Electricity – Appeal
Appeal
ENMAX Energy Corporation (“ENMAX”) and the Balancing Pool (together, the “Appellants”), appealed an arbitration award finding that Keephills Generating Unit #1 was offline for 216 days as result of force majeure. The Appellants claimed that, in the course of commercial arbitration, they were treated “manifestly unfairly and unequally” by the arbitration panel and not given the opportunity to present their case.
Decision
The appeal was dismissed.
Applicable Legislation
Arbitration Act, RSA 2000, c A-43.
Electric Utilities Act, SA 2003, c E-5.1.
International Commercial Arbitration Act, RSA 2000, c I-5.
Power Purchase Arrangements Determination Regulation, Alta Reg 175/2000.
Pertinent Issues
Permission to appeal was granted on one issue: whether the chambers judge erred in concluding the Appellants were not treated manifestly unfairly and unequally or prevented from presenting their case or responding to TransAlta Generation Partnership (“TransAlta”)’s case.
The Alberta Court of Appeal (“ABCA”) found that the appeal from the chambers judge’s decision to the ABCA is subject to the usual appellate standards of review. The ABCA found that the interpretation of s. 45(1)(f) of the Arbitration Act (the “Act”), which incorporates elements of natural justice and procedural fairness, is a question of law reviewable for correctness. The ABCA however also found that if there is a flaw in the arbitral process sufficient to contravene s. 45(1) of the Act, the decision of whether to set the arbitration award aside engages the chambers judge’s discretion and is entitled to deference on appeal.
The ABCA found that determining what constitutes manifest unfairness and unequal treatment or lack of opportunity to present a case under s. 45(1)(f) of the Act is a matter of statutory interpretation. It requires reading the section in its entire context and in its grammatical and ordinary sense, harmoniously with the statutory scheme, the object of the statute, and the legislature’s intention.
Regarding the specific phrase “treated manifestly unfairly and unequally” in s. 45(1)(f) of the Act, the ABCA agreed with the chambers judge that “manifestly” speaks to how apparent the unfairness is and whether it is obvious or clear.
On a review of s. 45(1)(f) as a whole, in the context of the entire Act and the purposes of the legislation, the ABCA made several observations: The Act imposes an obligation on arbitral panels to accord parties natural justice. While it is accepted as a foundational principle that the arbitration panel will treat parties fairly and give them an opportunity to present their case.
The ABCA reiterated that not every procedural breach during an arbitration will result in judicial intervention. Courts should intervene “only in cases of the most egregious procedural breaches”.
A party may be unable to present its case when: (a) the award is based on a theory of liability that either or both of the parties were not given an opportunity to address, or based on a theory of the case not argued for by either of the parties; (b) a party was not given an opportunity to respond to arguments made by an opposing party; or (c) the tribunal ignored or failed to take the evidence or submissions of the parties into account.
The ABCA reviewed the relevant jurisprudence and extracted the following principles: first, parties to an arbitration are entitled to a fair hearing, not a perfect hearing; second, the overall fairness of the proceedings must be considered, not individual rulings; third, parties must take advantage of and exercise diligence in pursuing issues and cannot later complain of some perceived unfairness resulting from their failure to do so; fourth, not every refusal to admit relevant evidence is a breach of natural justice; and, fifth, the threshold for setting aside an arbitration award on the grounds of unfairness has been described in various ways, but the cases make it clear that something of a significant nature is required, or that the excluded evidence was crucial to the case being presented.
The ABCA found that the chambers judge did not commit a palpable and overriding error in concluding that the failure to order production of the requested records earlier in the process did not render the entire arbitral process manifestly unfair or deprive the Appellants of the opportunity to present their case or respond to that of TransAlta.
