Marie-Claude Martel, Author at Arbitration Matters

August 17, 2023August 11, 2023

Québec – No evidence permitted in support of annulment application – #765

In Glen Eagle Resources Inc. v. Gem Yield Bahamas Ltd, 2023 QCCA 686, the Court of Appeal dismissed Appellant’s application for leave to appeal the Superior Court’s decision dismissing Appellant’s request to adduce evidence in support of its application for annulment of an arbitral award. The lower court dismissed Appellant’s request to have a witness testify in support of its argument that the contract containing the arbitration clause was void. Appellant argued that the nullity of the contract would lead to the conclusion that the arbitrator had no jurisdiction. Respondent, which applied for homologation of the award, argued that the lower court had no jurisdiction to hear evidence on the merits of the arbitration on an application to annul the award and that, in any event, the arbitration clause was a separate contract, not affected by the nullity of the contract in which it was included. Following the Superior Court’s decision, the hearing before it was suspended until the Court of Appeal’s decision on the matter.

June 20, 2023June 20, 2023

Ontario – No re-litigation when issues have already been fully arbitrated – #747

In Doria v. Warner Bros. Entertainment Canada inc., 2023 ONCA 321, the Court dismissed the appeal of a decision striking Appellant’s Statement of Claim on the ground that it was an abuse of process because it sought to relitigate issues that had already been fully arbitrated. The Court of Appeal confirmed Justice Koehnen’s decision, even though the Statement of Claim sought damages from third parties to the arbitration. Reviewing the application of section 139 (1) of the Courts of Justice Act, R.S.O. 1990, c. C.43, the Court of Appeal confirmed that this section does not give the broad right to sue jointly liable parties separately. That provision states that where persons are jointly and severally liable in respect of the same cause of action, a judgment or release of one of them does not preclude judgment against any other in the same or a separate proceeding. In this case, the provision did not apply. The Appellant’s claim was fully heard, and the Appellant was compensated through the arbitration process and award. Section 139 does now allow for the re-litigation of issues against third parties because the claimant is not satisfied with the decision, whether the decision arose from arbitration or from a court.

June 5, 2023June 5, 2023

Ontario – No hearing de novo in case of challenge to procedural fairness – #742

In All Communications Networks of Canada v. Planet Energy Corp., 2023 ONCA 319, the Court dismissed the appeal of a judgment upholding an arbitral award in favour of Respondent All Communications Networks of Canada (“ACN”) in the amount of $29,259,787 and made an order enforcing the award. In first instance, Planet Energy Corp. (“Planet”) sought to set aside the arbitral award based on the failure of due process, arguing: (1) that it was not given the opportunity to present its case; and (2) that the Arbitrator’s ruling violated public policy. Before the Court of Appeal, Appellant Planet raised the additional argument that the first instance judge failed to apply the right standard of review. Planet argued that a de novo hearing was required to examine properly the arguments raised against the arbitral award. The Court of Appeal dismissed Planet’s arguments and confirmed that a party seeking to set aside an arbitral award based on a failure of due process must prove that the Arbitrator’s conduct is serious enough to dismiss the application to enforce the award under the law of the enforcing State (here, Ontario). The Court of Appeal also confirmed that a party seeking to set aside an award based on a violation of public policy shall demonstrate that the award offends Ontario’s principles of justice and fairness in a fundamental way.

March 2, 2023February 23, 2023

Québec – Class Actions: rules for referral to arbitration should be followed – #717

In Vidéotron c. 9238-0831 Québec inc. (Caféier-Boustifo), 2023 QCCA 110, the Court of Appeal dismissed Vidéotron’s appeal and confirmed Justice Lussier’s first instance judgement dismissing Vidéotron’s request to limit the definition of the plaintiff group in a class action to only those customers whose contracts do not contain an arbitration clause. After the application for authorization was filed but before it was decided, Vidéotron amended its contracts with all new customers so that they contained an arbitration clause. Almost three years later, it sought to change the definition of the plaintiff group so that it included only those customers with contracts that pre-dated the amendment to include an arbitration clause. Justice Lussier found that Vidéotron was out of time. The Court of Appeal confirmed that section 622 CCP and its 45-day limit for an application for referral to arbitration are applicable to class action proceedings as well as to any other proceedings. Even if this limit is not de rigueur, the party asking for referral to arbitration has the burden of proof to justify any added delay. The Court of Appeal also reaffirmed that, based on an arbitration clause, the motion to request a modification to a plaintiff group in a class action is equivalent to a jurisdiction challenge. The Court of Appeal confirmed Justice Lussier’s ruling that Vidéotron did not meet its burden of proof to justify its delay to file its application to change the definition of the plaintiff class.

January 4, 2023March 13, 2023

Marie-Claude’s 2022 Hot Topic: Binding non-signatories – A new trend arising in Québec? – #697

The last year has seen several judgments which bind third parties to arbitration, specifically in Québec. The basic principles remain unchanged: the rule is still that a contract has effect only between the contracting parties (sec. 1440 CCQ). However, there is a trend, which seemed clear starting in 2021 and continues into 2022, to bring non-signatories into arbitration in certain circumstances, as set out in Québec’s recent judgments. Many reasons explain these decisions: let’s explore why this new trend is arising in Québec.

