Why Commercial Arbitral Awards are so Difficult to Appeal

Ontario’s Arbitration Act^[1] represents one of many efforts by the State to delegate the adjudicative function to non-judicial decision-makers.

Where parties choose to resolve their commercial dispute through arbitration, they do so with purpose: as opposed to the Court system, which is plagued by backlogs and overburdened caseloads,^[2] arbitration ensures a private, efficient, and final conclusion to any case.

For this reason, where parties select arbitration, the Arbitration Act holds them to that commitment by restricting the circumstances by which an arbitral award can be subsequently challenged in Court.^[3]

In large measure, appeals and applications to set aside arbitration rulings defeat the very purpose of removing litigation from the judicial system. If the parties seek arbitration, the Courts shut the door on future challenges before it.

A 2026 decision of the Ontario Superior Court’s Commercial List, G&L Group Ltd. v. Lamanna,^[4] illustrates why judges strictly enforce limited appeal rights from an arbitral decision, particularly where the parties have not set out a right of appeal in their arbitration agreement.

Canadian Family Feud

The facts of Lamanna are both unfortunate and typical.

They begin with first-generation Canadian immigrants establishing a successful construction aggregate and concrete business. Over time, the business grew and the founders’ children took on larger roles in the various companies.

On one side of the dispute were the father, Joe, who established the successful operations, and his son-in-law, Rob (the “Father Faction”). Collectively, the Father Faction held a sizeable interest in the group of companies that ultimately comprised the G&L Group. On the other side of the dispute was the father’s son, Pat (the “Son Faction”).

The particulars of the dispute are involved, but effectively arose from the father’s decision at age 80 to delegate responsibility and carriage over the companies to Pat and his son-in-law Rob.

The parties agreed to divide the businesses and, to the extent that such a division between Rob and Pat was unequal, the party receiving the businesses of lesser value would receive an equalization payment.

Disagreements arose almost from the outset regarding, among other things, how to conduct a valuation of the various corporate entities, who would conduct the valuation, and which valuation report was more favourable to Pat or Rob.

Accusations of oppressive and fraudulent misconduct followed, with Pat accusing the Father Faction of signing unauthorized cheques on behalf of Pat’s companies in the millions of dollars and attempting to disenfranchise him from the business.

Ultimately, Pat commenced an oppression application in the Ontario Superior Court against the Father Faction and obtained preliminary injunctive relief, which the Father Faction ultimately ignored.

In the context of the oppression proceeding, the parties decided to arbitrate their dispute before an arbitrator.  Notably, the arbitration agreement entered into between the parties was silent on any appeal rights.

The Arbitrator conducted a hearing and ultimately held the Father Faction liable for oppression. In a series of lengthy Awards, the Arbitrator awarded damages and injunctive relief to Pat and the Son Faction (the “Arbitral Awards”).

The Father Faction subsequently appealed the Arbitral Awards on questions of law pursuant to section 45 of the Arbitration Act and applied to set aside the Arbitral Awards under section 46.

The Court rejected both the appeal and the application.

In doing so, the Court emphasized a number of important themes about why it is so difficult to seek Court intervention following the issuance of an arbitrator’s order.

1. In the Absence of an Agreement to the Contrary, Appeals Are Only Allowed on Pure Questions of Law

As stated above, the arbitration agreement in this case was silent on any rights of appeal.

Under section 45 of the Arbitration Act, if the arbitration agreement “does not deal with appeals on questions of law”, a party can only appeal that legal question with leave.

The Court in Lamanna noted that section 45 deliberately constituted a “high bar”. 

Citing the Supreme Court of Canada in Teal Cedar Products Ltd. v. British Columbia,^[5] the Court noted that judges should be reluctant to identify pure legal questions for the purposes of granting leave to appeal under section 45:

…Courts should exercise caution in identifying extricable questions of law…The motivations for counsel to strategically frame a mixed question [of law and fact] as a legal question…are transparent…a narrow scope for extricable questions of law is more consistent with finality in commercial arbitration and, more broadly, with deference to factual finding.

As such, questions of law are limited in scope and concern “questions about what the correct legal test is”. 

In this case, as discussed below, none of the grounds of appeal met the threshold of a pure legal question, and the Court denied leave to appeal. 

2. Applications to Set Aside Arbitral Awards Impose a Very High Onus.

The Court was also careful to note that the test to set aside an arbitral award under section 46 of the Arbitration Act also represented “a very high bar”.   

In this case, the Father Faction alleged that the Arbitral Awards should be set aside as a result of alleged procedural defects under section 46(1), para. 7.

The “high bar” under section 46 involves showing a radical departure from basic notions about procedural fairness and the rule of law. 

Specifically, the Court held that the Father Faction would have to show that “the arbitrator’s conduct was sufficiently egregious to offend basic notions of morality and justice”. Courts should intervene only in the “most egregious procedural breaches”. 

The Court rejected the Father Faction’s position that this case met this very high threshold.

3. Courts Will Be Suspicious of Attempts to “Dress Up” Questions of Mixed Fact and Law to Secure Leave to Appeal. 

The overall thrust of the Court’s approach in Lamanna was that none of the proposed grounds of appeal constituted pure legal questions for the purposes of section 45 of the Arbitration Act.

All of the proposed grounds were attempts by counsel to dress up mixed factual and legal issues as questions of law.

For example, the Father Faction argued that the arbitrator erred in law in his reconciliation exercise by removing unauthorized transactions conducted by the Father Faction from the corresponding intercompany liabilities without adjudicating them. The Court struggled to characterize this error as “anything other than factual findings” by the arbitrator, or, at best, questions of mixed fact and law. In the Court’s view, counsel was simply trying to strategically frame the arbitrator’s factual conclusions as pure questions of law.

Similarly, the Father Faction argued that the arbitrator erred in law when he concluded that the Father Faction had breached various haulage agreements between the parties. The Court concluded that the arbitrator’s analysis involved questions of contractual interpretation, which were issues of mixed fact and law involving an analysis of the contract’s language as applied to the factual matrix. As such, they did not raise pure questions of law amenable to appeal under section 45.

Moreover, the Court made it clear that none of the proposed grounds under section 46 rose to the level of offending basic notions of morality and justice, such that the Arbitral Awards should be set aside.

Arbitration Appeals Have Their Limits

The lessons of Lamanna are consistent with Canadian jurisprudence that seeks to limit Court intervention following commercial arbitral awards.

Absent pure legal questions, which fall within the clear purview of the judiciary, if an arbitration agreement does not provide for express appeal rights on questions of fact or mixed fact and law, Courts will not grant leave to appeal an arbitral award.

Moreover, Canadian Courts remain skeptical of efforts by counsel to strategically frame factual questions as purely legal ones to overcome the legislative obstacles that limit appeal rights from arbitration.

The policy rationale for this approach remains sound: parties who choose arbitration as their adjudicative avenue must stick to their lane. Overburdening the Courts with appeals from arbitration undermines the very efficiency and finality arbitration is meant to achieve.

Marco P. Falco is a partner in the Appellate Litigation and Judicial Review Group at Torkin Manes LLP.  You may contact Marco about your commercial appeal at mfalco@torkin.com. Please note that a conflict search will need to be conducted before your matter can be discussed.