In a 7-0 decision limiting the
scope for judicial review of arbitral awards, the Supreme Court of
Canada has ruled that labour arbitrators do not have to apply common law and equitable principles
in the same way as judges do.
Justice Morris Fish’s Dec. 2
judgment restores a Manitoba
arbitral award that adapted and
applied the equitable doctrine of
estoppel to bar a union from
grieving an employer’s long-standing breach of the collective
agreement to which the union
had effectively acquiesced.
The top court held that the
arbitrator’s imposition of estoppel was reviewable by a court on
the deferential standard of reasonableness—not on the stricter
standard of correctness applied
by the Manitoba Court of Appeal
last year.
Justice Fish concluded the
decision fell “well within” the
bounds of reasonableness.
In setting out general princi-
ples that will apply to labour
arbitrations from coast to coast,
Justice Fish ruled that “labour
arbitrators are not legally bound
to apply equitable and common
law principles—including estop-
pels—in the same manner as
courts of law. Theirs is a different
mission, informed by the particu-
lar context of labour relations.”
He elaborated: “To assist them
in that mission, arbitrators are
given a broad mandate in adapt-
ing the legal principles they find
relevant to the grievances of
which they are seized. They must,
of course, exercise that mandate
reasonably, in a manner that is
consistent with the objectives and
purposes of the statutory scheme,
the principles of labour relations,
the nature of the collective bar-
gaining process, and the factual
matrix of the grievance.”
William Gardner of Winni-
peg’s Pitblado LLP, who with
Bryan Schwartz and Todd
Andres represented the appel-
lant employer, described the
decision as “particularly pleasing
because it’s not slanted either to
employers or to unions.”
Schwartz said the top court
has confirmed that general stan-
dard of review principles, and the
need for deference, apply even
when arbitrators are adapting
common law doctrines to the dis-
tinctive concerns of labour law.
Had the Supreme Court
endorsed the Manitoba Court of
Appeal’s view that arbitrators
must apply legal principles the
same way as judges, Schwartz
said it “would have opened a very
wide door to judicial interven-
tion—the reason being that all
kinds of stuff comes up in a
labour arbitration context that is
some sort of adaptation, or has
some sort of analogue, in the
common law.”
Jacob Giesbrecht, of Winni-
peg’s Inkster Christie Hughes LLP,
who represented the respondent
union, said the court has created a
new “arbitral estoppel.”
He suggested that the
Supreme Court’s ruling that
labour arbitrators can fashion
remedies that do not strictly
abide by the common law “gives
unions the ability to be able to
argue fairness, just as it does
employers. This is not a one-way
union-sided, or employer-sided,
case. I think this has really
opened up the argument of fair-
ness in the circumstances of each
individual arbitration…instead of
the strict application of the law.”
Giesbrecht said the ruling also
reduces the opportunities for
judicial review. “The Supreme
Court has said ‘the arbitrator will
decide,’ and that is going to be the
ultimate authority now. I don’t
think that’s good.”
Justice Fish emphasized that,
although reviewing courts must
defer to arbitrators who craft
labour-specific remedial doc-
trines, “the domain reserved to
arbitral discretion is by no
means boundless. An arbitral
award that flexes a common law
or equitable principle in a man-
ner that does not reasonably
respond to the distinctive nature
of labour relations necessarily
remains subject to judicial review
for its reasonableness.”
The arbitrator in the case said
that though Nor-Man Regional
Health Authority incorrectly cal-
culated vacation pay for some
employees under a collective
agreement, the union was barred
from grieving until expiry of the
agreement because it had not
objected over the years. n
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