In Sivitilli v PesoRama Inc., 2025 ABCA 56, the Court clarified that the grounds for staying an arbitration are exhaustively set out in Section 7(2) of the Alberta Arbitration Act, which does not provide for a stay in the event of a multiplicity of proceedings. Section 6(c) of the Arbitration Act does not provide any further discretion to stay an arbitration. This decision is in line with the Supreme Court of Canada’s decision in TELUS Communications Inc. v. Wellman, 2019 SCC 19.
Background – The respondent, Mr. Sivitilli, was the former CEO of the appellant, PesoRama. His employment contract included an arbitration clause for disputes arising from his employment. After his employment was terminated, Mr. Sivitilli commenced an oppression claim in the courts. PesoRama filed a statement of defence and counterclaim. Mr. Sivitilli then sought to discontinue the oppression claim and proceed with arbitration. He filed a notice of arbitration in respect of his employment claims.
PesoRama responded with an application to enjoin the arbitration. It argued that many of the same issues would be examined in the counterclaim, to the prejudice of PesoRama. PesoRama also argued that the employment agreement, which contained the arbitration clause, was not operative, as it was not signed or approved by PesoRama’s board of directors.
Chambers Justice’s Decision – The chambers justice made two key findings.
First, Mr. Sivitilli was granted leave to withdraw the oppression action without any conditions, although PesoRama was awarded costs in relation to its defence of that action.
Second, Mr. Sivitilli’s application to appoint an arbitrator was granted and PesoRama’s opposing application to enjoin the proposed arbitration was denied. The chambers justice rejected the argument that referring the dispute to arbitration would be duplicative and unnecessary.
In respect of PesoRama’s argument that the employment agreement was not valid, the chambers justice held that the question of whether the impugned agreement was operative was one of mixed fact and law and as such, it should be decided by the arbitrator at first instance (in accordance with the competence-competence principle).
Leave to Appeal Decision – Pursuant to sections 47 and 48 of the Alberta Arbitration Act, PesoRama sought leave to appeal the portion of the decision of the chambers judge in respect of the validity of the arbitration agreement. This was rejected by the Alberta Court of Appeal in Sivitilli v PesoRama Inc, 2024 ABCA 249.
PesoRama also raised a second ground of appeal. It argued that the chambers justice erred in failing to stay the arbitration pursuant to section 6(c) of the Arbitration Act, which permits court intervention to (among other things) prevent manifestly unfair or unequal treatment of a party to an arbitration agreement. The Court held that no permission to appeal was required to appeal an order made with respect to section 6(c).
This leave to appeal decision is discussed in Peter D. Banks’s Arbitration Matters Case Note: Alberta – Statutory Framework of Arbitral Appeals Clarified – Leave or No Leave? – #862.
Appeal Dismissed – The sole issue on appeal was whether the chambers justice had erred in failing to apply section 6(c) of the Arbitration Act.
Section 6(c) of the Arbitration Act states that “No court may intervene in matters governed by this Act, except for the following purposes as provided by this act: […] (c) to prevent manifestly unfair or unequal treatment of a party to an arbitration agreement.”
PesoRama argued, first, that it was manifestly unfair to permit the arbitration because it was being forced to defend the same claim in two forums (presumably this is because PesoRama’s counterclaim was proceeding, as Mr. Sivitilli’s oppression claim was withdrawn, although this is not made clear in the decision). Second, PesoRama argued that in resorting to the courts, Mr. Sivitilli had repudiated the right to arbitrate he claimed to have. It argued that it was an error of law and manifestly unfair for the chambers justice not to consider section 6(c), which was raised in the materials and submissions before him. PesoRama relied on New Era Nutrition Inc. v Balance Bar Company, 2004 ABCA 280, which held that section 6(c) of the Arbitration Act allowed a court to stay an arbitration where a party brought both an arbitration and a court proceeding and there were overlapping matters that could not reasonably be divided.
In rejecting that argument, the Court made the following three findings:
First, it held that “[m]uch of the reasoning in New Era has been overtaken by the subsequent Supreme Court of Canada decision” in TELUS Communications Inc. v. Wellman, 2019 SCC 19. In Wellman, that Court interpreted the stay provision in the Ontario Arbitration Act 1991, which is “virtually identical” to the Alberta Act. Section 7(2) of the Act (in both Ontario and Alberta) sets out the specific circumstances under which a court may refuse to stay a court proceeding. None of the listed circumstances involve the duplication of issues in an arbitration and a court proceeding. Under the stay provision in Section 7(4), if the court refuses to stay the court proceeding, the arbitration may not be continued. In other words, the arbitration shall not be continued only where the circumstances set out in Section 7(2) apply.