November 10, 2022May 12, 2023

Québec – No enforcement of award against alter egos – #681

In a much-anticipated decision, the Québec Court of Appeal overturned Justice Pinsonneault’s first instance decision and quashed the seizure before judgment by garnishment taken against a subsidiary and non-party to an arbitration to answer for the debt of the parent pursuant to an arbitral award. Justice Pinsonneault’s decision was discussed in a previous case note concerning CC/Devas (Mauritius) Ltd. v. Republic of India, 2022 QCCS 7. In Air India, Ltd. v. CC/Devas (Mauritius) Ltd., 2022 QCCA 1264, the Court of Appeal unanimously granted the appeal of the parent, ruling that a foreign award cannot be enforced against a third party’s assets unless it is proven: (1) that the third party is the debtor’s alter ego; and (2) that the third party was used in order to conceal fraud, abuse of right or a violation of a public order rule by the debtor. The Court of Appeal ruled that the applicable criteria for the enforcement of a foreign award against the shareholder of a condemned party were the same as the applicable criteria to lift the corporate veil, as codified at section 317 CCQ. Here, those criteria were not met, and the court did not lift the corporate veil.

September 12, 2022September 9, 2022

Québec – Annulment – No review of the merits and no reason to appeal – #658

Balabanyan v. Paradis, 2022 QCCA 877 is, hopefully, the last stage of this arbitration saga, which has come before the Court many times before. In a previous Case Note, Québec – Annulment – No review of the merits, even if award wrong #603, I reviewed how the Court dismissed each and every reason the Appellant raised against the arbitral award made against him. In her decision, Québec Superior Court Justice Harvie reaffirmed that courts have no jurisdiction to revisit the merits of an arbitral award or the arbitrator’s reasons and assessment of the evidence when a party is seeking homologation or annulment of an arbitral award. She also confirmed the strict scope of analysis of homologation/annulment grounds according to sections 645 and 646 CCP. In an ultimate attempt to annul the award made against him, the Appellant sought leave to appeal Justice Harvie’s decision. Firstly, the Court of Appeal took notice of Justice Harvie’s assessment that the Appellant acted in bad faith in the conduct of his proceedings: by seeking to “wear the opponent out of steam by a maze of procedures and ill-founded arguments”. This increased Appellant’s burden significantly and even more considering the fact that the Appellant’s application was out of time. The Court of Appeal dismissed the leave application because the Plaintiff did not demonstrate any reason to justify his demand.

June 21, 2022June 17, 2022

Ontario – No stay despite broad arbitration clause – #629

In FNF Enterprises Inc. v. Wag and Train Inc., 2022 ONSC 2813,Justice Ramsay dismissed the Defendant’s motion for a stay of proceedings under section 7 of the Ontario Arbitration Act, 1991, S.O. 1991, c. 17. The Defendant sought a stay of proceedings based on an arbitration clause included in a lease agreement. Justice Ramsay concluded that, standing alone, the arbitration clause suggested that issues arising out of the lease agreement shall be determined by way of arbitration, but he decided that, interpreting the lease agreement as a whole, the arbitration clause did not extend to an issue concerning collection of unpaid rent, which could be sought by action. Therefore, Justice Ramsay declined to stay the proceedings.

May 23, 2022May 26, 2022

Québec – Court extends arbitrator’s immunity to appointing authority – #619

In B Smart Technology inc. v. American Arbitration Association, 2022 QCCS 1526, Justice Mark Phillips granted the Defendants’ Application for dismissal of the Plaintiff’s Request for Provisional Interlocutory Injunction and Order to Safeguard the Rights of Plaintiff. The Defendants were the American Arbitration Association (“AAA”) and the arbitrator it had appointed. In its Request, Plaintiff sought orders: (1) to recuse and replace the arbitrator; (2) to review the arbitration proceedings, including the costs of the proceedings, the reimbursement for arbitrator’s fees paid to date; and (3) alternatively, the annulment of the arbitration clause and referral of the dispute to the Superior Court. Justice Phillips’s judgment was mainly based on the application of two well-known principles in arbitration law: arbitrator protection against prosecution/immunity (sec. 621 CCP); and the exclusion of court review except as provided by law (sec. 622 CCP). Justice Phillips reaffirmed that the arbitrator’s protection against prosecution is broad and applies both to the arbitrator’s liability and to any challenges against the conduct of the arbitration process itself. He found that the institute offering arbitration services is covered by the protection as well. Justice Phillips also confirmed the exclusion of court review principle, which prevents courts from interfering in an arbitration process other than within the strict and limited occasions provided by law. In this case, the law did not provide for court intervention. Finally, the issue was moot because the arbitrator terminated the arbitration for the Plaintiffs’ failure to pay his costs, as he was entitled to do under the AAA Rules.

April 11, 2022April 18, 2022

Québec – Annulment: no review of the merits, even if award wrong – #603

In Balabanian v. Paradis, 2022 QCCS 959, Justice Harvie reaffirmed clearly that courts have no jurisdiction to revisit the merits of an arbitral award or the arbitrator’s reasons and assessment of the evidence when a party is seeking homologation or annulment of an arbitral award. This judgment is one of many in a saga involving opposing co-owners regarding the management and maintenance of their property. The co-ownership contract included an arbitration agreement. A group of co-owners alleged a lack of transparency and equity by Balabanian in the management and maintenance of the property. The dispute against Balabanian resulted in two arbitrations and court proceedings, taking place in parallel. Justice Harvie’s decision concerned the second arbitration process. The group of co-owners sought the homologation of the second arbitral award, while Balabanian asked for its annulment. Balabanian contested the award for numerous reasons, including: the arbitrator’s appointment because of his lack of independence and neutrality, the lack of jurisdiction of the arbitrator, the award going beyond the scope of the arbitration agreement, the violation of the fundamental right to be heard and, more generally, the merits of the award itself. Justice Harvie dismissed every argument made by Balabanian against the award, reaffirming the strict scope of analysis of homologation/annulment grounds according to sections 645 and 646 CCP.