You receive an arbitral award that feels procedurally wrong; the arbitrator made a costs decision without ever asking for your submissions. Your contract says the arbitration is final. Do you have any recourse?
As of a recent British Columbia Court of Appeal decision (the “Court” or the “Court of Appeal”), the answer may be yes —and through more than one avenue. In Green Light Solutions Corp. v. Kern BSG Management Ltd., 2025 BCCA 408 [Green Light], the Court of Appeal clarified that alleged breaches of procedural fairness in a domestic arbitration may qualify as questions of law under section 59(2) of the Arbitration Act, S.B.C. 2020, c. 2 (the “Act”).
For owners, contractors, consultants, and subcontractors alike, this decision has immediate practical implications. It clarifies your options when an arbitral process goes wrong and serves as an important reminder that the arbitration clauses you sign today determine the remedies available to you tomorrow.
Background: What happened in Green Light? The dispute behind the ruling
The dispute arose from a project in which Green Light Solutions Corp. (“GLS”), as owner, engaged Kern BSG Management Ltd. (“Kern”), as contractor, to construct a cannabis growing facility. The parties’ agreement appointed a consultant to determine disputes concerning the value of completed work.
GLS withheld payment on certain invoices, alleging deficiencies in Kern’s work and taking the position that payment could be withheld pending the consultant’s valuation. Kern commenced arbitration seeking payment before the consultant completed that valuation process.
The arbitrator found that there were deficiencies in the work entitling GLS to withhold payment, the value of which ought to have been determined by the consultant. However, the arbitrator also concluded that the consultant should have completed the valuation by January 15, 2023, and that GLS should have paid any outstanding balance at that time.
Although the parties initially proceeded under the Canadian Construction Documents Committee (“CCDC”) – 40 Rules for Mediation and Arbitration, they later agreed to a bespoke set of procedures, including that:
- the arbitrator would have discretion to determine costs;
- costs submissions would summarize legal fees and disbursements; and
- the timing of costs submissions, if any, would be determined by the arbitrator in consultation with the parties.
Ultimately, the arbitrator awarded Kern 60% of its costs and GLS 40% of its costs, without inviting separate submissions on costs from either party.
GLS sought leave to appeal the costs component of the award under section 59(2) of the Act, which permits appeals on “questions of law.” A single justice in chambers denied leave, concluding that no question of law had been raised. GLS appealed that decision.
What did the Court of Appeal decide, and why does it matter?
The Court of Appeal granted leave to appeal. The central issue was whether the arbitrator’s failure to permit submissions on costs constituted a breach of procedural fairness capable of amounting to a “question of law” under section 59(2) of the Act.
The Court answered that question in the affirmative. In doing so, it held that:
- The ordinary meaning of “questions of law” includes questions of procedural fairness and natural justice; and
- The existence of a separate remedy under section 58(1)(h), which permits a party to apply to the British Columbia Supreme Court (the “Supreme Court”) to set aside an award for procedural unfairness, does not prevent the same issue from grounding an appeal under section 59(2). Both avenues remain available.
Practical takeaways for construction stakeholders
1. Procedural fairness issues may support an appeal
Green Light confirms that parties faced with a potentially unfair arbitral process should not assume that their only recourse is an application to set aside the award in Supreme Court. Procedural fairness concerns may also provide a basis for appellate review.
Examples may include situations where an arbitrator:
- fails to permit agreed submissions;
- departs from agreed procedures;
- decides issues without giving parties an opportunity to respond; or
- otherwise undermines procedural fairness or natural justice.
For parties to construction contracts, where arbitrations often proceed under compressed timelines and customized procedures, these issues may arise more easily than parties expect.
2. Parties may face a strategic choice between sections 58 and 59 of the Act
Green Light confirms that a party alleging procedural unfairness in a domestic arbitration may have two potential avenues of recourse under the Act:
- Section 58(1)(h): applying to the Supreme Court to set aside the award on the basis of procedural unfairness; or
- Section 59(2): appealing the award to the Court of Appeal on a question of law, with leave or consent.
However, section 59(2) is only available where the arbitration agreement does not expressly exclude appeals on questions of law arising from the award. Many construction arbitration clauses prioritize finality and may contract out of appeal rights altogether. In those circumstances, parties should carefully consider whether section 58 remains available as a separate avenue to challenge the award on the basis of on procedural fairness.
The distinction between these two routes is strategically important. One advantage of proceeding under section 58 is that it does not require leave to appeal, thereby avoiding a significant procedural hurdle. By contrast, a party proceeding under section 59 must either obtain the other party’s consent or successfully seek leave from the Court, including satisfying the statutory criteria set out in section 59(4).
At the same time, section 59 provides broader remedial powers. On an appeal, the Court of Appeal may:
- confirm the award;
- amend the award;
- set aside the award; or
- remit the award back to the arbitrator with the Court’s opinion on the legal issue.
By comparison, under section 58, the Supreme Court’s primary remedy is to set aside the award.
As a result, parties considering a challenge to an arbitral award should carefully evaluate both the arbitration clause itself and the strategic advantages and limitations of each statutory pathway.
3. Carefully draft arbitration clauses and procedures
The case also highlights the importance of precision when drafting arbitration clauses and procedural agreements.
Construction contracts frequently incorporate arbitration regimes such as the CCDC 40 – Rules for Mediation and Arbitration or customized procedures tailored to the project. Once parties establish procedural expectations, arbitrators are expected to follow them. Failure to do so may create grounds for challenge.
Parties should therefore carefully consider:
- whether appeal rights should be preserved or excluded entirely;
- whether certain institutional or industry rules should apply;
- how costs submissions and costs awards will be handled; and
- whether procedural flexibility is desirable or risky for the project at issue.
What does this mean for your arbitration clause right now?
One of arbitration’s primary attractions is finality. Green Light, however, confirms that appellate oversight under the Arbitration Act may be broader than some parties assumed, particularly where concerns about procedural fairness arise.
The decision may also have implications beyond British Columbia. Many Canadian jurisdictions permit appeals on questions of law or allow challenges to arbitral awards based on procedural fairness concerns. As a result, Green Light may be persuasive authority in other jurisdictions where parties seek to characterize procedural fairness issues as appealable legal errors.
For construction industry stakeholders, the decision is a reminder that arbitration clauses are not mere boilerplate. Careful drafting, thoughtful procedural planning, and strategic consideration of appeal rights can significantly affect the parties’ options once an arbitral award has been issued.
If you require guidance regarding arbitration clauses, arbitral awards, or dispute resolution strategy in light of the Court of Appeal’s decision in Green Light, please do not hesitate to contact a lawyer from Miller Thomson’s Construction Litigation Team.
