Consensual or Statutory: Court of Appeal Clarifies Nature of Arbitration Imposed by Law

Summary

In a decision rendered on April 4, 2024,^[1] in which the Court of Appeal of Québec was asked to rule on a dispute involving the professional fees of a criminal lawyer, the Court reversed the judgment rendered on July 19, 2023, by Superior Court Justice Babak Barin,^[2] reiterating the important distinction between consensual arbitration and statutory arbitration in Québec law.

The trial court’s decision held that the mere possibility of arbitration, even if provided by law, nonetheless made the dispute settlement process dependent on the will of the parties. Given his finding that the process was consensual, Justice Barin decided that an application for annulment was the only recourse available against the arbitration award granted under the law, as provided for in article 648 of the Code of Civil Procedure.

In the reasons written by Justice Schrager, the Court of Appeal points out that if a party’s only recourse to arbitration is that provided by law, that party is therefore only subject to “statutory” arbitration. In other words, where the arbitration is only provided by law, even if a party chooses to go to arbitration, that choice does not make the arbitration consensual per se. In doing so, the Court affirmed that a judicial review is the only option applicable in the circumstances, and not an application for annulment, as the trail judge had concluded, and reiterated the applicability of the reasonableness standard, as determined by the Supreme Court of Canada in the Guérin^[3] decision.

This decision clarifies the interaction between administrative and arbitration law in Québec, by confirming that recourse to judicial review is always available to litigants, especially in the context of statutory arbitration.

The Facts

The Commission des services juridiques (the “Commission”) is responsible for the application of Québec’s Act respecting legal aid and the provision of certain other legal services^[4] (the “Act”). The Commission ensures that legal aid is provided to eligible persons, and establishes regional legal aid centres that provide statutory services to eligible persons. The crux of the dispute turns on the professional fees claimed by Gabriel Bérubé-Bouchard under the Act, for services provided in two criminal matters, from which the Commission deducted 35% of the claimed fees under a statutory fee cap. In cases such as this, the Act provides that the Minister of Justice may agree to a procedure for the settlement of disputes that could arise in the application of the law. In this case, the law provides for an arbitration mechanism presided by a judge of the Court of Québec.

In the arbitration held under the provisions of the Agreement between the Minister of Justice and the Barreau du Québec (Québec Bar Association) respecting the tariff of fees and expenses of advocates rendering services in criminal and penal matters and the dispute settlement procedure (the “Agreement”), Justice Stéphane Davignon, the sole arbitrator and a Court of Québec judge, ordered the Commission to pay Mtre. Bérubé-Bouchard the amount of $3,439.63. The Commission applied for judicial review of the arbitration award and Mtre. Bérubé-Bouchard filed an application for dismissal under article 168 CCP.

Superior Court Judgment

When asked to rule on this application to dismiss the application for judicial review, Justice Barin found that the dispute settlement procedure provided for in the Agreement was consensual, and that the only recourse available against the arbitration awards resulting therefrom was the application for annulment provided for in article 648 CCP.

In reaching such a conclusion, the Superior Court noted the two types of arbitration that exist in Québec and emphasized that an application for judicial review cannot be used to contest a consensual arbitration award nor to examine its merits. In doing so, Justice Barin also found that the mere possibility of having recourse to arbitration, even if provided for by law, renders the dispute settlement procedure dependent on the will of the parties and therefore does not make it a statutory arbitration.

Here lies the problem: According to the Court, the fact that section 83.21 of the Act states that the Agreement has force of law does not affect the consensual nature of the two levels of dispute settlement provided for in the Agreement.^[5] In other words, in Justice Barin’s opinion, the fact that the legislator imposes the arbitral tribunal’s jurisdiction does not in itself alter the consensual nature of the arbitration. Statutory arbitration, in contrast, makes exemption from arbitration in favour of the courts impossible. Essentially, Justice Barin found that it would be contrary to the legislative objective to consider the arbitration process provided for in the Agreement as statutory arbitration. According to Justice Barin, this expressly recognizes consensual arbitration as a legitimate part of the Québec justice system.

Finally, Justice Barin questioned the principles laid down by the Supreme Court in Guérin. Justice Barin writes that the dispute settlement procedure set out in the Health Insurance Act was more consensual in nature and not statutory. As such, Justice Barin concluded, relying on the Supreme Court’s decision in Zodiak,^[6] which drew from decisions of the Cour de cassation française^[7] and Desputeaux,^[8] among others, that an application for judicial review cannot be used to contest consensual arbitral awards, including where arbitration is proposed by law.

Court of Appeal Decision

The Court of Appeal reversed the trial judge’s ruling, stating that the matter should be sent back to the lower court to be decided by a judge other than Justice Barin. The Court stated that the arbitration provided for in the Agreement between the Minister of Justice and the Barreau du Québec was statutory and not consensual.

In supporting his reasoning, Justice Schrager made several points, including the following:

1. The principles in Marquis^[9] guide judicial review in the context of statutory arbitration. The Court of Appeal reiterated that there are two types of arbitration in Québec: A dispute may be submitted (1) to a conventional arbitral tribunal, under article 2638 CCQ, by agreement of the parties, or it may be (2) mandatory and imposed by law and therefore subject to the authority of a statutory court. Arbitration is the domain of both private law and administrative law.^[10] Where arbitration is not mandatory as the only dispute settlement mechanism, even in cases where it is statutorily mandated, it must be characterized as consensual. As such, the principles set out by Justice Dalphond in Marquis still apply.
2. The Agreement has force of law and arbitration is imposed.^[11] The Agreement between the Minister of Justice and the Barreau du Québec providing for the dispute settlement procedure has force of law. Even though the dissatisfied party “may” submit such a dispute to arbitration, it is in fact the only recourse available. As such, it is an “exclusive jurisdiction clause” that excludes any other court. The parties cannot opt out of the arbitration mechanism. The fact that the Agreement was the result of negotiations between the Minister of Justice and the Barreau du Québec does not, however, make the arbitration consensual.
3. Public law litigation gives rise to judicial review.^[12] From a constitutional standpoint, consensual arbitration and statutory arbitration belong to two different “spheres.” When the source of the litigation is a decision by an administrative body, as in this case, relating to its decision to deny a lawyer the full amount of professional fees to which he would be entitled, then such a decision is subject to judicial review.
4. Other than Desputeaux and Marquis, the decisions on which the judge relied do not support his conclusion.^[13] The Court of Appeal pointed out that Fortin^[14] and Guérin were misinterpreted by Justice Barin, and that they do not support the idea that the nature of the arbitration under the Agreement is consensual. On the contrary, these decisions reinforce the need for judicial review of an arbitration imposed by law, thereby qualifying it as statutory and not consensual.

Conclusion

In sum, this Court of Appeal decision sheds new light on the interpretation of arbitration mechanisms imposed by law under Québec’s legal system. By overturning Justice Barin’s decision, the Court of Appeal not only clarified the statutory nature of the arbitration provided for in the Agreement, but also reaffirmed the importance of judicial review in overseeing awards arising from non-consensual arbitration.

This decision clarifies the interaction between administrative and arbitration law in Québec, by confirming that recourse to judicial review is always available to litigants, especially in the context of statutory arbitration.