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Changes Coming to Domestic Arbitrations in British Columbia

Changes Coming to Domestic Arbitrations in British Columbia
February 24, 2020

On February 19, 2020, the Government of British Columbia released Bill 7 – 2020: Arbitration Act (Bill), aimed at modernizing British Columbia’s arbitration regime and aligning it with the other arbitration-friendly jurisdictions.
 
Currently, British Columbia has two statutes relating to arbitral proceedings: the Arbitration Act, R.S.B.C. 1996, c. 55 (Current Domestic Act) and the International Commercial Arbitration Act, R.S.B.C. 1996, c. 233 (ICAA). The ICAA was amended on April 9, 2018, the intent of which was to make British Columbia a more desirable venue for international arbitrations. The Bill seeks to achieve a similar goal with respect to domestic arbitrations. For more information on the amendments to the ICAA, please see our April 2018 Blakes Bulletin: International Commercial Arbitration Act Amendments to Make B.C. Even More Arbitration-Friendly.
 
KEY CHANGES TO THE CURRENT DOMESTIC ACT
 
Appeal Rights
 
If the Bill comes into force, it will dramatically change the current appeal process by shifting the jurisdiction to grant leave to appeal an arbitral award from the British Columbia Supreme Court (Supreme Court) to the British Columbia Court of Appeal (Appeal Court). The Bill provides that the Supreme Court may only interfere with an arbitral award in very limited circumstances.
 
Under the Current Domestic Act, a party can appeal to the Supreme Court either by consent, or with leave of the Supreme Court. In the absence of consent, the applicant must apply for leave and satisfy the Supreme Court that there was an error of law, and that there is a level of importance to the appeal. If leave is granted, the Supreme Court may: (a) confirm, amend or set aside the award; or (b) remit the award back to the arbitrator.
 
In addition to appeal rights on questions of law, the Current Domestic Act allows an applicant to apply to the Supreme Court to have an award set aside or remitted back to an arbitrator on limited grounds. Only if the award was improperly procured or the arbitrator committed an arbitral error will such relief be granted. Even then, the Supreme Court could refuse to set aside the award if doing so would not constitute a substantial wrong or miscarriage of justice, or if the error was merely technical in nature.
 
In addition to removing the Supreme Court’s jurisdiction to grant leave to appeal, the Bill changes the procedure for setting aside an award. The Bill provides that an applicant may only apply to the Supreme Court to set aside based on certain enumerated grounds, primarily related to procedural unfairness.
 
If an applicant cannot establish the existence of an enumerated ground, their only recourse is to apply to the Appeal Court for leave on a question of law. The test for leave is substantially similar to the Current Domestic Act, and difficult to satisfy. It should also be noted that the Bill would also allow parties to opt out of their right to appeal if they do so expressly in their arbitration agreement.
 
Interim Measures and Preliminary Orders
 
Under the Current Domestic Act there is no clear process for obtaining interim relief. The Bill remedies this, and includes a detailed process for obtaining and enforcing both interim measures and preliminary orders. Unlike the Current Domestic Act, the Bill expressly provides for orders for security, disclosure and interim costs and damages. This will make the process of obtaining interim measures clearer and more predictable.
 
Disputes Surrounding the Appointment of Arbitrators
 
Under the Current Domestic Act, where parties do not agree on the appointment of an arbitrator, an application may be made to the Supreme Court for a court appointed arbitrator. Under the Bill, a party may now apply to the designating appointing authority (the British Columbia International Commercial Arbitration Center, soon to be renamed the Vancouver International Arbitration Center) to have an arbitrator appointed. This should be a more efficient process.
 
Confidentiality
 
Unlike the Current Domestic Act, which made no mention of the concept of confidentiality, the Bill expressly provides that unless otherwise agreed by the parties, arbitral proceedings will be held in private and remain confidential. The parties and the tribunal will not be allowed to disclose the nature of the proceedings, evidence, documents or arbitral award.
 
Arbitrator’s Fees
 
Under the Current Domestic Act, disputes regarding arbitrator’s fees are handled by application to the registrar or officer of the court for an appointment to review the account. The Bill proposes to change this process by allowing the parties, or an arbitrator, to apply to the designated appointing authority for a summary determination of fees and expenses payable.
 
CONCLUSION
 
If adopted, the Bill will streamline the domestic arbitral process and bring it in line with international best practices, making British Columbia a more arbitration-friendly jurisdiction. Given the magnitude of the changes, the Bill will impact the drafting and administration of all commercial agreements with arbitration provisions where British Columbia is designated as the “seat” of the arbitration. It is important to keep these potential changes in mind when drafting future commercial agreements and disputes.
 
For further information please contact:
 
Joe McArthur, FCIArb.            604-631-3383
Laura Cundari, FCIArb.          604-631-4177
Devon Luca                              604-631-3394
Andrew Kavanagh                  604-631-3388

or any other member of our Arbitration group.