Yves Faguy

The last word: What the Sattva ruling means for commercial lawyers

août 20 2014 20 août 2014

This month’s Supreme Court ruling in Sattva Capital Corp v Creston Moly Corp, in which it considers appellate review of commercial arbitration awards, has caused ripples among commercial lawyers. The top court rarely revisits questions of contractual interpretation, which is why

Geoff Hall calls it significant:

Sattva does three significant things. First, it determines that contractual interpretation generally involves a mixed question of fact and law, not a question of law alone. That holding has major implications for appellate review of decisions involving issues of contractual interpretation, and represents the resolution of an issue that had previously divided provincial appellate courts. Second, Sattva emphasizes the importance to contractual interpretation of evidence of the surrounding circumstances or the factual matrix in which a contract is formed. In doing so, Sattva implicitly overrules a 1998 Supreme Court of Canada precedent to the extent that it had downplayed the importance of the factual matrix. Third, Sattva reaffirms a number of principles of contractual interpretation which are well established in Canadian jurisprudence.

Craig Ferris explains the new parameters of appellate review:

The Court further found that permission to appeal an arbitrator’s decision should only be granted under the Arbitration Act where the issue is material (in the sense that a different decision would have affected the outcome) and where the appeal has some possibility of succeeding (a type of preliminary merits test). Courts retain a residual discretion to deny leave even if all the statutory prerequisites are met.  If leave is ultimately granted, the appellate court should almost invariably defer to the arbitrator and only review the decision to determine if it is “reasonable” as opposed to reviewing it to determine if it is “correct.”

Here’s Margaret Waddell on why the decision is a seminal one:

In Sattva, the Supreme Court sends a strong message that appellate courts should be engaged in resolving matters of general importance, and there should be limited intervention in cases where the results of the appeal will have little or no impact beyond the immediate parties to the dispute.

Mary Paterson, Lindsay Rauccio, Catherine Gleason-Mercier consider how parties to commercial agreements might adapt:

Given the Supreme Court’s reasons, where leave to appeal is required, parties may face an uphill battle in obtaining leave to appeal from arbitral decisions concerning the proper interpretation of a commercial agreement. If parties want an appeal right, parties should carefully consider their arbitral agreements, and should include express language providing for a right of appeal on questions of fact, mixed fact and law or law, depending on the Arbitration Act governing their agreement.

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