Marie-Claude Martel, Author at Arbitration Matters

November 22, 2024November 20, 2024

Québec – Peace River not considered where referral to arbitration sought under LACC/CCAA – #877

In 9327-6269 Québec inc. and Banque de Montréal, 2024 QCCS 3399, the Court dismissed the Creditor Applicants’ demand to lift the stay of proceedings under the Loi sur les arrangements avec les créanciers des compagnies (LACC)/ Companies’ Creditors Arrangement Act (CCAA) so that they could file proceedings against one of the Debtors (Laboratoires C.O.P. inc.) in a New York-seated arbitration, where they sought to be declared owners of potential tax credits and refunds to which they alleged they were entitled as part of the selling price under a Sale Purchase Agreement between the Applicants and the Debtors’ shareholders. The Sale Purchase Agreement contained an arbitration clause. The Applicants argued that under New York law the Sale Purchase Agreement created a constructive trust in their favour, as a result of which the tax credits and refunds received or to be received by the Debtor were never included in the Debtor’s assets. Therefore, the Applicants argued that they should not be subject to the CCAA. The Court dismissed the Applicants’ motion. Even if the Applicants obtained a favourable ruling from the arbitration tribunal, it would be ineffective because the constructive trust concept is not recognized under Québec law and it would be detrimental to other creditors of the Debtor. In any event, the arbitral award would not modify the distribution order of the Debtors’ assets to their creditors under the CCAA because, when a conflict of law arises, the CCAA’s application is governed by the lex fori, in this case Québec. Foreign law should not alter the outcome of the CCAA’s implementation due to its rehabilitative purpose. Therefore, lifting the stay would not help the Applicants and would only cause the CCAA procedure to be delayed.

September 9, 2024September 9, 2024

Québec – First consideration of test for stay application for annulment application – #860

In ADRAQ (CSD) Laurentides c. Hamelin, 2024 QCCS 2324, the Court dismissed a motion brought pursuant to section 648 CCP to stay an application for annulment of an award to give the arbitrator the opportunity to correct it to eliminate the grounds for annulment. This is the first case to consider section 648 CCP. The Court developed the list of factors to be considered on such a motion. It also ruled that it has broad discretion in deciding a motion for a stay under section 648. In light of the preceding, the Court ruled that the judge deciding the merits of the application for annulment should decide the stay motion. That judge would have a better understanding of the case to determine whether a stay is appropriate considering the allegations, including alleged bias against the arbitrator, which the Court found were serious, and the respondent’s denial of the very existence of any grounds for annulment, leaving no place at this stage, for the arbitrator to correct his award. Therefore, the Court dismissed the respondent’s demand to stay the application for annulment.

June 17, 2024June 17, 2024

Nunavut – No lawyer disqualification for near-client relationship in prior arbitration – #841

In The Government of Nunavut v. Stantec Architecture Ltd., 2024 NUCJ 11, the Court dismissed the application of Defendant Stantec Architecture Ltd. (“Stantec”) to disqualify the lawyers of the Plaintiff, Government of Nunavut (“Nunavut”), from acting in the litigation. The dispute arose from the construction of an arena (“Project”). Stantec, the architect for the Project, argued that the Nunavut’s lawyers were in a conflict of interest because of a confidential cooperation agreement in which Nunavut’s counsel had assisted Stantec in a previous arbitration in which Stantec and the construction company hired for the Project were parties. That construction company was not a party to this action. Stantec alleged a “near-client” relationship with Nunavut’s lawyers arising from this cooperation agreement which disqualified them from acting for Nunavut in this litigation. The Court dismissed the application because the cooperation agreement specifically excluded the creation of a solicitor-client relationship between Stantec and Nunavut’s lawyers and expressly reserved the parties’ rights and recourses against each other concerning the Project.

