; Arbitration Act, RSA 2000, c A-43.
9. Bollhorn, supra note 1 at para 30.
10. Ibid, citing ZCCM Investment Holdings plc v. Kansanshi Holdings plc [2019] E.W.H.C. 1285 (Comm.), at para 27.
11. Ibid at para 33.
12. Ibid at para 46.
To view the original article click here
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.