Cross-posted to CanLII.

A panoptic legal system, one dominated by the rule of law, is fallible in the measure that its adherents believe that law can be pervasive. Any rule of law is self-fulfilling: ‘the rule of law requires the creation and maintenance of an actual order of positive laws which preserves and embodies the more general principle of normative order’ (Re Manitoba Language Rights, [1985] 1 SCR 721, para. 60). A tension exists between the governed’s activities and governors’ attempts to impose order, and that tendency toward disorder–what Mikhail Bakhtin described in another context as centrifugal and centripetal forces.

The Northwest Territory Court of Appeal recently contributed to this linguistic push-and-pull in Northland Utilities (NWT) Limited v Hay River (Town of) (2021 NWTCA 1). The case has been ably summarized; it speaks to a centralizing desire that, left unchecked, undermines private arbitration and effaces the division between government power and private agreements.

This note criticizes the court’s application of Vavilov tout court. Vavilov lays down a useful statement about appellate courts’ jurisdictions when they are granted a statutory appeal. That case does not pretend to make private-law rules, and courts must be wary of mistaking application for analogy.

The case applies the rule of law

The Supreme Court and the Court of Appeal in Northland had to determine the standard of review for arbitral decisions which came before it as statutory appeals. These appeals are legitimized under the various Canadian Arbitration Acts; they must be authorized by the parties to arbitration. The question in Northland related principally to interpreting the words ‘an appeal lies to a judge’ (RSNWT 1988, c A-5, s. 27). The requirement that the parties authorize the appeal in their submission to arbitration changes the judicial inquiry. The right to appeal is authorized by contract and vests by operation of statute. Would an administrative, or public, law standard of review apply to these words? Or would the parties’ choice to create an appeal grant the courts appellate jurisdiction?

The case arose out of a dispute between the utility hired to create and sustain an electrical grid for the municipality. The municipality had the option to purchase the system. The arbitrator was appointed after the parties failed to agree to a price. He decided the issue after reviewing the parties’ positions: he created a ‘fair and just remedy’. Northland took exception to this exercise of discretion: it appealed to the Supreme Court of the Northwest Territories pursuant to the Arbitration Act. Its counsel pled Vavilov to disturb the arbitrator’s decision, for it contended that the arbitrator was held to a standard of correctness.

The threshold issue—and that with which we are presently concerned—was whether the public law rules in Vavilov applied to private arbitrators enabled by the Arbitration Act. The Court of Appeal found that Vavilov did apply, for the legislature’s decision to provide a statutory right to appeal administrative decisions was equivalent to an appeal from an arbitrator’s decision:

We therefore conclude that the revised standard of review framework described in Vavilov applies to commercial arbitration decisions reviewed as a result of a right of appeal given by statute. As noted, this does not mean that all issues under appeal pursuant to the Arbitration Act are to be automatically reviewed on a standard of correctness. As this legislation does not limit the right of appeal to questions of law, an appellate standard of review is to be applied to all issues raised, including not only questions of law reviewed for correctness, but questions of fact or of mixed fact and law which will continue to be reviewed on a standard of palpable and overriding error.

Para. 44, emphasis original.

This reasoning arrives at a proper result: finality in commercial arbitration is essential to its practise (viz. para. 43); the court gives too much weight to the analogy between public and private situations. Government decisions are centrifugal. They impose an outcome based on Royal or legislative norms. Arbitration instead springs from the parties’ desire for finality, which benefits the parties and, perhaps, a community. The Northland court instead viewed arbitration as yet another branch of the law because it is enabled by a law:

It is difficult to follow the argument that the reliability of Canada as a forum for resolution of local and global business disputes, would be rendered less grounded in the rule of law in a rules-based system of law by employing an appellate review standard. The Dunsmuir standard requiring deference to arbitrator’s decisions, no matter the basis upon which they were determined, resulted in greater uncertainty than an appellate standard of review. In other words, commercial attractiveness may be enhanced, rather than reduced, by allowing appeals based on an arbitrator’s errors on questions of law.

Para. 42, emphasis original.
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Where a statutory appeal exists from an arbitrator’s decision, the court viewed that appellate mechanism as a controlling legal force–and indeed it is, for the legislator contemplated the appellate standard of review when granting a right of appeal (para. 39). The court’s imposition of the rule of law apparently accords with the appellate standard. It in fact undermines the purpose of commercial arbitration.

Commentary: the rule of law is a stranglehold

Directly applying the Supreme Court’s reasoning from Vavilov confuses the court’s meaning because it blends the public concerns with which Vavilov dealt with the commercial arbitrator’s private jurisdiction. That latter jurisdiction ideally operates to exclude the courts (arbitration is not, as some lawyers contend, merely another step in the judicial process). 

