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Arbitration - Stay (2). BizTech v. Accreditation Canada [arbitration stay v JR justiciability by discretion]
In BizTech v. Accreditation Canada (Div Ct, 2025) the Divisional Court considered what are essentially two JRs, these opposing decisions by Accreditation Canada and the Superintendent of Career Colleges [under the Ontario Career Colleges Act, 2005], these resulting in the revocation of a college's educational program which "triggered a statutory right by BizTech students in the DMS Program to a full refund of their fees."
The court considers whether a contractual arbitration clause - that can invoke a stay on civil proceedings - applies to bar a JR of these issues under the 'adequate alternative remedy' (AAR) [this starting at para 144] (or perhaps prematurity) JR doctrines:F. THE MOTION TO STAY IN FAVOUR OF ARBITRATION
[87] Accreditation Canada has brought a motion to stay BizTech’s judicial review application in favour of arbitration, pursuant to the parties’ contract and s. 7 of the Arbitration Act. Subsection 7(1) of the Arbitration Act provides:Stay
7 (1) If a party to an arbitration agreement commences a proceeding in respect of a matter to be submitted to arbitration under the agreement, the court in which the proceeding is commenced shall, on the motion of another party to the arbitration agreement, stay the proceeding. ....
[89] Some preliminary explanation of how I approach this motion is required.
[90] All parties agree that the leading authority to be considered is Peace River Hydro Partners v. Petrowest Corp., 2022 SCC 41, 475 D.L.R. (4th) 1 (“Peace River”). Both BizTech and Accreditation Canada rely on this case. In Peace River, the Supreme Court of Canada considered a motion under the British Columbia Arbitration Act to stay an insolvency proceeding in favour of arbitration provided for in the material contract. After a comprehensive exposition of the issue, Côté J. ultimately concluded on the facts of that case, a stay of proceedings in favour of arbitration was not warranted.
[91] After analyzing the policy rationales underlying arbitration and insolvency law, Côté J. concluded that in many cases, given the shared interests between the two areas in expediency, procedural flexibility, and specialized expertise, the parties should be held to their agreement and the presumption in favour of arbitration would lead the court to stay the legal proceedings. However, in certain situations, the court proceeding may take precedence if it was necessary because arbitration would compromise the orderly and efficient conduct of a court-ordered receivership. She stressed the analysis must focus on the facts of the specific case, the particular statutory regimes, and the arbitration agreements in play. In conducting this assessment, the court should have regard to the principles of party autonomy and freedom of contract as well as the policy imperatives underpinning the law under consideration, in that case, bankruptcy and insolvency law: Peace River, at paras. 72-75.
[92] Côté J. set out a test to guide the analysis. In her view, the test was implicit in all the various provincial arbitration legislation.
The Peace River Test
[93] In Peace River at paras. 76-79, a two-step process was established to determine whether court proceedings should be stayed in favour of arbitration:1. the technical requirements for a mandatory stay of proceedings are met; and
2. none of the statutory exceptions under the Arbitration Act apply. [94] Before analyzing this two-step test on the facts here, the competence-competence principle must be addressed. Competence-competence is a principle that gives precedence to the arbitration process subject to the exceptions where the challenge to jurisdiction involves pure questions of law, or questions of mixed fact and law requiring only superficial consideration of the evidentiary record. If the two exceptions do not apply, the arbitrator should be allowed to exercise their power to rule first on their own jurisdiction: Peace River, at paras. 41 to 42; Uber Technologies Inc. v. Heller, 2020 SCC 16, 447 D.L.R. (4th) 179, at para. 32. If the exceptions apply, the court may resolve a challenge to the arbitrator’s jurisdiction.
[95] None of the parties contend in this case that the competence-competence principle will be offended if the court determines the issue of the arbitrator’s jurisdiction. The questions in this judicial review are of mixed fact and law requiring at best a superficial consideration of the evidentiary record.[1] Acknowledging that the competence-competence principle is not lightly displaced, I find that an exception has been established: Lochan v. Binance Holdings Limited, 2024 ONCA 784, at para. 22. Therefore, I will resolve the question of arbitral jurisdiction.
