notes on new arbitration cases in Canada
Issues related to the involvement of third parties in arbitration can be particularly challenging in practice given that few Canadian court decisions address this topic. The purpose of this blog is to address the following three key issues related to third parties in arbitration:
In Fisher v Airfoam Industries Ltd. (Quad-Lock Building System), 2025 BCSC 758 (“Fisher”), the court considered an application to stay court proceedings in favour of arbitration pursuant to section 8 of the British Columbia International Commercial Arbitration Act, RSBC 1996, c 233 (“ICAA”). The court proceedings related to a dispute between a buyer and seller about the sale of goods that the buyer alleged were deficient. The applicant seller argued that the dispute was required to be submitted to arbitration pursuant to a mandatory arbitration clause that was included in the Terms and Conditions on the seller’s website. The court found that respondent buyer had signed sales orders that referred to the Terms and Conditions and that this was evidence that he agreed to them, including the arbitration clause. The respondent buyer argued that the applicant was estopped from relying on the arbitration clause because the respondent and applicant had a shared assumption that the arbitration clause would not be used and that the parties would instead litigate in court. The respondent buyer argued that, as a result, the clause was “inoperative” and unenforceable pursuant to section 8(2) of the ICAA. However, the court found that there was no evidence of any such shared assumption and therefore there was no estoppel. The court granted the stay application. This case is an important reminder that an arbitration agreement is just a contract and grounds that can render a contract unenforceable, such as estoppel, can also render an arbitration clause “inoperative” and unenforceable for the purpose of an application to stay court proceedings for arbitration.
Continue reading “B.C. – Website Terms Contained Enforceable and Not “Inoperative” Arbitration Clause – #911”
In Fowlie et al v Wrestling Canada Lutte et al, 2024 ONSC 7196 (“Fowlie”), the Court considered the appeal of a motion judge’s order declining to strike a breach of contract claim made by a sports dispute resolution expert (“Expert”) against Wresting Canada Lutte (“WCL”). The Expert claimed that WCL had breached their contract by failing to engage in a contractual dispute resolution process before WCL terminated the contract without cause. The dispute resolution clause in the parties’ contract included the option to refer disputes to arbitration. The Court granted the appeal and struck the Expert’s claim. The Court held that the dispute resolution clause only applies when a “dispute” arises. Because there was no dispute as between the Expert and WCL about the validly of the without-cause termination while the contract was in force, there was no “dispute” to which to apply the dispute resolution clause. This decision is surprising in view of the separability principle that arbitration agreements survive contract termination. Arbitration jurisprudence suggests that the arbitration agreement in the contract between WCL and the Expert should have been treated as an independent agreement that survived termination of the main contact.
Continue reading “Ontario – Breach of arbitration clause gives rise to cause of action – #894”
In Lochan v Binance Holdings Limited, 2024 ONCA 784 (“Binance”), the Court considered the appeal of the Motion Judge’s finding that an arbitration clause in a crypto trading agreement was void because it was contrary to public policy and unconscionable. The arbitration clause was part of a standard form contract between the appellant and crypto users. It provided that the appellant could change any part of the arbitration agreement, including the forum and governing law, and that users agreed to any amendments. On appeal, the appellant argued that the Motion Judge had failed to first consider the competence-competence principle in his analysis. The Court dismissed the appeal, finding that the Motion Judge had followed the approach of the Supreme Court of Canada in Dell Computer Corp. v Union des consommateurs, 2007 SCC 34 (“Dell”) and Uber Technologies Inc. v Heller, 2020 SCC 16 (“Uber”) when he considered the competence-competence principle before he considered if an exception to that principle applied to allow the court to consider if the clause was unenforceable.
Continue reading “Ontario – Order of competence-competence analysis on stay motion challenged – #880”
In B Smart Technology Inc. v Norstan Communications Inc., 2024 QCCS 2416 (“B Smart”), the Court considered an application by Norstan Communications Inc. (“Norstan”) to dismiss originating applications of B Smart, in which B Smart sought an order to replace the arbitrator who was appointed to resolve their dispute. B Smart alleged that the arbitrator was biased and that his appointment was improper. What was important to the Court’s analysis was that B Smart had brought an earlier application before the Court to challenge this same arbitrator’s appointment. That judge held that the arbitrator was impartial and that his appointment was proper. Given those findings, the Court found that res judicata applied as a full answer to B Smart’s allegations and the application was dismissed. The Court also found that B Smart’s multiple attempts to challenge the arbitrator were an abuse of process.
Continue reading “Québec – Multiple arbitrator challenges res judicata and abuse of process – #859”
In Ballantry Construction Management Inc. v GR (CAN) Investment Co. Ltd., 2024 ONSC 2129 (“Ballantry”), the applicant, Ballantry Construction Management Inc. (“Applicant”), brought a motion for (among other things) an interlocutory injunction to restrain the Respondent from transferring or encumbering its assets pending the hearing of: (1) the Applicant’s application to enforce two arbitral awards; and (2) the Respondent’s application to set aside the awards on the grounds of a reasonable apprehension of bias on the part of the Arbitrator. On the second issue, the Court concluded that while a “business relationship” between a party and the Arbitrator may create a reasonable apprehension of bias, here, the fact that the Arbitrator was a director and shareholder of the parent of a company that had provided a loan to the Respondent did not support a finding of bias. This case considers how close a relationship between an arbitrator and a party is “too close” if a party seeks to set aside an award based on alleged arbitrator bias.
