Lisa C. Munro

December 30, 2022March 13, 2023

Lisa’s 2022 Hot Topic #1: Arbitrator resignation – the when, how, and what next? – #696

Although there is provision in most provincial domestic arbitration legislation and the Model Law for the resignation of the arbitrator, there is little guidance on when the arbitrator may do so and the potential consequences once that occurs. However, two cases released in 2022 are helpful in that they suggest: (1) potential limitations on the discretion of an arbitrator to resign, regardless of the rights contained in the legislation; and (2) how the parties many anticipate this issue and provide for it in their arbitration agreement if it is important, so as to minimize the inevitable disruption that arises when an arbitrator resigns.

December 15, 2022December 15, 2022

Ontario – Leave to appeal award application and appeal dismissed together – #692

In The Tire Pit Inc. v Augend 6285 Yonge Village Properties Ltd., 2022 ONSC 6763, Justice Vermette dismissed an application for leave to appeal an award and the appeal itself. The grounds of appeal did not raise questions of law which were subject to appeal pursuant to subsection 45(1) of the Arbitration Act, 1991, S.O. 1991, c. 17 (“Act”) and had no importance beyond the parties. In any event, if she was wrong, she found that they lacked merit.

December 7, 2022December 5, 2022

Ontario – Arbitrator no jurisdiction to hear challenge for bias after partial final award – #691

In Aroma Franchise Company, Inc. v Aroma Espresso Bar Canada Inc., 2022 ONSC 6188, Justice Cavanagh dismissed the Respondents’ motion to stay or dismiss an application to set aside a final award on the merits on the ground of the reasonable apprehension of bias of the Arbitrator. The Respondents argued that the Applicant was required to bring its challenge to the Arbitrator first in accordance with Article 13 of the Model Law because the arbitration had not yet terminated; interest and costs had yet to be determined. However, Justice Cavanagh found that the Arbitrator was functus officio. Therefore, the application was properly before the Court.

December 1, 2022December 1, 2022

Supreme Court – Peace River v Petrowest Part 2: no conflict between arbitration, bankruptcy law – #687

In Peace River Hydro Partners v Petrowest, 2022 SCC 41, the central issue was whether a receiver/trustee in bankruptcy may disclaim the arbitration clause in a contract and sue in the courts when it seeks to enforce the debtor’s contractual rights against third parties. The case concerned the tension between the court’s supervisory power over all proceedings brought by a receiver/trustee under the Bankruptcy and Insolvency Act (BIA) RSC 1985, c. B-3, and party autonomy to contract out of the courts. Section 15 of the British Columbia (former) Arbitration Act, RSBC 1996 c. 55 required a stay of proceedings where a party to an arbitration agreement has commenced a court proceeding in respect of a matter to be submitted to arbitration, unless the arbitration agreement is “void, inoperative, or incapable of being performed”. The Supreme Court of Canada dismissed the stay application of the defendant sued by the receiver/trustee, but split 5-4 on the reasons. The majority found that the arbitration clauses at issue were “inoperative” because enforcing them would compromise the orderly and efficient resolution of the receivership. This authority arises from the statutory jurisdiction conferred on provincial superior courts under ss. 243(1) and 183(1) of the BIA. It found that this interpretation of the stay provision ensures that provincial arbitration legislation and federal bankruptcy legislation are not in conflict. The minority found that the specific language of the “template” Receivership Order authorized the Receiver/Trustee to disclaim the arbitration agreements, rendering them inoperative.

November 17, 2022November 17, 2022

Supreme Court – Peace River v Petrowest Part 1: Separability Clarified? – #682

Most of the commentary about the Supreme Court of Canada’s decision of Peace River Hydro Partners v Petrowest, 2022 SCC 41, is about the interplay between arbitration law and bankruptcy/insolvency law – and my next Case Note will address that issue. However, perhaps a more important issue for arbitration law was the Court’s consideration of the doctrine of separability (although it was not relevant to the outcome). The scope of its application in Canada was uncertain following the 2020 decisions of the British Columbia Court of Appeal under appeal, Petrowest Corporation v Peace River Hydro Partners, 2020 BCCA 339, and the Supreme Court of Canada in Uber Technologies Inc. v Heller, 2020 SCC 16 (“Uber”).

November 3, 2022November 15, 2022

Québec – No clean hands, no security despite stay of homologation application – #677

In Specter Aviation v United Mining Supply, 2022 QCCS 3643, Justice Castonguay granted a stay of an application by the successful party in a foreign arbitration to homologate the award, but denied the applicants’ alternative request for security, pending the unsuccessful party’s annulment application to the Paris Court of Appeal. Despite recognizing that a court should be reluctant to interfere with a successful party’s enforcement efforts, Justice Castonguay found that the annulment application was, “neither futile nor frivolous” and that the successful party did not have clean hands and had resorted to a self-help remedy. He also ordered costs against the successful party.

