On August 1, 2014, the Supreme Court of Canada released its decision in Sattva Capital Corp. v. Creston Moly Corp., a case involving an arbitral award under the British Columbia Arbitration Act. In that case, the Court departed from the historical approach that treated questions of contractual interpretation as questions of law. The Court held that “[c]ontractual interpretation involves issues of mixed fact and law as it is an exercise in which the principles of contractual interpretation are applied to the words of the written contract, considered in light of the factual matrix” (para. 50).

The Court also addressed two issues of appellate practice: (1) the standard of review on appeal of a commercial arbitral award; and (2) the impact of the findings made by the court that decided the leave application on the court hearing the merits of an appeal.

On the first issue of the standard of review, the Court observed that “[a]ppellate review of commercial arbitration awards takes place under a tightly defined regime specifically tailored to the objectives of commercial arbitrations and is different from judicial review of a decision of a statutory tribunal” (para. 104). However, the Court noted that judicial review of administrative tribunal decisions and appeals of arbitration awards are analogous in some respects:

Both involve a court reviewing the decision of a non-judicial decision-maker. Additionally, as expertise is a factor in judicial review, it is a factor in commercial arbitrations: where parties choose their own decision-maker, it may be presumed that such decision-makers are chosen either based on their expertise in the area which is the subject of dispute or are otherwise qualified in a manner that is acceptable to the parties. For these reasons, aspects of the Dunsmuir framework are helpful in determining the appropriate standard of review to apply in the case of commercial arbitration awards. (para. 105)

The Court held that in the context of commercial arbitration, where appeals are restricted to questions of law (as is the case under the B.C. Arbitration Act), the “the standard of review will be reasonableness unless the question is one that would attract the correctness standard, such as constitutional questions or questions of law of central importance to the legal system as a whole and outside the adjudicator’s expertise” (para. 106).

On the second issue of whether the court hearing the leave application can bind the court hearing the merits of an appeal, the Supreme Court was unequivocal that any findings made on the leave application cannot be binding on the determination of the merits:

A leave court decides only whether the matter warrants granting leave, not whether the appeal will be successful (Pacifica Mortgage Investment Corp. v. Laus Holdings Ltd., 2013 BCCA 95, 333 B.C.A.C. 310, at para. 27, leave to appeal refused, [2013] 3 S.C.R. viii). This is true even where the determination of whether to grant leave involves, as in this case, a preliminary consideration of the question of law at issue. A grant of leave cannot bind or limit the powers of the court hearing the actual appeal (Tamil Co-operative Homes Inc. v. Arulappah, (2000), 49 O.R. (3d) 566 (C.A.), at para. 32). (para. 122)