[96] To begin the analysis, the two-step process set out in Peace River is mirrored in s. 7(1) and s. 7(2) of the Arbitration Act—section 7(1) being the technical requirements and s. 7(2) being the statutory exceptions.
The Technical Requirements
[97] Accreditation Canada must establish an “arguable case” that the following technical requirements to engage a mandatory stay have been met:1. an arbitration agreement exists;
2. court proceedings have been commenced by a “party” to the arbitration agreement;
3. the court proceedings are in respect of a matter that the parties agree to submit to arbitration; and
4. the party applying for a stay in favour of arbitration does so before taking any “step” in the court proceedings. Peace River, at paras. 83-85.
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The Statutory Exceptions
[109] Even if the technical requirements for a stay are met, the party seeking to avoid arbitration can show on a balance of probabilities that one or more of the statutory exceptions apply: Peace River, at para. 88; Husky Food Importers & Distributors Ltd. v. JH Whittaker & Sons Ltd., 2023 ONCA 260, at para. 29.
[110] Section 7(2) of the Arbitration Act provides a list of statutory exceptions:Exceptions
(2) However, the court may refuse to stay the proceeding in any of the following cases:
1. A party entered into the arbitration agreement while under a legal incapacity.
2. The arbitration agreement is invalid.
3. The subject-matter of the dispute is not capable of being the subject of arbitration under Ontario law.
4. The motion was brought with undue delay.
5. The matter is a proper one for default or summary judgment. ....
Subject-matter of the dispute not capable of being the subject of arbitration under Ontario law
[128] BizTech argues that the judicial review of statutory decision-makers cannot be supplanted by a privately negotiated arbitration agreement. Acceptance of such an argument would descend administrative law into chaos—statutory decision-makers could simply delegate away decisions to private parties to avoid judicial oversight. Judicial review would become arbitral review. BizTech submits that it would be legally absurd if the court’s constitutionally recognized ability to judicially review decisions was ousted by arbitration provisions. It would sterilize the purpose of judicial review if parties and government actors could contract away the court’s right to judicially review public decisions and the public’s interest in ensuring statutory decision-makers are held accountable.
....
[142] There is nothing in the Arbitration Act that precludes a stay of proceedings from applying to a judicial review proceeding. Section 7(1) applies to a “proceeding”, a broad term which is left undefined.
[143] The Supreme Court of Canada in Wellman sets out the purposes and history of the Ontario Arbitration Act both generally and more particularly of s. 7. Fundamentally, this legislative scheme rests on a policy of party autonomy and through provisions like s. 7, the legislative and judicial preference that the parties to a valid arbitration agreement should abide by their agreement is given effect: Wellman, at paras. 51-53; Peace River, at para. 10.
