In Inter Pipeline Ltd v Teine Energy Ltd, 2024 ABKB 740 (“Inter Pipeline”), the Court set out the three-part test a party must meet to obtain a stay of enforcement of a domestic arbitration award in Alberta, rejecting as “not principled” the two-part test that applies in Ontario. The Court also addressed the argument that refusing a sealing order in these circumstances would put a chill on challenges to arbitral awards.
The Arbitration – Teine Energy Ltd. (“Teine”) ships crude oil on the Mid-Saskatchewan Pipeline System (the “Pipeline System”), which is owned by Inter Pipeline Ltd. (“IPL”). A dispute arose in connection with how IPL compensates Teine for quality changes in Teine’s product that occur between the entry and exit points on the Pipeline System. Teine initiated arbitration under the parties’ Pipeline Connection Agreement. The dispute was heard by a three-member tribunal seated in Calgary under the rules of the ADR Institute of Canada (“ADRIC”). The tribunal rendered its Award on August 19, 2024. While each party apparently had some success in the arbitration, the net result required IPL to pay a substantial amount to Teine.
Post-award applications – IPL applied for permission to appeal the Award and to set it aside, while also requesting a sealing order. In a separate application (which was mentioned only briefly in the decision), Teine sought to enforce the Award. The judgment did not address why the parties proceeded by separate applications instead of by cross-applications, although the Court took a functional approach to deciding the issues before it – the stay of enforcement and the sealing order – as if they were made in one proceeding. The Court noted, at para. 10, that a consolidation or similar order may be “necessary for the efficient administration of the actions.”
(i) The stay application – IPL asked the Court to exercise its authority under s. 49 of the Arbitration Act, RSA 2000, c A-43 (the “Act”) to stay enforcement of the Award pending the outcome of its applications for permission to appeal or to set aside the Award. IPL argued that instead of applying the three-part test for stays or injunctions derived from RJR MacDonald Inc v Canada (Attorney General), [1994] 1 SCR 311 (“RJR”) the Court should adopt a two-part test from a line of Ontario cases arising in the context of arbitration awards. Accordingly, the Court first needed to determine what legal test to apply to IPL’s stay application.
The RJR three-part test for a stay or injunction asks:
- Is there a serious issue to be determined?
- Will the applicant suffer irreparable harm if the stay is refused? and
- Does the balance of convenience favour the granting of the stay?
IPL referred the Alberta Court to a line of Ontario cases which have not applied RJR in this context. Rather, applying s. 50(5) of Ontario’s Arbitration Act, SO 1991, c. 17, the Ontario Courts have stayed the enforcement of an arbitration award without requiring the applicant to demonstrate irreparable harm. In the recent case of Abraham v Abraham, 2024 ONSC 5315, at para. 13, the Ontario Superior Court of Justice explained:
“In these circumstances, the court must assess the bona fides of the application to set aside the award or the appeal of the award, and the relative hardship to the parties in the event the court grants the stay: 887574 Ontario Inc. v. Pizza Pizza Ltd., 1995 CarswellOnt 1205 (Ont. Gen. Div. [Commercial List]), at paras. 5, 7; Jaffasweet Juices Ltd. v. Michael J. Firestone & Associates, 1997 CarswellOnt 4384 (Ont. Gen. Div.), at para. 41. Questions aimed at the issue of irreparable harm are therefore not relevant.” (emphasis added)
The Alberta Court in Inter Pipeline rejected this analysis as “not principled,” observing at para. 12 that it is “not clear to me that the line of authority that I have dubbed for convenience the Ontario approach is universally accepted in Ontario: see, for example, Kingston Automation Technology Inc. v Montebello Packaging, 2021 ONSC 2684 at para. 14.”
The problem with the Ontario approach, in the Alberta Court’s view (at para. 15), is that it applies different tests to a stay of enforcement depending on how the issue is presented. Where a party opposes enforcement pending an appeal, the Ontario approach results in the Court’s exercise of discretion to stay enforcement by reference only to the first and third RJR factors, without a clear allocation of burden of proof and without a consideration of irreparable harm. In contrast, “[o]n the cross-application for a stay of enforcement, the Court must consider all three steps of the tripartite test with the party moving for the stay bearing the burden of proof.”
Having rejected the Ontario approach, the Court in Inter Pipeline considered it appropriate (at para. 17), to “offer a reasoned justification for use of the tripartite [i.e., RJR] test in the context for of an application for a stay of an arbitral award.” That is because in earlier Alberta cases (and recent BC authority, like lululemon athletica Canada inc v Industrial Color Productions Inc, 2021 BCCA 108 at para 22) “the appropriateness of the tripartite test is just assumed.” The Alberta Court then offered three reasons to support a different approach than the Ontario one:
First, this issue has been expressly addressed under Manitoba’s Arbitration Act, CCSM c A120, which has enforcement provisions like those in the corresponding Alberta and Ontario legislation. In Shelter Canadian Properties Limited v Christie Building Holding Company, Limited, 2021 MBQB 59 (“Shelter”), the Manitoba Court reasoned that “the exercise of discretion [to stay enforcement of a domestic award] under s 49(5) of the [Manitoba] Act should be governed by the same principles and criteria which are to be applied when a party seeks a stay pending an appeal of a judgment.” The usual RJR tripartite stay test applies to the latter circumstance, in part, because the presumption of correctness means “a stay ought not to be granted easily” (citing GS Dunn & Co Ltd v Venture See Ltd, 2003 MBQB 293 at para. 12). Arbitration Matters previously covered other decisions in the Shelter litigation, including in Manitoba – Vavilov inapplicable to arbitration appeals – #709;
Second, applying the tripartite test to a request to stay enforcement of an arbitration award “has the added virtue of being consistent with how Alberta courts approach stays of administrative decisions and lower court decisions” (citing Knelsen Sand & Gravel Ltd v Harco Enterprises Ltd, 2021 ABCA 362 at para. 37.); and
Third, the legislature’s use of the word “stay” in s 49(5) of the Act means “the usual tripartite test for a stay applies in the same way that its [use] of the word ‘appeal’ indicates that the usual appellate standard of review applies.” (citing Canada (Minister of Citizenship and Immigration) v Vavilov, 2019 SCC 65 at para. 44).
