Right of appeal under Alberta’s Arbitration Act

Introduction and overview

Agrium v Orbis Engineering Field Services, 2022 ABCA 266 (Agrium v Orbis), is a case involving statutory interpretation of section 7(6) of Alberta’s Arbitration Act, RSA 2000, c A-43 (the “Act”). Section 7 of the Act allows a court to stay court proceedings in light of an arbitration agreement.  Section 7(6) specifically states: “There is no appeal from the court’s decision under this section.” Agrium v Orbis considers whether or not the court can hear appeals of an application to stay proceedings in favour of arbitration.

By reasons filed on August 8, 2022, the majority of the three member panel of the Court of Appeal (Crighton, Ho, JJA) held that a party may appeal from a master (now applications judge, but referred to in this article as a master for consistency with the reasons for decisions) to a Court of King’s Bench justice under section 7 of the Act. The dissenting member of the panel of the court (Wakeling JJA) held that there is no right to appeal from a master’s decision under section 7(6) of the Act.

Background facts

In 2013, the Appellant Agrium Inc. (“Agrium”) separately engaged Respondent Orbis Engineering Field Services Ltd. (“Orbis”) and Respondents Elliott Turbomachinery Canada Inc. and Elliott Company (collectively, “Elliott”) to provide work and services relating to the upgrade of one of its production facilities. Agrium drafted the purchase orders that governed the work (the “Agrium Contract”), which contained the following mandatory arbitration provision relating to the resolution of disputes (emphasis added):

1. 28. Proper Law and Dispute resolution:

… Any dispute relating to [the Agrium Contract] shall be resolved by arbitration in Calgary, Alberta, Canada, pursuant to the UNCITRAL Model Law and Rules. The courts having exclusive supervisory jurisdiction with respect to the matters relating to [the Agrium Contract] shall be the courts of the Province of Alberta.

A failure occurred at the production facility on March 22, 2014. Nearly two years later and on the eve of the limitation period, Agrium filed a statement of claim suing Elliott and Orbis and seven other defendants for its loss. None of the agreements with the seven other defendants contained a mandatory arbitration provision.

By the time Agrium served its claim on Orbis and Elliott, the parties agreed that the time limit for commencing an arbitration proceeding had long expired. Orbis and Elliott defended the claim on the basis of non-compliance with the dispute resolution provision.  In March 2019 and January 2020, Orbis and Elliott respectively took steps to stay or strike the action pursuant to section 7(1) of the Act.

Master (now Applications Judge’s) decision: Agrium, Inc v Colt Engineering Corporation, 2020 ABQB 53

By reasons reported at Agrium, Inc v Colt Engineering Corporation, 2020 ABQB 53, the master dismissed Orbis and Elliott’s application to strike the action, concluding that it had discretion to determine if Orbis and Elliott had waived reliance on the mandatory arbitration provision and attorned to the jurisdiction of the court. The master noted that although Orbis and Elliott took two years, and two years and three months, respectively, to move to strike, the extent of delay is simply a factor to be considered.[1]

Court of Queen’s Bench decision: Agrium Inc v Colt Engineering Corporation, 2020 ABQB 807

Orbis and Elliott appealed the decision to a justice of the Court of Queen’s Bench (now Court of King’s Bench, but referred to in this article as Queen’s Bench for consistency with the reasons for decisions) and Agrium applied to strike both appeals on the grounds that section 7(6) of the Act barred appeals from the master’s decision. In Agrium Inc v Colt Engineering Corporation, 2020 ABQB 807, the court held that, first, section 7(6) did not bar an appeal from a master’s decision. Second, that Elliott and Orbis did not waive reliance on the mandatory arbitration provision in the Agrium Contract. The chambers justice allowed Orbis and Elliott’s appeal from the master, struck the claim, and dismissed Agrium’s application to strike the appeals.

The analysis by the Court of Appeal

Agrium appealed the court’s decision. Among other issues, Agrium argued that the chambers justice did not have jurisdiction to hear the appeal of Orbis and Elliott from the decision of the master. The Court of Appeal therefore addressed whether s 7(6) of the Act bars an appeal from a master in chambers to a justice of the Court of Queen’s Bench.

The parties did not dispute or disagree on the following points:

1. the applicability of mandatory arbitration provision in the Agrium Contract;
2. that the time for commencing arbitration proceedings had expired;
3. the chambers justice’s finding on the merits of the appeal;
4. the standard of review, being a question of law that engages principles of statutory interpretation.

The Court of Appeal reviewed the Act, the Court of Queen’s Bench Act, RSA 2000, c C-31, the Interpretation Act, RSA 2000, c I-8, and the Alberta Rules of Court, Alta Reg 124/2010.

The court set out the following relevant statutory provisions:[2]

1. Section 7 of the Act states:

(1) If a party to an arbitration agreement commences a proceeding in a court in respect of a matter in dispute to be submitted to arbitration under the agreement, the court shall, on the application of another party to the arbitration agreement, stay the proceeding.

(2) The court may refuse to stay the proceeding in only the following cases:

(a) a party entered into the arbitration agreement while under a legal incapacity;

(b) the arbitration agreement is invalid;

(c) the subject‑matter of the dispute is not capable of being the subject of arbitration under Alberta law;

(d) the application to stay the proceeding was brought with undue delay;

(e) the matter in dispute is a proper one for default or summary judgment.

(3) An arbitration of the matter in dispute may be commenced or continued while the application is before the court.

