Case information

Arbitration — Commercial arbitration — Administrative law — Whether Canada (Minister of Citizenship and Immigration) v. Vavilov, 2019 SCC 65, determines the standard of review for appeals of commercial arbitration awards — Whether a reviewing court may examine the evidentiary record underlying an arbitral award when identifying an error of law

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The applicant, March of Dimes Canada, purchased the respondent, Escape 101 Ventures Inc.’s, business. Part of the purchase price included a share of the business’ quarterly revenues for five years after the closing date. A dispute arose between the parties about whether revenue from a new contract generated after the closing date should be included. In accordance with the purchase agreement for the business, the parties referred this dispute to an arbitrator.

The arbitrator concluded that the respondent was not entitled to a share of revenues arising from the new contract because it originated outside of the geographic area where the respondent originally operated. Central to the arbitrator’s ruling was a factual finding that the respondent was aware that the applicant had generated the new contract several quarters earlier, but failed to object to the applicant’s revenue calculation in a timely fashion.

At the Court of Appeal, the parties agreed that the arbitrator’s finding that the respondent failed to object to the exclusion of revenue from the new contract was a misapprehension of evidence. The new contract did not generate revenue until the quarter when the dispute arose. Because this misapprehension was central to the arbitrator’s interpretation of a key provision of the parties’ contract, it was an error of law and could not survive appellate review on any standard. The Court of Appeal set aside the award and remitted the matter for reconsideration.