[144] Giving effect in the right case to an arbitration agreement even if a public body exercising statutory authority is involved is consistent not only with the primacy given to arbitration under the Arbitration Act but also with the exercise of judicial discretion where there is an appropriate alternative remedy to judicial review. Put another way, it is appropriate to consider the Arbitration Act and a valid arbitration agreement in the exercise of the discretion in deciding whether judicial review is appropriate. Such an approach reflects what Yatar, at para. 64, described to be the “balancing exercise” that is judicial review in the following quote citing Strickland v. Canada (Attorney General), 2015 SCC 37:This Court in Strickland, at para. 43, also emphasizes the appropriateness of judicial review in the circumstances, referring to a "balancing exercise":The categories of relevant factors are not closed, as it is for courts to identify and balance the relevant factors in the context of a particular case: Matsqui, at paras. 36-37, citing [Minister of Energy, Mines and Resources], at p. 96. Assessing whether there is an adequate alternative remedy, therefore, is not a matter of following a checklist focused on the similarities and differences between the potentially available remedies. The inquiry is broader than that. The court should consider not only the available alternative, but also the suitability and appropriateness of judicial review in the circumstances. In short, the question is not simply whether some other remedy is adequate, but also whether judicial review is appropriate. Ultimately, this calls for a type of balance of convenience analysis: Khosa, at para. 36; TeleZone, at para. 56. As Dickson C.J. put it on behalf of the Court: "Inquiring into the adequacy of the alternative remedy is at one and the same time an inquiry into whether discretion to grant the judicial review remedy should be exercised. It is for the courts to isolate and balance the factors which are relevant ..." [Minister of Energy, Mines and Resources], at p. 96). [Emphasis added in Yatar.] [145] In determining whether to exercise that discretion, the constitutional nature of that power, as urged by BizTech, is respected. As stated in Yatar at para. 61:In Vavilov, this Court held that "because judicial review is protected by s. 96 of the Constitution Act, 1867, legislatures cannot shield administrative decision making from curial scrutiny entirely" (para. 24). Professor Paul Daly argues that "[w]here the judicial review jurisdiction of the courts has been successfully ousted by statute ... the legislature has provided a particular channel for oversight of the legality, rationality and procedural fairness of administrative action" (Understanding Administrative Law in the Common Law World (2021), at p. 188 (emphasis in original)). In other words, there was an appropriate alternative forum or remedy. [146] The Arbitration Act may not always provide a suitable alternative channel for the oversight of the legality, rationality, and procedural fairness of administrative action. Much will depend upon the terms of the contract, the arbitration agreement in issue, the nature of the interests involved, and the factual circumstances of the case. In some situations, judicial review should be entertained over arbitration. To put it in the words of s. 7(2), the subject matter in those circumstances is not capable of being subject to arbitration. Support for this can be found in Alexander M. Gay, Alexandre Kaufman A.J., and James Plotkin, Arbitration Legislation of Ontario: A Commentary, 4th ed, (Toronto: Thomson Reuters, 2023), at pp. 218-219, where the writers state that a dispute may not be capable of being the subject of arbitration under Ontario law due to the public interest at stake or the fact that “the very nature of the subject-matter cannot be entertained by an arbitral tribunal, such as a criminal proceeding or a right that has been conferred by statute and which is inalienable.”
[147] However, if on the specific facts, as Peace River insists the focus be on, the Arbitration Act and the arbitration agreement in issue viewed carefully in context provides an appropriate alternative forum or remedy, then arbitration should proceed as the subject matter is capable of being arbitrated under Ontario law; essentially on the grounds that it does not infringe the rule of law, the principle that underpins judicial review: Wilson v. Atomic Energy of Canada Ltd., 2016 SCC 29, [2016] 1 S.C.R. 770, at para. 28, citing Dunsmuir v. New Brunswick, 2008 SCC 9, [2008] 1 S.C.R. 190, at paras. 27-28.
[148] In this case, looking at some of the typical factors in the exercise of discretion set out in Strickland, at para. 42, many support the finding that arbitration is an alternative remedy adequate to justify a discretionary refusal to hear a judicial review application. These include the fact the alternative remedy is convenient and flexible. A single Toronto arbitrator can be chosen. The rules and procedures will be determined at the arbitration. It is designed to be conducted expeditiously; unless consented to by the parties, the arbitrator will decide within 30 days. The remedial capacity of the arbitrator is broad and it includes the awarding of costs. The grievances of BizTech can be determined by the arbitrator. Perhaps most importantly, BizTech can nominate three independent and impartial potential arbitrators of which Accreditation Canada may select one to be the arbitrator. This is an invaluable mechanism to select an arbitrator with the appropriate experience and/or expertise in such areas as educational institutions, assessment of regulatory programs, and health sciences; expertise that a court may well not have. The nature of the errors alleged can be adjudicated as appropriately by an arbitrator as by a court. Indeed, a reasonableness review on judicial review would likely be less exacting than one conducted under arbitration. While the judicial review is presently before the court, the court system must be mindful about the judicious use of limited judicial resources in cases such as this where scrutiny of thousands of pages of documents submitted by BizTech to Accreditation Canada on the Decision is required—the interpretation of which is unguided or unfiltered by any expert or expertise.
