Marie-Claude Martel, Author at Arbitration Matters

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, 2022November 3, 2022

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.

January 31, 2022May 4, 2022

Québec – Enforcement of foreign award against alter egos – #578

In CC/Devas (Mauritius) Ltd. v. Republic of India, 2022 QCCS 7, Justice Pinsonnault was seized with several questions with respect to two seizures before judgment by garnishment, which were authorized within the context of an application for recognition and enforcement of arbitral awards rendered outside of Québec. What makes this situation of interest is the fact that the seizures before judgment involved assets (money) owned by third parties who were not defendants to the arbitration or named in the awards for which recognition is sought (still pending). They are not implicated at all in the facts alleged in the dispute leading to these awards and they are not targeted in the awards either. Nonetheless, Justice Pinsonnault concluded that the allegations against these third-party corporations (fully owned by the respondent, Republic of India) were sufficient to cause him to confirm the seizure against one of them, although with a revised scope. The seizure against the other corporation was dismissed for other reasons related to the State Immunity Act. The application for recognition and enforcement of the awards remains pending.

October 13, 2021May 4, 2022

Québec – Court favors arbitration even for related, but non-signatory, parties – #541

In 10053686 Canada inc. v. Tang, 2021 QCCS 3467, Justice Geeta Narang declined jurisdiction with respect to a dispute arising out of a Franchise Agreement. Plaintiffs were the franchisees and a director of a franchisee. Defendants were directors and shareholders of the franchisor. Justice Narang referred the case to private arbitration following Defendants’ demand for declinatory exception because the Franchise Agreement contained an arbitration clause. Justice Narang first concluded that the arbitration agreement was a “complete undertaking to arbitrate”, in conformity with the Supreme Court of Canada decision in Zodiak International v. Polish People Republic, [1983] 1 S.C.R. 529. She concluded that all allegations in the Plaintiffs’ claim were related to the franchisor-franchisee relationship and covered by the arbitration agreement. Secondly, she recognized the Legislator’s intention to favor a private dispute resolution mechanism over the public justice system whenever the parties have expressed the intention to resolve their dispute out of court. Thirdly, she granted Defendants’ demand for a declinatory exception, even though all Defendants and one of the Plaintiffs were non-signatories to the arbitration agreement. In interpreting the arbitration agreement liberally, she concluded that in this context ignoring the arbitration agreement because the Defendants were not parties to the arbitration agreement would be to rely upon a “blind technicality”.

September 14, 2021May 4, 2022

Québec – Arbitration clause cannot be avoided by bringing a class action – #531

In Centre de santé dentaire Gendron Delisle inc. c. La Personnelle, Assurances générales inc., 2021 QCCS 3463, Justice Davis reaffirmed that a valid arbitration clause will be enforced and cannot be avoided by the Plaintiff bringing a class action. In this matter, the Plaintiff sought authorization to bring a class action against various insurance companies under various insurance policies and to be appointed as representative Plaintiff on behalf of dental clinics which claimed business interruption losses caused by the COVID-19 pandemic. Justice Davis dismissed the request for authorization on the basis that it did not meet the requirements of Article 575(2) of the Code of Civil Procedure. However, he said that had he granted authorization, those insured dental clinics covered by an insurance contract containing a valid arbitration clause would have been excluded from the group covered by the class action and referred to arbitration.