Continue reading “Ontario – Arbitrator’s relationship with party’s lender not sufficient for bias – #842”
Brown v Smithwick, 2024 BCCA 83 is about an application for leave to appeal an interim award brought pursuant to section 59 of the British Columbia Arbitration Act, SBC 2020 c 2 (“Arbitration Act”). The Applicant sought leave to appeal on the ground that the arbitrator had erred in law by concluding that a debt that the Applicant owed to the Respondent was a debt within section 178(1)(e) of the Bankruptcy and Insolvency Act, RSC 1985, c B03 (the “BIA”), as a debt that arises out of fraud, embezzlement, misappropriation or defalcation while acting in a fiduciary capacity. The reasons of the Court focused on the issue of whether the leave application was premature because the arbitration had not yet ended. The Court held that while it has the discretion to grant leave to appeal from an interim arbitral award, the circumstances of the case weighed against exercising that discretion, including: (1) early judicial intervention would interfere with the arbitration process that the parties had agreed to; (2) the Applicant had not demonstrated that it would be prejudiced by the adjournment; and (3) there could be multiple leave applications to the Court arising from the same arbitration. The Court adjourned the leave application pending the conclusion of the arbitration.
Continue reading “B.C. – Leave to appeal interim award premature until arbitration concludes – #825”
In this commentary, I provide key takeaways for parties that seek to bring or oppose an application to enforce an international arbitration award in Canada. I focus on three decisions issued by the Ontario Superior Court of Justice in 2023: Costco Wholesale Corporation v TicketOps Corporation, 2023 ONSC 573 (“Costco”), Prospector PTE Ltd. v CGX Energy Inc, 2023 ONSC 4207 (“Prospector”), and Xiamen International Trade Group Co Ltd. v LinkGlobal Food inc., 2023 ONSC 6491 (“Xiamen”). What is the procedural fairness exception and how does it work?
Continue reading “Lindsay Reflects (2023): Enforcement of International Awards: The Procedural Fairness Exception – #808”
In Zenda Mount Pearl Square Enterprises Limited Partnership v MP TEI Realty Limited Partnership, 2023 NLSC 142, the Applicant/Respondent in the arbitration applied to set aside an arbitral award arising from a dispute involving the contractual entitlement to refinancing proceeds that the Applicant/Respondent received as a result of a rogue transfer of funds. Section 14 of the Newfoundland and Labrador Arbitration Act, RSNL 1990, c A-14 (the “Arbitration Act”) gives the Court the authority to set aside an arbitral award if it finds that there was Arbitrator misconduct or the award was improperly procured. The Court held that the burden is on the applicant to show that the award is improper as a matter of fact, law, or mixed fact and law, and that the award falls outside out any potential reasonable outcome. The Court’s analysis and reasons looked at whether the decision of the Arbitrator was reasonable, applying Layman v Layman Estate, 2016 NLCA 13 (“Layman”). Focusing, in part, on the Arbitrator’s application of the principles of contract interpretation set out in Creston Moly Corp. v Sattva Capital Corp., 2014 SCC 53 (“Sattva”), the Court concluded that the Arbitrator’s decision to divide the proceeds equally between the parties was reasonable based on the terms of the parties’ agreements. The Court dismissed the set-aside application on the basis that the decision of the Arbitrator, in respect of all of the grounds reviewed by the Court, was reasonable. This case has application to the review (including on set-asides) of arbitration decisions on the basis of reasonableness and the contractual interpretation of commercial agreements.
Continue reading “Newfoundland and Labrador – Set-aside application denied where award meets Vavilov reasonableness test – #793”
In Prospector PTE Ltd v CGX Energy Inc, 2023 ONSC 4207, the Court considered an application by Prospector PTE Ltd. (“Prospector”) for the enforcement of an international arbitration award issued in an ICC arbitration. Prospector brought the application pursuant to the International Commercial Arbitration Act, 2017, SO 2017, c 2, Sched 5 (“ICAA”), which incorporates the UNCITRAL Model Law on International Commercial Arbitration (“Model Law”). CGX Energy Inc. (“CGX”) opposed the application based on the procedural fairness exception in Article 34(2)(ii)(a) of the Model Law. CGX argued that it was denied the opportunity to fully present its case. However, based on the arbitral award, CGX failed to adduce sufficient evidence to prove its counterclaim. The Court granted the enforcement application. Prospector, together with the Ontario Court of Appeal decision in Consolidated Contractors Group S.A.L. (Offshore) v. Ambatovy Minerals S.A., 2017 ONCA 939, leave to appeal to the SCC refused, 2018 CanLII 99661 (“Consolidated Contractors”), make clear that the procedural fairness exception in Article 34(2)(ii)(a) is very narrow. A court is not likely to intervene for process or public policy reasons unless the conduct or decision of the tribunal offends the principals of justice and fairness in a fundamental way.
Continue reading “Ontario – High bar to oppose enforcement of international arbitral award – #777”