Professor Joshua Karton and three senior Canadian arbitration practitioners have co-authored an award-winning paper on the proper scope of appeals from arbitration decisions. 

An increasing trend in the field of business law – and a problematic one – is the growing incidence of disputes about arbitrations that spill over into the courts. Canadian parties who freely agreed to arbitration seem to be increasingly launching challenges in the courts before, during, and after arbitral processes.

“There are at least a couple of key reasons for this,” says Professor Joshua Karton, a Vancouver native who in his 13 years at Queen’s Law has earned an international reputation as an authority on all things to do with arbitration.

Karton explains that the growth in the number of appeals to the courts is largely client-driven; parties who aren’t happy with the process or its outcomes try to get “another kick at the can” even though they’ve chosen to bind themselves to arbitration. In addition, commercial arbitration is a relatively new field of practice in Canada, and counsel and judges alike may lack specific expertise in arbitration law. Unfortunately, the courts have not always provided the necessary guidance. 

In its 2014 ruling in Sattva Capital v. Creston Moly, the Supreme Court of Canada (SCC) emphasized that courts should only hear appeals from commercial arbitration awards in narrow circumstances, such as when an arbitrator makes an “extricable error of law” in the process of interpreting a contract. 

In the nine years since, confusion about the scope of “extricable error of law” has only grown. Conflicting appellate rulings in two recently decided cases, one in Ontario and one in B.C., made that much glaringly apparent. In the former case, the Court of Appeal for Ontario ruled that “extricable error of law” should be narrowly defined, while in the latter, the B.C. Court of Appeal came down in favour of a more expansive interpretation, holding that a serious misapprehension of the facts by an arbitrator can constitute an extricable error of law.  

This split between provincial courts of appeal creates uncertainty for parties, arbitrators, and judges about proper scope of appeals. That prompted Karton and three colleagues – the Hon. Barry Leon, Joel Richler, and Lisa Munro – all of whom are senior Canadian arbitration practitioners – to write an article on the topic. “Arbitration Appeals on Questions of Law in Canada: Stop Extricating the Inextricable!”, was published in the March 2023 issue of the Queen’s-Law-based Canadian Journal of Commercial Arbitration (CJCA). 

In their study, the authors make a strong case for the need to have the SCC clarify the definition of an “extricable error of law,” and come out in support of the restrictive approach taken by the Ontario courts. They have three reasons for doing so: “first, the narrow approach is more consistent with SCC jurisprudence; second, it is truer to the spirit of arbitration . . . and third, it provides greater certainly and predictability to parties that have contracted for arbitration to provide a final resolution to their disputes.”  

Other arbitration luminaries evidently agree with that line of reasoning. At the 2023 Canada Arbitration Week, held in Toronto in October, the article was presented with the Vancouver International Arbitration Centre prize for “best arbitration article or book of the year.”

Of course, Karton and his co-authors were delighted to receive that accolade. However, they remain disappointed that the SCC has not given leave for appeal on either the Ontario and B.C. cases discussed in the CJCA article. 

Says Karton, “Our biggest goal was to prod the SCC into taking on one of those cases. Unfortunately, for now the justices aren’t going to provide the necessary clarity we were calling for. But while we failed to convince them this time around, another case worth considering will inevitably come along. When it does, hopefully the SCC will grant leave to appeal.”  

Students gain experience in arbitration law and scholarship

The CJCA is run by a JD student Editorial Board and depends on the contributions of student editors and volunteers. Queen’s Law professor Joshua Karton co-founded the biannual publication in 2020 and continues to serve as its managing editor. Karton recruited the first group of student volunteers in 2019, but he no longer has to go looking for them. “Word got around about the excellent opportunities the journal provides to those students who want to learn how to put together and edit a law journal, to interact with authors, to write for the journal’s blog, and to organize webinars and other events,” he says. “Upper-year students act as editors, while first-year student volunteers help out and learn the basics.” 

For more information on student volunteer positions with the Canadian Journal of Commercial Arbitration in the 2023-24 academic year, please email Co-Editors-in-Chief Lexi Lewis (16ajgl@queensu.ca) and Joshua Cabral Cardoso (joshua.cabralcardoso@queensu.ca). 

By Ken Cuthbertson, Law’83