[149] While BizTech argues that the arbitration process will not be as transparent as judicial review or include the CMRITO as a party, for an alternative forum or remedy to be adequate, neither the process nor the remedy need be identical to those available on judicial review. In Strickland, at para. 42, the Court adopts the following framing of the question: “in each context the reviewing court applies the same basic test: is the alternative remedy adequate in all the circumstances to address the applicant’s grievance?”
[150] In my opinion, the alternative remedy of arbitration is adequate to address BizTech’s grievances.
[151] In coming to this conclusion, I am appreciative of the fact that the parties have not brought to the attention of the Court any authority relating to a stay of a judicial review proceeding under s. 7(1) of the Arbitration Act or other arbitration legislation.[3] I do note the decision of Knox v. Conservative Party of Canada, 2007 ABQB 180, [2007] A.J. No. 303 (Alta. Q.B.), at paras. 67-72, where a judicial review application brought against a political party’s decision to acclaim a candidate was dismissed as the court concluded that a referral to an arbitration panel, as permitted by the party’s constitution and rules, afforded a suitable alternative remedy for judicial review. On appeal, 2007 ABCA 295, 286 D.L.R. (4th) 129, at paras. 27-28, the Alberta Court of Appeal varied the decision finding that these decisions of the political party were not sufficiently public in character to be judicially reviewable and since the judge below had found the referral to arbitration to be proper, the arbitration legislation applied.
[152] Also, I have not overlooked BizTech’s submission that there are exceptional circumstances present such that, despite there potentially being an alternative remedy, an application for judicial review should nonetheless proceed: Volochay v. College of Massage Therapists of Ontario, 2012 ONCA 541, 111 O.R. (3d) 561, at para. 70. The exceptional circumstances are said to be the Superintendent’s Decision to revoke BizTech’s status as a career college to offer the DMS program thereby triggering an automatic refund of student fees leading to alleged devastating consequences for BizTech. Similar concerns were raised in BizTech’s motion to stay the Superintendent’s Decision pending the decision by this Court. For largely the reasons set out in our decision dismissing the motion, I am not persuaded that these constitute exceptional circumstances: BizTech Institute Inc. v. Accreditation Canada, 2025 ONSC 2455 (Div. Ct.).
[153] Finally, I observe that some of the factors used in the exercise of the judicial discretion in this context would parallel to a degree the analysis in Peace River regarding whether an arbitration agreement is “incapable of being performed” or would be rendered “inoperative” by the courts. Some factors set out in Peace River at para. 155, as modified to the context of judicial review, that may be relevant in determining whether an arbitration agreement is inoperative under s. 7(2) include: (a) the effect of arbitration on the integrity of the judicial review proceedings; (b) the relative prejudice to the parties to the arbitration agreement; (c) the urgency of resolving the dispute; (d) the effect of a stay of proceedings arising from the judicial review proceedings; and (e) any other factors the court considers material in the circumstances. Each factor may carry more or less weight depending on the circumstances of the case.
[154] In conclusion, I am not satisfied that BizTech has met its onus in establishing a statutory exception. This not being a “clear case” where the statutory exception applies, a stay of proceedings is warranted: Peace River, at para. 89; Dalimpex Ltd. v. Janicki, (2003) 2003 CanLII 34234 (ON CA), 64 O.R. (3d) 737 (C.A.), at para. 22; Goberdhan v. Knights of Columbus, 2023 ONCA 327, at para. 15.
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I. DISPOSITION
[158] For the reasons given, I would grant the motion and stay the judicial review of the Decision and dismiss the judicial review of the Superintendent’s Decision.
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