(4) If the court refuses to stay the proceeding,

(a) no arbitration of the matter in dispute shall be commenced, and

(b) an arbitration that has been commenced shall not be continued, and anything done in connection with the arbitration before the court’s refusal is without effect.

(5) The court may stay the proceeding with respect to the matters in dispute dealt with in the arbitration agreement and allow the proceeding to continue with respect to other matters if it finds that

(a) the agreement deals with only some of the matters in dispute in respect of which the proceeding was commenced, and

(b) it is reasonable to separate the matters in dispute dealt with in the agreement from the other matters.

(6) There is no appeal from the court’s decision under this section.

2. Section 1(1)(c) of the Act defines “court” as: “… in sections 6 and 7, the Court of Queen’s Bench and the Provincial Court, and in all other sections, the Court of Queen’s Bench.”
3. Section 28(1)(k) of the Interpretation Act defines the “Court of Queen’s Bench” as the Court of Queen’s Bench of Alberta. Section 2 of the Interpretation Act states that the Interpretation Act applies “to every enactment whether enacted before or after the commencement of this Act.”
4. Section 12 of the Court of Queen’s Bench Act states that “[a]n appeal lies to a judge in chambers from a decision of a master in chambers.”
5. Rule 6.14 of the Rules of Court states the following: “Appeal from master’s judgment or order: (1) If a master makes a judgment or order, the applicant or respondent to the application may appeal the judgment or order to a judge.”

The court cited several principles of statutory interpretation. As the appeal involved several pieces of legislation, the court cited the presumptions of consistency and coherence. The court noted that: “In the context of statutory interpretation, conflict is a narrow concept meaning the two acts under review cannot stand together and cannot both operate without interfering with the other.”[3]

Moreover, legislation is presumed to be enacted in compliance with the constitution.[4] The court noted that decisions of a master in Alberta have always been subject to review by a section 96 judge (i.e. a superior court justice), who hear appeals on a de novo basis.[5] The constitutional jurisdiction of a master and a justice could not be changed by an “implied amendment to a provincial statute.”[6]

Further, even if section 12 of the Court of Queen’s Bench Act, which confers a right of appeal from a master to a justice of the same court, conflicts with the statutory prohibition in section 7(6) of the Act, the court did not agree with Agrium that the Act is the more specific provision that would override the right of appeal in the Court of Queen’s Bench Act.  Rather, the provision that specifically addresses the right of appeal is that in the Court of Queen’s Bench Act.[7]

The court noted that an appeal is not available pursuant to section 7(6) of the Act where the decision of a master was not appealed, the time for doing so has expired, or a justice of the Court of Queen’s Bench decided the issue.[8] The majority held that this interpretation of section 7 of the Act respects the constitutional limitations on the master’s decision, the statutory right of appeal in the Court of Queen’s Bench Act, and the legislative intention that arbitration matters not be subject to multiple levels of appeal.[9]

Wakeling J.A. in dissent would have allowed the appeal, noting that a master’s decision is a decision of the Court of Queen’s Bench of Alberta and it is “crystal clear” that “no appeal” means “no appeal”.[10] He further noted that section 7(6) of the Act deprives a party a further right to appeal, but would not preclude applying for permission to appeal to the Supreme Court of Canada or applying to a justice of Court of Queen’s Bench for judicial review.[11]

Takeaways

Section 7 of the Act allows the court to stay a proceeding where a party has commenced a court action in the face of a mandatory arbitration agreement. This issue often arises when a party has not followed the contractual dispute resolution process and has proceeded to file an action in court in ignorance or in an attempt to, perhaps, meet or preserve its limitation date. When that happens, the opposing party to the arbitration agreement can bring an application under section 7 of the Act to stay the proceedings. Section 7(6) of the Act states that, “there is no appeal from the court’s decision under this section.” Even so, the law in Alberta is that appeals from applications judge’s decisions under this section are permitted.

It is interesting to briefly place this case within the broader context of commercial arbitration and what the Supreme Court of Canada has emphasized is the central aim of commercial arbitration – “efficiency and finality.”[12] To the extent that Agrium v Orbis permits a further appeal from an applications judge, it arguably challenges those twin aims set out by the Supreme Court.

Despite that, practically, parties and their counsel should engage in a detailed review of the governing contractual provisions in the initial stages of a dispute to ensure that they are not bringing a court action in the face of a mandatory arbitration agreement or provision. Doing so carries risk that a court may dismiss the court action. This may then mean that the plaintiff is without legal recourse because they may similarly be unable to commence arbitration proceedings after the passage of some time.

For further questions about this area of law, the applicability of the Agrium v Orbis decision, or the pursuit or defence of legal action when a mandatory arbitration provision is present, please contact Miller Thomson’s Commercial Litigation Group.

[1] Agrium, Inc v Colt Engineering Corporation, 2020 ABQB 53, para 38

[2] Agrium v Orbis Engineering Field Services, 2022 ABCA 266 at paras 17-22.

[3] Agrium v Orbis at para 29.

[4] Agrium v Orbis at para 30.

[5] Agrium v Orbis at para 30.

[6] Agrium v Orbis at para 30.

[7] Agrium v Orbis at para 32.

[8] Agrium v Orbis at para 33.

[9] Agrium v Orbis at para 33.

[10] Agrium v Orbis at para 53.

[11] Agrium v Orbis at paras 50-59.

[12] Teal Cedar Products Ltd v British Columbia, 2017 SCC 32 at paras 1, 74, 83.