Section 7(5) provides the court with discretion to stay the court proceeding in respect of the matters in dispute dealt with in the arbitration and allow the court proceeding to continue with respect to other matters if it finds that (a) the agreement deals with only some of the matters in dispute and (b) it is reasonable to separate the matters in dispute dealt with in the agreement from the other matters. The majority of the Supreme Court in Wellman held that section 7(5), “does not grant the court discretion to refuse to stay claims that are dealt with in an arbitration agreement.” In Wellman, the Supreme Court specifically held that a “multiplicity of proceedings” is not a reason to stay proceedings unless the legislature has amended the Act to allow such a stay.
After having reviewed these findings from Wellman, the Alberta Court of Appeal held that the circumstances enumerated in section 7(2) were not present in this case. Section 6(c) cannot supplant the circumstances set out in section 7 and thus does not allow for a court to stay an arbitration because it may result in a duplication or multiplicity of proceedings. The Court then went on to hold that, in any event, “we need not determine if New Era has been overturned as the chambers justice found the proceedings were not duplicative.”
Second, the chambers justice rejected the argument that there were duplicative proceedings because both the statement of claim and the notice of arbitration included allegations relating to Mr. Sivitilli’s termination. (The chambers justice analysis focused on duplication between the statement of claim and notice of arbitration, despite the fact that the oppression claim was withdrawn.) He held that the oppression claim dealt with Mr. Sivitilli’s position as a shareholder while the notice of arbitration referred to the employment agreement between the parties. The Court found no error in this conclusion, which was available to him in the circumstances and thus owed deference.
Third, PesoRama argued that Mr. Sivitilli had waived the right to arbitrate by filing the statement of claim. It relied on RH20 North America Inc. v. Bergmann, 2024 ONCA 445, for the proposition that once a party to an arbitration agreement actively pursues litigation rather than an arbitration, the party has waived or abandoned the right to arbitrate. (See Jonathan Eades’s Arbitration Matters Note: Ontario – Motion to strike civil claims in court waives arbitration rights – #847.)
The Court noted that the RH20 decision was rendered after the chambers justice’s decision that was the subject of this appeal and held that a breach of the negative obligation in the arbitration agreement to not proceed to court requires that the dispute to be arbitrated is the same dispute as that which was brought to court. It emphasized that, “[t]his is key.” Section 7(5) of the Arbitration Act recognizes that not every matter in a dispute may be covered by an arbitration agreement. This provision requires a court to stay a proceeding with respect to the matters in dispute dealt with in the arbitration agreement, but may allow a proceeding to continue “with respect to other matters” if the court finds that “the agreement deals with only some of the matters in dispute” and “it is reasonable to separate the matters in dispute dealt with in the agreement from the other matters.” In other words, the Act explicitly allows for a multiplicity of proceedings in certain circumstances. Here, the chambers justice had already found that Mr. Sivitilli had not brought a claim to the courts on the same matter as the dispute subject to the arbitration provision in his employment contract.
As a result, even though the chambers justice did not expressly refer to section 6(c) of the Arbitration Act, intervention by the Court was not warranted. The record supported the chambers justice’s decision not to intervene given his finding the issues in the two proceedings were not the same.
Contributor’s Notes:
This decision reinforces TELUS Communications Inc. v. Wellman, 2019 SCC 19, that says that there is no residual power for a Court to stay an arbitration beyond the express exceptions to the requirement to stay that are set out in Section 7(2) of the Arbitration Act.
So it is interesting that the Court held on the one hand that “[m]uch of the reasoning in New Era has been overtaken by the subsequent Supreme Court of Canada decision” but also said “we need not determine if New Era has been overturned as the chambers justice found the proceedings were not duplicative.” In that second sentence, the Court seems to have weakened its initial statement on the status of New Era and it is not clear why the Court did not just forcefully declare that it is overturned. The Court also did not make any reference to IBI Group Architects v. Edmonton (City), 2022 CarswellAlta 1805 (K.B.), where the Alberta court found, in no uncertain terms, that “New Era is no longer good law”. (See Julie Hopkins’s Arbitration Matters Note: Alberta – Power to prevent “manifestly unfair treatment” not power to stay arbitration – #706.)
In the result, this should not be a controversial decision. The Supreme Court of Canada’s decision in Wellman was clear. Other Courts of Appeal have been equally clear that cases on this point decided before Wellman must “be taken as having been overturned.” (See Toronto Standard Condominium Corporation No. 1628 v. Toronto Standard Condominium Corporation No. 1636, 2020 ONCA 612, para. 43 and Daniel Urbas’s Arbitration Matters Note: Ontario – appeal court reaffirms jurisdiction for appeal of stay decision where decision holds arbitration agreement does not apply – #385.)