Alberta – court relies on stated purpose of its own court rules to ensure arbitration proceeds – #046

Alberta’s Court of Queen’s Bench in Acciona Infrastructure Canada Inc v. Posco Daewoo Corporation (Daewoo), 2017 ABQB 707 demonstrated the court’s ongoing support and assistance of consensual commercial arbitration by relying on the stated purpose of its own court rules as a starting point in deciding how to resolve parties’ dispute over if and how to undertake arbitration provided in their agreements.

Acciona/Pacer Joint Venture (“Acciona”) contracted with Posco Daewoo Corporation (“Posco”) for the fabrication and supply of structural steel required for a bridge Acciona had undertaken by contract with the City of Edmonton to build.

To introduce and guide his analysis of three procedural issues raised by parties to an arbitration, Mr. Justice A.D. Macleod cited the purpose of the Alberta Rules of Court, Alta Reg 124/2010 which is “to provide a means by which claims can be fairly and justly resolved in or by a court process in a timely and cost‑effective way”.

Having cited the court rule, and as introduction to considering Posco’s application to set aside three earlier orders issued by the Court of Queen’s Bench in July 2017, Macleod J. elaborated: “In other words, the rules provide us with the tools by which we deliver justice to the parties before the Court. To the extent possible, those tools should serve the ends of justice and should be interpreted in such a way that timely justice is served and not denied. This policy forms part of the context in which this application must be considered.”

Acciona’s and Posco’s contract included an undertaking to resolve all disputes arising from their contract to arbitration in accordance with Alberta’s Arbitration Act, RSA 2000, c A-43 (“AA”).

Acciona served a Notice to Submit Disputes to Arbitration dated November 17, 2016 (“NoA”).  In its NoA, Acciona referred to Alberta’s AA.  Posco responded by arguing that the NoA was defective in that it referred to the AA and not Alberta’s International Commercial Arbitration Act, RSA 2000, c I-5 (“ICAA”).  Acciona informed Posco that Acciona was prepared to proceed under the ICAA.  Posco refused to cooperate in appointing an arbitrator even under ICAA.

Posco served its own Notice of Arbitration dated June 6, 2017, referring to the application of ICAA if part 2 of ICAA applied.  Just before Posco served its Notice of Arbitration, Acciona attempted to serve Posco through its counsel with originating application materials returnable in the courts of Alberta.   Posco disputed the validity of the service, relying on alleged non-compliance with the Hague Convention on the Service Abroad of Judicial and Extra-Judicial documents in Civil and Commercial Matters (“HC”).

A key step arose in the dispute when the parties entered into a Stand Still Agreement on March 16, 2016.

[11] In addition to the Subcontract, the parties had entered into a Stand Still Agreement dated March 16, 2016. The preamble to the agreement references the dispute between the parties arising out of the Subcontract, provides for the discussion of these issues in good faith with a view to settling, and, failing that, that the matter “shall be settled in accordance with the terms and conditions of the Subcontract Agreement”. 

[12]  Paragraph 6 of that agreement stated “This Agreement is governed by the laws of Canada and Alberta, and each of the Parties irrevocably and unconditionally submits and attorns to the exclusive jurisdiction of the Courts of the Province of Alberta to determine all issues, whether in law or in equity, arising from this Agreement”. Paragraph 12 states “Any written notice required to be given by a Party by this Agreement may be made to the respective addresses for notices in the subcontract.”

Macleod J. held that the disagreement over which arbitration act applied did not make Acciona’s NoA a nullity.  Relying on EPCOR Power L.P. v. Petrobank Energy and Resources Ltd., 2010 ABCA 378, he held that the arbitration panel would decide that issue as it has the right to determine all issues including those relating to its jurisdiction.

He also determined that the courts of Alberta had jurisdiction by virtue of the parties’ express agreement and that the Stand Still Agreement did not alter that agreement.  The Stand Still Agreement relates to disputes arising under the original contract and only amended it.

The wording of the parties’ Stand Still Agreement tied that agreement closely to the disputes arising out of the initial contract and expressly referred the parties to resolve their disputes in accordance with its terms and conditions.  Even if it did not contain an express undertaking to arbitrate any disputes, Macleod J. held that the parties were still bound to arbitrate their disputes.

In the reasons for judgment, Macleod J. noted that the parties had agreed to each appoint one member of an arbitration panel who in turn would appoint a chair.

As a result, Macleod J. dismissed Posco’s applications and he affirmed the three earlier court orders issued in aid of the arbitration.