The legislature’s use of the word ‘appeal’ immediately invokes the appellate standard of review to reinforce this exclusion. Contesting an arbitrator’s decision before the courts requires deference, which is guaranteed through the appellate standard. This reading was acknowledged by the Supreme Court in a myriad of cases (Vavilov, paras. 36-52 reviews cases in which a statutory appeal was recognized and given effect in public law). Appeals in private law 

One can detect patent unreasonableness in using the impeached case to deliver a point: the Supreme Court’s use of case law to effect statutory appeals is useful when made by analogy. Its direct application in the realm of private arbitral law, however, undermines the legislature’s institutional design choices. 

Commercial arbitration’s history diverges so markedly from the state’s control because it is centripetal, borne of medieval mercantile legal disputes and a need to keep the piece when the King’s justice was beyond most litigants’ reach. 

The King’s justice is, similarly, beyond most litigants’ reach today. The pace of communication and the speed with which money changes hands makes judicial remedies unwieldy. Arbitration, however, lets disputants join their issue on their terms, with their agreements in mind. In so doing, the arbitrator becomes a vessel for the parties’ will, not a creature of statute. The decision to arbitrate binds the parties, not the Arbitration Act’s stipulations, most of which can be set aside by mutual consent.

The marked difference between judicial and arbitral authority influences the interpretation of a statutory right to appeal. Vavilov assists courts with a general principle: Parliament is sovereign (Reference re Pan?Canadian Securities Regulation, 2018 SCC 48, paras. 54-67). Clear legislative direction must be honoured. Vavilov does not, however, speak directly to the law of private arbitration.

The distinction nitpicks. It departs from what many consider to be a uniform system of law, or a rule of law. Arbitration now accomplishes what courts can but rarely provide: a solution tailored to parties’ realities. It is, in a labour context, valued for keeping industrial peace (Dunsmuir, 2008 SCC 9, para. 156). Commercial arbitration has similar value.

Regularity in this context takes on a different meaning. The application of the rule is potentially irregular because it can extend debate, thus lessening the certainty of arbitration. The legislature’s inclusion of an appellate standard of review for arbitral decisions that may be reviewed is meant to make appeals difficult. The award’s finality ends argument. Vavilov provides some insight, but its focus on public and administrative law gives it uneasy application to a private-law context. A straight appeal does not imply public law norms; the arbitrator is instead the trier of fact and law who, much like any judge, is held to the appellate standard of review.

Conclusion

Courts are picking arbitration apart based on differing perceptions of its relevance and utility. In Northland, the Northwest Territories Court of Appeal took a centralizing approach to define its and the lower court’s appellate jurisdiction. In so doing, it applied public law rules to perceive arbitration as an activity enabled by statute. The older view is that arbitration is recognized by statute; the parties enable the jurisdiction. Though the court correctly interpreted the legislature’s expression, its direct application of Vavilov instead of reasoning by analogy confuses arbitration’s underlying authorities. In so doing, the court contributed to a dangerous centralization of arbitral practise. That desire for order is laudable, but the freedom to contract that founds arbitral jurisdiction is the first principle from which a court should reason. 

David Hume’s is-ought problem is oft-forgotten in Canadian political and legal circles, and it bears some repetition. We often forget the value of deduction in an algorithmic age, for computers and the science from which they stem cause us to increasingly rely on inductive logic. In this age of induction, we formulate general rules based on observations when those observations admit to much more limited claims that, taken together, might build a general rule.

These different approaches have characterized debates between sciences and humanities since Plato and Aristotle. David Hume’s contribution extends beyond his is-ought principle, but this principle does bring the immediate problem in political science and law into focus:

Morality is a subject that interests us above all others: We fancy the peace of society to be at stake in every decision concerning it; and ’tis evident, that this concern must make our speculations appear more real and solid, than where the subject is, in a great measure, indifferent to us. What affects us, we conclude can never be a chimera; and as our passion is engag’d on the one side or the other, we naturally think that the question lies within human comprehension; which, in other cases of this nature, we are apt to entertain some doubt of.

A Treatise of Human Nature, 3.1.1.1

Hume does not directly touch upon the dichotomy I’ve expressed. Induction and deduction are not mentioned in this passage; they underlie the debate. Hume takes aim at morality deployed in argument. Prescriptions for the good life are erroneously ascribed inductive weight, which skews arguments toward what a subject thinks ought to be. Similarly, the invocation of a status quo becomes sufficient argument for a desirable state of affairs.