April 8, 2024April 5, 2024

Québec – No stay of arbitration without exceptional circumstances – #826

In McLaren Automotive Incorporated v. 9727272 Canada inc., 2024 QCCS 389, the Superior Court dismissed the application of McLaren Automotive Incorporated (“Applicant”) to stay the arbitration until the Superior Court had ruled on the merits of its applications: (1) to homologate the Arbitrator’s award concluding that he had no jurisdiction to act; and (2) to annul the arbitration appeal panel’s decision to overturn the arbitrator’s award on its own jurisdiction. The Judge reviewed the applicable criteria for a stay of the arbitration He concluded that exceptional circumstances are required to obtain a stay because of the respect that Courts must show toward arbitration agreements and the principle of limited interventions that the Court must follow in arbitrations. The Judge ruled that no such exceptional circumstances were demonstrated by the Applicant in the present case. But the case is worth watching. The institutional rules under which the arbitration proceeded allowed for an appeal to a panel of arbitrators. The issue will be whether the appeal is permitted in Québec where, pursuant to section 648 CCP “an arbitration award may only be challenged by way of an application for annulment”. There is no appeal right.

January 30, 2024January 26, 2024

Québec – No revocation of a homologated award without the prior revocation of the judgment – #812

In Investissements Immobiliers MB inc. v. SMP Direct inc., 2023 QCCS 4526, the Superior Court dismissed the application of Investissements Immobiliers MB inc (“Plaintiff”) to partially revoke a judgment homologating an arbitration award. In her decision, the Judge ruled that the Plaintiff had delayed acting without justifying the delay and that the application for revocation of the homologating judgment had no reasonable chance of success. The background is complicated. The application followed multiple proceedings between the court and the Arbitrator. The Plaintiff (Claimant in the Arbitration) applied to the court to annul the arbitration award on the basis that the Arbitrator had exceeded his jurisdiction. Then, before that application was decided, the Plaintiff returned to the Arbitrator for revocation of the award based on the fact that there was subsequent information that he had not considered that would affect the result. The Arbitrator refused to hear Plaintiff’s demand before the Court ruled on the Plaintiff’s annulment application. The Court homologated the award. Plaintiff’s application for leave to appeal was dismissed. The Arbitrator then dismissed the application for revocation. He found that the Court must revoke the homologating judgment first, which made the issues ruled in the arbitration award revocation issue because the homologating judgment give the award the force of res judicata. The Plaintiff’s later return to the court to revoke the homologating judgment was too late – five months later. The lesson? An arbitrator has no jurisdiction to revoke an award that has been homologated in a court judgment.

December 5, 2023December 1, 2023

Québec – Final Award on arbitrator’s own jurisdiction: what recourse(s)? – #797

In ADREQ (CSD) Estrie c. Centre intégré universitaire de santé et des services sociaux de l’Estrie – CHUS, 2023 QCCA 1315, the Court of Appeal granted leave to appeal a Superior Court decision dismissing an application for annulment of an arbitration award. The first instance Judge ruled that despite the fact that the arbitrator heard the whole case on the merits and decided in the final award that he had no jurisdiction, the award could not be contested under the annulment provisions of the Code of Civil Procedure (sec. 648), but rather must be challenged under the provisions concerning an arbitrator’s ruling on their own jurisdiction (sec. 632). Because of the potential overlap between these provisions and because of the limited jurisprudence on their application, the Court of Appeal deemed that it was a subject of interest for the Court and granted the leave.

November 7, 2023November 3, 2023

Alberta – Non-signatory principal bound by its agent’s arbitration agreement – #789

In LAPP Corporation v. Alberta, 2023 ABKB 566, the Court overruled the arbitrator’s decision in which he found that he had no jurisdiction over the Government of Alberta. In a de novo hearing pursuant to s. 17(9) of the Alberta Arbitration Act, R.S.O. 2000, c. A-43, the Court concluded that Alberta was bound by the arbitration agreement included in an Investment Management Agreement (IMA) between three Alberta public pension plans (Funds) and Alberta Investment Management Corporation (AIMCo). AIMCo is a fully state-owned investment management services provider created by the Alberta Investment Management Corporation Act. The Act specifically provides in Section 3(1) that AIMCo “is for all purposes an agent of the Crown in right of Alberta and may exercise its power and perform its duties and functions only as an agent of the Crown in right of Alberta.” Considering the broad and all-inclusive scope of the provision, the Court found that, while acting within its powers, AIMCo was always acting as Alberta’s agent and never on its own behalf. Alberta, as disclosed principal, was bound by an agreement made by its agent, even though it was not a party to the arbitration agreement.

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.