By HMC Lawyers LLP

In Medicine Hat (City) v Fieldcore Service Solutions Canada Company, 2026 ABKB 447, the Alberta Court of King’s Bench dismissed an appeal from a commercial arbitration award arising from alleged damage to a gas turbine. The decision is a useful reminder that arbitration appeals are shaped by the parties’ arbitration agreement, and that procedural fairness complaints will be assessed in the context of the choices made by the parties during the arbitration itself.

The underlying dispute concerned Unit 14, a gas turbine used by the City of Medicine Hat to generate electricity. The City alleged that Fieldcore Service Solutions Canada Company, a GE subsidiary, was negligent in connection with borescope inspections performed on the turbine in 2019 and 2020. The City advanced a theory that a borescope plug had been improperly inserted or left in a condition that allowed foreign material to enter the turbine and cause downstream damage. Fieldcore disputed both breach and causation.

The arbitrator dismissed the City’s claim. Among other things, the arbitrator found that no bailment had been established, that Fieldcore had not breached the applicable standard of care or any duty to warn, and that causation had not been proven. The City appealed the award under sections 44 and 45 of Alberta’s Arbitration Act, arguing that the arbitrator made reviewable errors and that the arbitration process had been manifestly unfair.

The Scope of the Appeal: The Arbitration Agreement Governed

A central issue on appeal was the scope of the Court’s jurisdiction. The arbitration agreement provided that the award was appealable on questions of law or fact:

“28. The Award of the Arbitrator shall be final but appealable by either Party to the Court of King’s Bench on a question of law or fact, which appeal may be heard without the party first seeking leave of the Court to bring its appeal.”

The City argued that this language also permitted an appeal on questions of mixed fact and law because, in its view, a question of mixed fact and law necessarily includes both law and fact.

Justice Froese rejected that argument. The Court confirmed that questions of law, questions of fact, and questions of mixed fact and law are distinct categories. The distinction was set out in the Supreme Court of Canada decision Canada (Director of Investigation and Research) v Southam Inc, 1997 CanLII 385:

“Briefly stated, questions of law are questions about what the correct legal test is; questions of fact are questions about what actually took place between the parties; and questions of mixed law and fact are questions about whether the facts satisfy the legal tests.”

Justice Froese concluded that because the arbitration agreement permitted appeals only on questions of law or fact, the Court’s jurisdiction was limited accordingly. As laid out in the Alberta Court of Appeal decision ENMAX Energy Corporation v TransAlta Generation Partnership, 2022 ABCA 206, ultimately the arbitration agreement governs.

This aspect of the decision is significant for parties drafting arbitration clauses. If parties intend to preserve a broader right of appeal, including appeals on questions of mixed fact and law, the agreement should say so clearly. Conversely, where the agreement limits appeal rights, the Court will give effect to that bargain.

Procedural Fairness and Tactical Choices

The City also argued that the arbitration had been procedurally unfair, particularly in relation to the arbitrator’s treatment of a third-party report prepared by TransCanada Turbine (the “TCT Report”). The TCT Report was important to the City’s causation theory. However, the authors of the TCT Report were not called as witnesses, their qualifications were not provided, and Fieldcore objected to the TCT Report being relied on for opinion evidence without an opportunity to cross-examine the authors.

The arbitrator admitted the TCT Report but ultimately gave no weight to portions that expressed opinion evidence on causation. On appeal, the City characterized this as an exclusion of crucial evidence and argued that it was denied a fair opportunity to present its case.

Justice Froese rejected that argument. The Court emphasized that the report had not been excluded; rather, the arbitrator had admitted it and assigned limited or no weight to portions he considered opinion evidence. The arbitrator’s approach was consistent with the approach described in Kon Construction Ltd v Terranova Developments, 2015 ABCA 249.

The Court also assessed the fairness issue in the broader procedural context. Justice Froese held that although the report was crucial to the City’s case, that was not determinative. The arbitrator’s decision on admissibility and weight had to be viewed “in light of the City’s tactical and strategic choices.” Those choices included relying on a different witness to support the report, rather than calling the report’s authors; proceeding despite Fieldcore’s stated objection; and not seeking an adjournment or calling rebuttal evidence after the evidentiary issue became clear. The Court held that the City had been given an opportunity to make submissions and could not later recast the consequences of its own procedural choices as manifest unfairness.

“To conclude, the arbitrator’s decision to place no weight on the parts of the TCT Report that he found were opinion evidence was not manifestly unfair nor did it deny the City the opportunity to present its case. I decline to exercise my discretion to set aside the award on this basis.”

Other Issues

The Court also addressed several additional issues advanced by the City, including the applicable standard of review, the treatment of expert and corporate representative evidence, the adequacy of the arbitrator’s reasons, bailment, and the standard of care and duty to warn. Justice Froese rejected these grounds, emphasizing that the arbitrator was entitled to weigh competing evidence, manage the record, and make factual findings within the scope of the arbitration agreement. The appeal was dismissed.

The decision reinforces the high threshold for setting aside an arbitration award on procedural fairness grounds. Parties are entitled to a fair hearing, not a perfect one. Alleged unfairness must go to the heart of the process and meaningfully impair a party’s ability to present its case. Where the issue flows from a party’s own litigation strategy or failure to pursue available procedural steps, the Court will be unlikely to intervene.

Key Takeaways

• Appeal rights in arbitration are governed by the arbitration agreement. If parties wish to permit appeals on questions of mixed fact and law, the agreement should say so expressly.
• Questions of law, questions of fact, and questions of mixed fact and law remain distinct categories. A right to appeal questions of “law or fact” does not automatically include mixed fact and law.
• Procedural fairness challenges are assessed in context and remain narrow. The issue is whether the process was fundamentally unfair, not whether the hearing was perfect.
• Strategic and tactical choices made during the arbitration matter. A party may have difficulty later alleging unfairness where the alleged prejudice flows from its own evidentiary or procedural decisions.
• Arbitrators have discretion to manage evidence, including by admitting evidence but assigning limited or no weight to portions that cannot be meaningfully tested.

Medicine Hat v Fieldcore is a helpful decision for parties involved in commercial arbitration in Alberta. It underscores the importance of careful drafting at the front end and disciplined procedural decision-making at the hearing.

HMC Lawyers was pleased to represent Fieldcore Service Solutions Canada Company on the appeal, with David J. Corrigan, KC and Taylor Hudson appearing for the respondent.

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