Hence that opening appositive: ‘We fancy the peace of society to be at stake in every decision concerning it’. An apposite example is some political scientists’ desire to limit the Crown’s ability to prorogue Parliament (see ‘Constitutional Peace, Political Order, or Good Government? Organizing Scholarly Views on the 2008 Prorogation’, p. 114; ‘(Mis)Representing the 2008 Prorogation: Agendas, Frames, and Debates in Canada’s Mediacracy’). This prescription for the good life—or, better stated, the popular-democratic life—is a fantasy borne from induction. It makes a claim for what ought to be, yet some political scientists and administrative lawyers will claim that our polity is threatened by prorogation when Parliament is noticeably at odds with cabinet. The so-called prorogation crisis in 2008 took on existential significance because academics and lawyers billed the Crown’s possible intercession as a crisis. They imposed their own view of the right society—be it increased responsible government, increased cabinet proceduralism, etc.—to argue for and against prorogation, which was itself a political issue.

Courts have historically refused to intercede in these affairs because they rightly identify (though they rarely discuss) the is-ought principle at work. Politicians have the latitude to make empty promises and sweeping proclamations. Judges are technicians whose province is, in common law at least, the application of legal rules through deductive means (see Operation Dismantle, para. 52, restated in Hupacasath, para. 66). The ‘subject matter’ is, to refer to our quotation, ‘indifferent’ to a judge. What ought to be done does not enter a common lawyer’s mind. The law is applied, and even equity follows the law. The application of rules to fact often proceeds without regard for broader policy or moral questions.

Charter litigation does, to be sure, change the game somewhat. These general rules are imposed by universal legislation on every aspect of Canadian law and politics. The Charter‘s prescriptions are a form of moral induction that allows academics, lawyers, and litigants to channel their passion into a cause of application for ‘one side or the other’. Courts have restrained such passion by imposing fairly strict legal tests on every cause of action. The government, moreover, always has an advantage in its promoting a ‘free and democratic society’.

The limiting tests build a deductive framework into Charter litigation, and it is the frustrating deduction of a particular worldview. I cannot enter into this subject in the depth required to do it justice. Suffice, for the present, to say that the judicial perspectives that have shaped Charter jurisprudence have represented a very normative and centralizing view of what may and may not be tolerated in a ‘free and democratic society’. The resulting deductions have constrained minorities even as the majority has adopted the Charter as something of a ‘passion’. Hume’s worry about morality is that the passion we feel when our colours are up on an issue gives us a false certainty. What ought to be becomes a statement of fact: ‘we naturally think that the question lies within human comprehension’. Hubris obtains, and Hume explains such arrogance in his Problem of Induction:

Shou’d it be said, that we have experience, that the same power continues united with the same object, and that like objects are endow’d with like powers, I wou’d renew my question, Why from this experience we form any conclusion beyond those past instances, of which we have had experience? If you answer this question in the same manner as the preceding, your answer gives still occasion to a new question of the same kind, even in infinitum; which clearly proves, that the foregoing reasoning had no just foundation.

A Treatise of Human Nature, 1.3.6.10

The problem with induction is that inductive reasoning’s premises become self-referential. The observed occurrence must be true all the time for the proven rule to obtain. The experience on which we attempt to theorize a general rule is not broad enough to determine the general rule, and this problem repeats itself throughout the reasoning. Its premises cannot lead to a logical conclusion, but it is tempting to place our faith in this conclusion when our experience and our emotions inspire worldviews or strong opinions.

A.V. Dicey, for his many faults, valued the deductive principles that animate common law. He holds in one part of the Introduction to the Study of the Law of the Constitution that ‘there runs through the English constitution that inseparable connection between the means of enforcing a right and the right to be enforced which is the strength of judicial legislation’ (p. 186). The practical nature of judge-made law builds upon the facts of each case. Dicey again valorizes deductive reasoning when he puns on the word:

So far, therefore, from its being true that the sovereignty of Parliament is deduction from abstract theories of jurisprudence, a critic would come nearer the truth who asserted that [John] Austin’s theory of sovereignty is suggested by the position of the English Parliament.

p. 68

Dicey means to dispute John Austin’s theory of sovereignty while making clear that the dispute relies on his and Austin’s observations of the English Parliament. Both writers are working to deduce a truth based, as Hume might say, on impressions left by the institution of Parliament.

