Arbitral award errors need not be on its face: BC Court of Appeal

The British Columbia Court of Appeal upheld that the misapprehension of an important aspect of the evidence in an arbitral award need not be apparent on the face of the award to be subject to appeal.

In Escape 101 Ventures Inc. v. March of Dimes Canada, 2022 BCCA 294, Escape 101 Ventures Inc. (Escape) and March of Dimes Canada (March) entered into an asset purchase agreement, where March purchased substantially all of the assets used by Escape. While the agreement provided a formula for how March would pay Escape, Escape questioned the amount.

Since the dispute went unsolved, Escape commenced arbitration in 2020. In 2021, the arbitrator ruled in favour of March and dismissed Escape’s claim. However, the arbitrator misapprehended an important aspect of evidence.

Escape appealed on three grounds, whether there was a material misapprehension of evidence, whether the misapprehension had to be apparent on the fact of the award, and whether the award was reasonable. March argued that under the Arbitration Act, SBC 2020, c 2, the appellate court lacked the jurisdiction to set aside the award since the misapprehension of evidence was not an error of law, and the arbitrator’s misapprehension did not arise out of the award.

The appellate court disagreed with March.

Contrary to March’s argument, the right to appeal an arbitral award has not changed by the passing of a new law, said the court. Neither do the previous decisions suggest that misapprehension of evidence cannot be raised in an arbitral award appeal, said the court.

The appellate court ruled that while an arbitrator is uniquely positioned to make credibility assessments if those assessments are based on a misapprehension of evidence and played a critical role in decision-making, the award can be appealed.

Further, the Law Reform Commission and jurisprudence found that whether the error appears on the face of the award was irrelevant, said the court.

However, the appellate court declined Escape’s request to decide on the case considering there was a lack of the necessary evidentiary foundation.