Returning to the merits of IPL’s request to stay enforcement, the Court found, at para. 21, that IPL’s appeal raised serious issues to be determined. The Court did not explain that finding in detail because it rejected IPL’s assertion that the enforcement of the award would cause irreparable harm.
(ii) The sealing order application – IPL sought a sealing order to prevent public access to the court file. While Teine agreed that some parts of the arbitration record contained confidential information that should not be made public, it took the position that redacted versions of the Award and other documents already shielded that information from public disclosure.
The Court applied the test set out in Sherman Estate v Donovan, 2021 SCC 25, at para. 38: “the person asking a court to exercise discretion in a way that limits the open court presumption must establish that:
- court openness poses a serious risk to an important public interest;
- the order sought is necessary to prevent this serious risk to the identified interest because reasonably alternative measures will not prevent this risk; and,
- as a matter of proportionality, the benefits of the order outweigh its negative effects.”
The Court found (at para. 38) that there is a public interest in maintaining the confidentiality expectations of third parties whose information is in the arbitration record, but dismissed IPL’s claim that preventing disclosure of its own information is a protected public interest. The Court also rejected IPL’s argument that open access to the court record would chill parties’ willingness to challenge arbitration awards. In the Court’s view (at para. 56) the parties’ “clear expectation” in selecting arbitration “was that once an award was rendered, any enforcement and appeal proceedings would take place in court according to normal court standards and practices including the open courts principle.”
To protect the public interest in nondisclosure of confidential third party information, the Court directed the parties to identify and agree additional redactions in a short timeframe, failing which they may seek further orders from the Court.
Contributor’s Notes
While this is in some ways a routine decision, there are several key takeaways for arbitration practitioners:
- There are important distinctions between arbitration statutes across Canada. I addressed one example of this fragmentation – in the context of a court’s power to stay litigation in favour of arbitration – in Nova Scotia – Court orders stay in favour of arbitration – but with conditions – #858. Inter Pipeline raises a further complication: some provinces interpret similar legislative text differently – here, the statutory power to stay enforcement while a challenge to an Award is decided. If IPL’s stay application had been decided in Ontario, the outcome may well have been different, with the result that IPL might have been able to delay payment of the Award.
- Local court procedures that have nothing to do with arbitration may lead to idiosyncrasies. For example, in Inter Pipeline the Court pointed out, at para. 16, that “[t]he stay-friendly Ontario approach may be sub-consciously influenced by the Ontario rules governing enforcement of judgments while appeals are pending.” Ontario provides for an automatic stay of a judgment while an appeal is pending (Rules of Civil Procedure, RRO 1990, Reg 194, Rule 63.01(1)), whereas in Alberta a judgment is immediately enforceable unless a court grants a stay. Practically, this suggests that even in domestic cases arbitration counsel would be wise to take a close look at likely enforcement jurisdictions to understand what hazards might arise on the road ahead.
- The Court’s treatment of IPL’s request for a sealing order warrants a few comments. As occurred in the underlying arbitration, in my experience complex confidentiality regimes, including “Attorneys’ Eyes Only” or similar designations, are increasingly being used to protect competitively sensitive or third-party information in arbitration. These are often party-driven and can add significant costs and complexity, requiring multiple versions of documents and careful management of who is present for certain testimony or argument. This case highlights the need for counsel and their clients to be alive to what might happen if the arbitration ultimately leads to court involvement.
- Arbitration is sometimes the beginning and end of a dispute. After an award is rendered, in most cases, the parties comply and move on with their business. But as this case illustrates, arbitration awards are not self-executing, and parties may need to resort to court process to challenge the award or to seek to enforce it. At that point, the default toward openness and transparency in Canadian courts may conflict with party expectations about the confidentiality of their dispute. As the Court in Inter Pipeline suggested, the best time to define and account for the parties’ expectations – speed, efficiency, confidentiality, finality, etc. – may be at the outset, before a dispute is crystallized. The Court suggested that parties could protect the interests that matter to them by careful drafting of their arbitration agreements; for instance, parties may contract for an automatic stay of enforcement pending an appeal (para. 28), limited appeal rights, or to resort to a private appeal (para. 56, citing 2249492 Ontario Inc v Donato, 2017 ONSC 4975 at para 23.).
- Finally, it is notable that the commitment of Canadian courts to openness and transparency in proceedings concerning confidential arbitrations is not universal, even among common law jurisdictions. For example, enforcement proceedings in connection with arbitration awards in Singapore and Hong Kong are private by default, although that is subject to limitations. See, respectively, s. 22 of the Singapore International Arbitration Act 1994 and s. 56 of the Singapore Arbitration Act 2001 and ss. 16-18 of the Hong Kong Arbitration Ordinance, Cap. 609. This is another way in which careful planning for the juridical seat of an arbitration, in addition to thinking ahead about enforcement strategy, may play a role in achieving outcomes that align with client expectations.