October 26, 2022October 26, 2022

Alberta – Action brought to require payment ordered in award – #676

In Tomalik v Enthink Inc., 2022 ABCA 302, the Court dismissed an appeal of the decision of Justice Gill of the Alberta Court of King’s Bench, who ordered the Appellant companies to buy out the Respondents’ shares in the companies pursuant to a Unanimous Shareholders Agreement (“USA”) and a valuation done by the second of two valuators. The Respondents argued that the first valuation was too low and pursued arbitration, as result of which the arbitrator found the first valuation deficient and ordered a second valuation, which was even lower. The arbitrator ordered the Appellants to purchase the shares at the second valuation amount. When they refused to pay, the Respondents sued the Appellants for breach of contract and, in a separate action, the second valuator in negligence for failing to arrive at a fair valuation. The two actions were permitted to proceed; by accepting the valuation as binding upon them in the first action and challenging it in the second, the Respondents were not seeking “inconsistent and mutually exclusive rights”.

October 20, 2022October 20, 2022

Ontario – Does an appeal of a costs award require leave? – #672

In Schickedanz v Wagema Holdings Ltd., 2022 ONSC 5315, Justice Ramsay dismissed the motion by Wagema Holdings Ltd (Respondent on appeal) to quash Appellant Schickedanz’s appeal of a costs award. Wagema argued that leave was required under s. 133(b) of the Ontario Courts of Justice Act, R.S.O. 1990, c. C.43 (“CJA”) and so the appeal was also out of time. Justice Ramsay was not persuaded that Wagema would prevail when the issue was determined by the appeal judge. First, the parties’ arbitration agreement contained a broad appeal process, without a leave requirement for costs appeals. Second, there is nothing in s. 45 of the Ontario Arbitration Act, 1991, S.O. 1991, c. 17 that requires leave to appeal a costs award or imports the leave requirement set out in the general costs appeal provision in s. 113(b) of the CJA. Third, the parties could contract out of the appeal provisions in s. 45 of the Arbitration Act pursuant to s. 3. Imposing a leave requirement to appeal a costs award would amount to judicial interference with the parties’ right to contract, which was recognized by the Supreme Court of Canada in TELUS Communications Inc. v. Wellman, 2019 SCC 19. Ultimately, it would be up to the judge hearing the appeal to decide whether leave was required and, if so, whether the appeal was out of time and whether the appeal had merit.

October 13, 2022October 17, 2022

Québec – Solidary liability allegation no bar to referral to arbitration for one defendant – #671

In Nantel v Gonzalez (not reported), Justice Buchholz stayed an action as against one defendant of a group and referred its dispute with the Plaintiffs to arbitration, even though the Plaintiffs alleged solidary (joint) liability as against all Defendants.

October 6, 2022October 13, 2022

Ontario – No oral hearing required even if one party requests it – #667

Optiva Inc. v Tbaytel, 2022 ONCA 646, raises two issues of interest to arbitration law. First, the Appellant (Optiva) made a jurisdictional objection to the arbitrator’s ruling allowing the Respondent (Tbaytel) to bring a motion for summary judgment. The arbitrator then issued a procedural order in which he ruled that he had jurisdiction. After hearing the motion, the arbitrator issued a partial award on the merits, which was in favour of Tbaytel. Optiva applied to the Ontario Superior Court of Justice to “decide the matter” of the arbitrator’s jurisdiction and to set aside the partial award, both pursuant to s.17 (rulings and objections re jurisdiction) of the Ontario Arbitration Act, 1991, S.O. 1991, c. 17 (the “Act”). However, the application judge found that Optiva had failed to bring its application on time and dismissed it. Pursuant to s. 17(8), it was required to do so within 30 days of the arbitrator’s jurisdiction ruling, not after the issuance of the partial award on the merits. The Ontario Court of Appeal agreed with the application judge and dismissed Optiva’s appeal, but for different reasons. The application judge erred in finding that Optiva was out of time to ask the Court to “decide the matter” because the preliminary ruling was not jurisdictional. Relying upon Inforica Inc. v. CGI Information Systems and Management Consultants Inc., 2009 ONCA 642, the ruling that the matter could proceed by summary judgment was procedural, not a ruling on the arbitrator’s “own jurisdiction”; therefore, s. 17 was not engaged. However, the appeal was dismissed because the arbitrator was entitled to decide matters of procedure, both under the Act and under the parties’ arbitration agreement, and did so. Second, the Court of Appeal held that s. 26(1) of the Act does not require an oral evidentiary hearing, even if one party requests it.