In Alberta Motor Association Insurance Company v. Aspen Insurance UK Limited, 2018 ABQB 207, Madam Justice Dawn Pentelechuk reviewed competing case law and considered academic commentary before concluding that, under the International Commercial Arbitration Act, RSA 2000, c I-5,(“ICAA”) court involvement must yield to party autonomy and party control when the court is asked to order consolidation. Unless all parties agree to consolidation, the courts do not have jurisdiction under the ICAA to consolidate despite how circumstances might tempting the court to do so.
The case stemmed from damages caused by the May 2016 wildfire southwest of Fort McMurray, Alberta. Alberta Motor Association Insurance Company (“AMA”) issued 13,000 policies covering residences, businesses and vehicles affected the fire. As of June 2017, AMA had paid out more than $293 million to its policyholders.
AMA had reinsurance coverage with six (6) reinsurers: Aspen Insurance UK Limited (“Aspen”), Everest Reinsurance Company (“Everest”), Hannover Rueck SE (“Hannove”), SCOR Canada Reinsurance Company (“SCOR”), Swiss Reinsurance Company Ltd (“Swiss”), The TOA Reinsurance Company of America (”TOA”), and Lloyd’s Underwriters (“Lloyd’s”) (the “Reinsurers”). That reinsurance coverage was provided by a Property Catastrophe Excess of Loss Reinsurance Agreement (“Reinsurance Agreement”).
The Reinsurance Agreement contained what Pentelechuk J. characterized as a lengthy but also ‘ambiguous’ arbitration clause. Not only did the clause not state which Alberta statute applied – Arbitration Act, RSA 2000, c A-43 (“Arbitration Act”) or the ICAA – she later noted that “consistent with the ambiguity that defines the arbitration agreement, there is no reference to the arbitral seat, the law of the arbitral seat of the law that applies to the arbitration proceedings”.
The choice of arbitration legislation impacted two (2) issues raised before the court: stay of proceedings and consolidation. Before dealing with either issue, Pentelechuk J. determined that:
(a) there was a single, “overarching” Reinsurance Agreement. See paras 18-53. The result is fact specific and does not necessarily offer guidance across many situations; and,
(b) one of the six (6) defendants qualified as ‘international’ for the purposes of the ICAA. This determination was sufficient to conclude that the entire group was subject to ICAA since they were all bound by a single contract. See paras 54-67 for her overview and paras 68-84 and paras 85-130 for her application of those principles to the particular facts of two of the Respondents. Her analysis is quite useful to other arbitration parties as it examines how different facts can point towards either domestic or international arbitration.
Under the Arbitration Act, the court has jurisdiction to refuse a stay of the court proceedings if the matter in dispute is a proper one for summary judgment. Under the ICAA, the court has no jurisdiction and has to refer the parties to arbitration. Given her conclusion that there was a single, “overarching” Reinsurance Agreement and one of the parties triggered the application of the ICAA, Pentelechuk J. granted the stay and focused on the application for consolidation.
Her analysis on consolidation excluded the option of the Arbitration Act as a source of authority to consider consolidation of the arbitrations. She therefore examined whether the ICAA allowed her to order the consolidation of arbitrations in the absence of all the parties’ consent. AMA opposrd consolidation for “undisclosed reasons”.
She readily acknowledged that consolidation, even without all the parties’ consents had benefits.
“ Consolidation would avoid multiplicity of proceedings, save arbitral and party resources and avoid possibly inconsistent results arising from multiple arbitration proceedings. This application is brought before any arbitration proceedings have commenced, so all parties are at the same stage.
 Parties elect to proceed with arbitration of their disputes, rather than resorting to the courts for a number of reasons, including efficiency, finality, privacy and the ability to hear the dispute by an arbitrator or arbitral panel with expertise in the subject-matter of the dispute. It does seem counter-intuitive to allow one party (in this case AMA) to refuse consolidation, and insist on multiple arbitrations which serve to erode many of the inherent benefits of consolidation.”
Earlier case law had come to opposite conclusions as to whether a court needed to have consent from all the parties prior to ordering consolidation:
– Western Oil Sands Inc. v. Allianz Insurance Company of Canada, 2004 ABQB 79 held that the answer is ‘yes’;
– Pricaspian Development Corporation v. BG International Ltd, 2016 ABQB 611 held that that the answer is no’.
Pentelchuk J. conceded that the “broad, purposive interpretation” followed in Pricaspian was “tempting”, especially when the facts favoured consolidation. Pentelechuk J. further noted that academic commentary pointed in the opposite direction. She referred to Uniform Law Conference of Canada’s “International Commercial Arbitration Report of the Working Group (August 18, 2012)” and the Alberta Law Reform Institute’s “Final Report 103 – Arbitration Act: Stay and Appeal Issues (September 2013)” which urged to require consent of all parties in lieu of court intervention and expediency.
Pentelechuk J. preferred to limit the court’s involvement and to reflect the policy that arbitration agreements should be honoured and not to sacrifice party autonomy and party control to court involvement. She determined that the consent of all the parties was a pre-requisite for consolidation under an arbitration governed by the ICAA.
“ Neither Pricaspian nor Western is binding on me. Looking at this issue holistically, and having regard to the fundamental principles of minimal court involvement and party control that govern arbitration law, I prefer the reasoning in Western Oil that, in international arbitrations, the consent of the parties is a pre-requisite to consolidation.”
Pentelechuk J. had opened and closed her reasons with her observation about how ambiguity in arbitration clauses redirects parties into court applications. At the very onset of her reasons, she opened her reasons with a single sentence:
“ This application demonstrates the complex preliminary applications that can result from an ambiguously worded arbitration clause.”
As she closed her reasons, she returned to her opening critique. She conceded that favouring party autonomy and party control may lead to unwanted results but that the solution was also within reach of the parties:
“ … That may mean that from time to time, ambiguity within the arbitration agreement will create a potentially impractical result. The answer is to encourage the drafting of detailed arbitration clauses, where foreseeable issues are considered in advance and uncertainty is mitigated.
 As stated at the outset, these applications could have been avoided had the parties addressed their minds to the arbitration clause that governed them. The parties could have expressly stated any one of the following to make it clear that the International Act applies:
– that the subject-matter of the arbitration relates to more than one country;
– that the International Act applies to the arbitration proceedings;
– that the Domestic Act does not apply;
It was also open to the parties to incorporate a consolidation or joinder provision.
 The parties are all sophisticated corporations. I am advised the quantum in dispute is $147 million. I find the cavalier approach to the arbitration clause all the more surprising.”
Pentelechuk J. concluded that the objective intention of the parties was to enter into a single, overarching agreement and that one of the parties met the test for internationality under the ICAA, thereby placing the arbitration proceedings fall under the ICAA. She stayed the litigation and referred the parties and their dispute to arbitration given that section 8 of the ICAA requires the consent of all parties as a pre-requisite to consolidation.