In Baffinland Iron Mines LP v. Tower-EBC G.P./S.E.N.C., 2023 ONCA 245, released on April 13, Justice Benjamin Zarnett concluded that the application judge had correctly interpreted that the arbitration agreement between the parties dealt with appeals on questions of law by precluding them.
The appellant, Baffinland Iron Mines LP (BIM) contracted the respondent Tower-EBC G.P./S.E.N.C. (TEBC) to perform earthworks for BIM’s construction of a railway to transport ore from its mine on Baffin Island, Nunavut, to a nearby port. BIM terminated the contracts in 2018 due to delays, and TEBC commenced arbitration in 2018 and filed a statement of claim in 2019 challenging BIM’s right to terminate the contracts and claiming damages arising from the termination.
The arbitration concluded with a majority order providing an award exceeding $100 million against the appellant, with a dissenting member of the tribunal recommending that $54 million be deducted from the award as a result of disagreements with the majority “about the law of Ontario which governs the contractual relations between TEBC and BIM.”
BIM sought leave to appeal the award to the Ontario Superior Court on legal questions including those it contends drove the divergent results reached by the majority and the dissent.
The application judge, however, declined to consider whether grounds for appeal raised by BIM were deserving of leave, holding that the arbitration agreement precluded appeals by saying that disputes would be “finally settled” by arbitration.
Under the arbitration agreement either party was entitled to refer a dispute to a Dispute Adjudication Board (DAB), which the contracts deemed not to be an arbitration.
Section 20.6 of the contracts provided that “any dispute in respect of which the DAB’s decision (if any) has not become final and binding shall be finally settled by international arbitration.”
The appellant, BIM, argued that the application judge failed to properly apply the contractual principle known as the presumption of consistent expression. The principle assumes that language in a contract is consistent, with identical terms having the same meaning, and the use of different words indicating an intention to refer to different things.
The appellant contended that the use of the phrase “final and binding” in relation to some decisions of the DAB and the use of “finally settled” with respect to arbitration decisions required giving the latter phrase a different meaning by applying the presumption.
Justice Zarnett rejected this argument, noting that the presumption of consistent expression should not be seen to bar the use of differently worded but mutually reinforcing phrases which can only be understood to have the same meaning.
The judge cited Interactive E-Solutions JLT and another v O3B Africa Ltd [2018] EWCA Civ 62, in which the English Court of Appeal had held that a contract draftsperson may “try to obliterate the conceptual target by using a number of phrases expressing more or less the same idea.”
He further noted that where the ordinary meaning of different words or phrases is clearly the same, the presumption cannot be applied to force a different meaning on one set of words or phrases.
BIM had also argued that the application judge had erred by not reconciling apparently inconsistent terms in the contract by giving priority to the general conditions of the contract, including s. 20.6, over other documents such as the Rules of Arbitration of the International Chamber of Commerce (ICC Rules) which were also part of the contract.
Justice Zarnett noted that the appellant’s argument presupposed that s. 20.6 was inconsistent with ICC Rules.
“The application judge, however, held the terms were not inconsistent, and there was no error in that finding,” wrote the judge, adding that both provisions precluded appeals of an arbitral award.
ICC rule 35(6) provides that every award would be binding on the parties and that they are by submitting to arbitration deemed to have “waived their right to any form of recourse insofar as such waiver can validly be made.”
In dismissing the appeal, Justice Zarnett found that the application judge made no reversible error and had reached the correct interpretation: that the arbitration agreement contained in the contracts dealt with appeals on questions of law by precluding them.
Justices Julie Thorburn and Jill M. Copeland concurred in the decision.
Counsel for the parties were not immediately available for comment.
Counsel for the appellants were Kent Thomson, Maureen Littlejohn, Anthony Alexander and Trevor May of Davies Ward Phillips & Vineberg LLP, and Sean Campbell and Anisah Hassan of Tyr LLP.
Counsel for the respondents were Ira Nishisato, Hugh A. Meighen, Erin Peters and Stéphanie Gagné of Borden Ladner Gervais LLP.
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