An example adjacent to prorogation evokes Hume’s problem alongside the is-ought principle even as it seeks to reject some of Dicey’s views. Leonid Sirota (author of Double Aspect) has recently published a piece, ‘Immuring Dicey’s Ghost: the Senate Reform Reference and Constitutional Conventions’, in the Ottawa Law Review in which he argues that Canadian constitutional conventions have or can be turned into law by an activist Supreme Court (p. 318). He treats the Supreme Court’s decision in the recent Senate Reference as a convincing precedent for granting constitutional conventions force of law. A telling paragraph from his conclusion summarizes the argument:

Contrary to what some scholars have suggested, [the Court’s decision that the Senate could not be made elected by simple legislation] does not mean that the Court was oblivious to the existence of conventions regulating the Senate’s place in the constitutional framework, let alone hostile to the very notion of conventions. Rather, conventions are the principal component of the “constitutional architecture” that the Supreme Court invokes, but only defines as consisting of assumptions underlying the constitutional text. The text—first the Constitution Act, 1867, and then the amending formulae included in the Constitution Act, 1982—has been written with conventions, including those governing the Senate, in mind. The Supreme Court’s opinion recognizes this but does not say so.

p. 359

Sirota focuses on the Court’s use of ‘architecture’ in the Senate Reference and in two previous references, the Secession Reference and the Supreme Court Act Reference, without properly evoking the word’s use and meaning. He uses induction to appeal to scholars who share his view. The final sentence in the above-quoted paragraph bears this reading out. Sirota may be reading an opinion into the Court’s use of ‘architecture’: the Court’s recognition of conventions as law depends on a ‘metaphor’ (p. 320). The metaphor later receives treatment as a ‘concept’ (p. 327), which appellation subtly turns the illustrative figure of speech into ‘a general idea or notion, a universal; a mental representation of the essential or typical properties of something’ (OED). This change is disingenuous because it casts an image of the constitution as an idea about the constitution. This elision is more fully pronounced: ‘Under the Canadian Constitution [sic], conventions are sometimes essential evidence of the acceptance of fundamental principles’ (p. 438, emphasis original). Conventions become evidence of a metaphor that has been turned into an idea suitable for use in constitutional interpretation. Sirota’s induction imposes his argument on the word instead of showing the word’s ability to move past metaphor.

Sirota’s inductive account is confirmed when he proclaims that

whatever label one might use, the real issue is whether the Court incorporated constitutional rules that were previously regarded as matters of politics alone into law. As I have argued above, it did just that, and this is significant.

p. 335

Sirota argues here that there has been historical shift in judicial appreciation of convention, yet he fails to show how the Supreme Court demonstrated its acknowledgment of conventions as law: ‘the Supreme court is well aware that “conventional constitutionalism” was always meant to supply the regulations that the Fathers of Confederation knowingly left unstated in the constitutional text’ (p. 334). The Court’s careful avoidance of convention is read as acknowledgment of conventions’ normative, thus legal, value. The absence of evidence has become the evidence of a norm: Sirota concludes that the Court’s mention of ‘constitutional architecture’ allows him to show that the Court has allowed itself to enforce certain conventions.

A further elision of terms is suggestive of induction: Sirota holds that certain conventions are constitutionally entrenched ‘and thus enforceable, if only against attempts to amend the Constitution’ (p. 339. sic). This sentence contains a category shift: bars to amending the constitution do not allow the courts to enforce constitutional convention. Judicial enforcement occurs when a legal right is negated. Amendment purports to alter a legal right. Constitutional conventions in this system ‘carry only political sanctions’ (Reference re Secession of Quebec, para. 98). Those sanctions are under-explored in Sirota’s piece, but they may (as I have elsewhere suggested) be considered Parliament’s inherent jurisdiction, thus depriving courts of any power to enforce convention. Sirota’s category shift refers to his identification of the real issue in the Court’s Senate Reference decision: if the Court incorporates a political rule into legal treatment, that rule becomes law; if the Supreme Court notices a political rule to bar constitutional amendment, the noticed rule is a legal rule. This premise sustains Sirota’s argument because it is repeated in different form.

This objective assessment of Sirota’s piece incorporates Hume’s Problem of Induction; the is-ought principle digs into Sirota’s motives for writing. Those motives are only properly known to him. The is-ought problem can only be used to caution scholars writing on constitutional conventions or the royal prerogatives: the inductive fantasy leads you astray when you ‘fancy the peace of society to be at stake’ and write to correct the situation. Canadian law will change when scholars identify remedies and show courts how these solutions work alongside other cases in which the same rights were asserted. In so hewing to recorded experience, counsel and academics better demonstrate how the solution is supported by ‘human comprehension’. If common law may stand for one progressive thing, let it be that our collective previous experience may be used to advance judicial remedies.