Ontario – Court can hear set aside despite NY forum selection clause – #837

In Tehama Group Inc v Pythian Services Inc, 2024 ONSC 1819, the Court declined to stay an application to set aside an arbitration award. The stay application was based on a forum selection clause in favour of the courts of New York. In denying the stay, the Ontario court applied an exception in that forum selection clause regarding certain types of disputes under the parties’ agreement that were to be referred to arbitration. The key issue in the case concerned establishing the “place” of the arbitration, which had not been expressly set out by the parties or determined by the arbitrator. Applying the International Commercial Arbitration Act, RSO 1990, c I.9 (“ICAA”) and  UNCITRAL Model Law on International Commercial Arbitration (“Model Law“) the Court determined that Toronto, Ontario, was the place of arbitration and that the Ontario Superior Court of Justice was therefore the only competent forum to decide the set-aside application. 

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Ontario – Arbitrators cannot ignore the law or defy the Court – #836

In Eyelet Investment Corp. v. Song, 2024 ONSC 2340, the Divisional Court’s decision starts with: “Domestic arbitrations in Ontario must be decided in accordance with the law. Arbitrators are accorded broad deference for matters within their jurisdiction and in defining the scope of their jurisdiction. But they are not free to ignore the law or to decide cases in accordance with their whims”. In Eyelet, the Court set aside the damages award from an arbitration concerning repudiated real estate transactions. The Court identified multiple instances where the arbitrator defied directions from the Supreme Court to determine the claims and remedies on remittal. Rather than following the law, the arbitrator addressed damages in accordance with his sense of fairness. The Court directed the damages and cost determinations to a new arbitrator.

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Ontario – Parties share responsibility to keep arbitration moving – #835

In Bank-Strox Renovation Inc. v. Lugano View Limited, (“Bank-Strox”) the Court dismissed the defendant’s motion to dismiss a construction lien action for delay where the had parties agreed to have their dispute resolved by arbitration. As a reminder of the sharp distinction between litigation and arbitration, the Court held that a respondent in an arbitration has the same, or in some circumstances a greater, contractual obligation to keep the arbitration moving as the claimant. Simply sitting back and doing nothing is not a basis to later seek dismissal of the claim for delay. That might work in a court case but it won’t where the parties have agreed to move their dispute to arbitration.

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Québec – Attempt to circumvent ICC Tribunal order amounts to fraud (in Canada) – #834

In Eurobank Ergasias S.A. v. Bombardier inc., 2024 SCC 11, the Court held that a call on a bank guarantee in contravention of an order of an arbitral tribunal in a pending ICC arbitration amounted to fraud under Canadian law, such that the bank that issued a related counter-guarantee was required to refuse payment.

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B.C. – No arbitrator bias where prima facie merits and credibility determinations made – #833

In Johnston v. Octaform Inc., 2024 BCSC 537, the Court dismissed a petition to have an arbitrator removed from an ongoing arbitration on the basis of an alleged reasonable apprehension of bias. The circumstances relied on by the petitioners arose from the arbitrator’s issuance of a freezing order and other procedural directions, in a hard fought and contested arbitration. The fact that the freezing order required the arbitrator to make findings of credibility and preliminary merits determinations did not give rise to bias. Also, the trigger for the 15-day period to challenge an arbitrator for bias is not an “open and fluid concept”.

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Ontario – Award unreasonable where tribunal failed to follow binding law on frustration – #832

In Taseko Mines Limited v. Franco-Nevada Corporation, 2023 ONSC 2055, the Ontario Superior Court of Justice (Commercial List) granted an appeal from an arbitral award due to, among other things, the arbitrator’s failure to apply binding precedent on frustration of contract. Although the Court applied a deferential reasonableness standard, it concluded the arbitrator’s departure from binding jurisprudence rendered the award unreasonable.

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Singapore – Party cannot resist enforcement on grounds already rejected at seat – #831

In The Republic of India v. Deutsche Telekom AG, [2023] SGCA(I) 10, the Singapore Court of Appeal held that India could not resist recognition and enforcement of an arbitral award based on arguments that had already been rejected in a set-aside proceeding in Switzerland, the seat of the arbitration. Applying the doctrine of transnational issue estoppel, the Court of Appeal held that parties to a proceeding to set aside an award at the seat are generally precluded from resisting recognition and enforcement of the award on grounds raised before the court at the seat and rejected by that court. 

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B.C. – Consumer protection claim survives stay application through last-minute amendment – #830

Polanski v Vancouver Career College (Burnaby) Inc. concerns a defendant’s stay application brought under s. 7 of the Arbitration Act, SBC 2020, c 2 (“Arbitration Act”). The Court dismissed the application to stay certain claims made under s. 172 of the British Columbia Business Practices and Consumer Protection Act (“BPCPA”). The Court, relying on various appellate cases, held that s. 172 restricted the parties’ ability to agree to arbitrate and that the policy objectives of s. 172 would not be served by private and confidential arbitration. Why did the court need to re-articulate this well-established principle? Perhaps because the defendant needed to pivot after it had initially brought the application in response to the plaintiffs’ changing positions. The plaintiffs only added the s. 172 claims in the face of the stay motion and then only consented to the stay of the remainder of their claims for damages, including under s. 171 of the BPCPA, at the hearing of the application – no doubt, to the dismay of defence counsel who were facing a moving target. (A brief refresher for those in need it: s. 172 provides for private enforcement of consumer protection claims in the public interest, while s. 171 provides for  a private remedy for damages or loss.)

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Ontario –“Fraud” does not include “constructive fraud” for set-aside application deadline – #829

Campbell v Toronto Standard Condominium Corporation No. 2600, 2024 ONCA 218, considered the meaning of “fraud” under section 46(1)9 of the Ontario Arbitration Act, 1991, SO 1991, c, 17. It provides that a court may set aside an award on the ground that, “the award was obtained by fraud.”  The first issue before the Court was whether “fraud” includes “constructive fraud.”  The main issue, however, was the interpretation to be given to sections 47(1) and (2), which provide that an application to set aside an award shall be commenced within 30 days after the applicant has received the award – except if the applicant alleges corruption or “fraud”.  The Court found that “fraud” does not include “constructive fraud, which means that the Respondents were out of time to bring their set-aside application. It found that a broadening of the definition of fraud is not consistent with the statutory objectives to narrow the grounds for court interference in arbitrations. The Court expressed the view that the allegation of constructive fraud was made for the purpose of circumventing the statutory time limit for bringing a set-aside application. (This case is also useful for its summary of basic arbitration law principles. If you need a quick update or refresher of these, see my Editor’s Notes below for a “cheat sheet”.)

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B.C. – Stay in favour of non-party to arbitration agreement in multi-party construction dispute – #828

In Vancouver Pile Driving Ltd. v. JGC Constructors BC Ltd., 2024 BCSC 344, the Court granted two applications to stay litigation arising out of a large multi-party construction dispute in favour of arbitration.  The first Applicant was a contractor which had a subcontract with the Plaintiff that provided for mandatory arbitration, unless the dispute involved the owner or other project participants.  The second Applicant was the owner, a non-party to the subcontract, which argued that if the litigation was stayed against the contractor, it should be stayed against the owner as well.  The Court applied section 8 of the International Commercial Arbitration Act, R.S.B.C. 1996, c. 233 (“ICAA”) to stay the proceedings against the first Applicant.  The Court also stayed the action against the second Applicant owner pursuant to section 10 of the Law and Equity Act, R.S.B.C. 1996, c. 253 to prevent a multiplicity of proceedings.

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