Alberta – Extra hurdle for appeals under s. 44(3) of Alberta Arbitration Act – #642

In Schreiner v Vistas at Callaghan Ltd, 2022 ABQB 472, Justice Davidson dismissed an application for leave to appeal an arbitral award, in part, on the basis that the issue raised by the applicant was a matter “squarely before the arbitrator” and was decided by her. Section 44(3) of the Alberta Arbitration Act, RSA 2000, c A-43 provides that no appeal lies on a question of law expressly referred to the arbitrator.

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Ontario – Arbitration clause not consideration; provides only detriment to contracting party – #641

In Goberdhan v Knights of Columbus, 2022 ONSC 3788, Justice Harris dismissed the Defendant’s motion to stay the Plaintiff’s wrongful dismissal action in favour of arbitration. The parties signed three employment contracts over a period of 8 years; the last two each contained a mandatory arbitration clause. The Plaintiff argued that there was no consideration for the second and third contracts, so he was entitled to sue. The Defendant argued that the arbitration clause itself was consideration and that a stay should be ordered because it was “arguable” that the dispute fell within the terms of the arbitration agreement. Justice Harris rejected the Defendant’s argument. He found that the last two contracts lacked consideration because there was no benefit flowing to the Plaintiff; essentially, he gave up his right to sue, which was a detriment, and gave him nothing in return. Therefore, because the main contract failed for lack of consideration, so too did the arbitration clause.

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Alberta – Preliminary “ruling” on jurisdiction not an “award” – #637

In Brazeau (County) v Drayton Valley (Town), 2022 ABQB 443, Justice Davidson considered the timeliness of an application for judicial review of both an arbitrator’s preliminary ruling on jurisdiction and the final award. The issues raised on the application are relevant beyond the statutory tribunal regime under the Municipal Government Act, RSA 2000, c M-26 (the “MGA”) and have broader significance. Of most interest is: (1) Justice Davidson’s determination that the limitation period for a challenge to an award begins to run only once there has been compliance with the statutory formalities of an award, including the requirement that it be signed; and (2) Justice Davidson’s conclusion that an application for ”judicial review” of an arbitrator’s preliminary jurisdiction “ruling” must be made within 30 days after it is released, and cannot be challenged as part of a review of the final award, even if it is sent to the parties again as an attachment to the final award. It is not part of the final award.

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Ontario – Motion to “compel” participation in arbitration dismissed, despite arbitration clause – #635

In Black & McDonald v. Eiffage Innovative Canada Inc., 2022 ONSC 1855, Justice Dow was faced with two motions: (1) the defendants’ motion to stay the Ontario action on the basis of forum non conveniens; and (2) the plaintiff’s motion to “compel” the defendants to participate in arbitration as a result of an arbitration clause contained in the relevant contract. Justice Dow granted the stay on the ground that British Columbia was the proper forum, but declined to “compel” the defendants to participate in arbitration. He found that whether the arbitrator had jurisdiction over the dispute was to be determined by the arbitrator at first instance and that any failure on the part of the defendants to participate in an arbitration would have consequences for them in that proceeding.

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Ontario – “Vigorous” intervention and “difficult”, “incisive” questions by arbitrator not bias – #632

In Dufferin v Morrison Hershfield, 2022 ONSC 3485, Justice Woodley dismissed an application made pursuant to sections 13(6) and 15(1) of the Ontario Arbitration Act, 1991, S.O. 1991, c. 17, for an order removing an arbitrator on the basis that, “circumstances exist which give rise to justifiable doubts about the Arbitrator’s independence and impartiality, which are alleged to give rise to a reasonable apprehension of bias”. Essentially, the allegations were that the arbitrator had “entered the fray” because of the many questions he asked the witnesses, pre-judged the issues, and become an advocate for the Respondent. Justice Woodley found that the arbitrator was interventionist, but that she could find no bias or a reasonable apprehension of bias; “instead, [she] found a deeply invested, engaged Arbitrator that worked tirelessly for the parties in furtherance of his mandate, which was to determine the truth of the issues before him”. The Applicants were not out of time to bring their application because the alleged conduct complained of was “cumulative”. In any event, it would be “nonsensical” to allow a partial arbitrator to continue, even if the Respondent had not objected in time.

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Alberta – Appeal/set aside not designed to “save the parties from themselves” – #631

In Singh v Modgill, 2022 ABQB 369, Justice Feasby denied the Applicants’ application to set aside and for permission to appeal an arbitral award pursuant to sections 44(2) and 45 of the Alberta Arbitration Act, RSA 2000, c A-43. On the eve of trial and after 15 years of litigation, the parties submitted their dispute to a mediation-arbitration process. The process was set out in a written agreement and provided that there would be no oral hearing and that the arbitrator was required to deliver an award within 5 days. Justice Feasby described this process as “quick and dirty”; the parties “designed a process that prioritized expediency”. The principle of party autonomy allowed the parties to choose a process that was a “departure from the norms of natural justice” and the Applicants could not now complain. He expressed the view that “the arbitrator was stuck with the process designed by the parties” and that now that the Applicants had received an unfavourable decision from the arbitrator, they had “buyer’s remorse”. An appeal or set aside application was not designed to “save the parties from themselves.

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Ontario – Arbitrator’s notes not a substitute for transcript – #627

In Aquanta Group Inc. v Lightbox Enterprises Ltd, 2022 ONSC 3036, Justice Morgan was asked to appoint an arbitrator when the parties could not agree. The Respondents opposed all arbitrator candidates on the Applicants’ list and requested the appointment of an arbitrator who was previously appointed by the parties in an earlier arbitration involving the same parties and the same agreements. The Respondents argued that this would facilitate costs and time savings by allowing the arbitrator to use his notes from the earlier arbitration because there was no transcript of that arbitration. The Applicants had challenged the award arising from the earlier arbitration and opposed the appointment of the same arbitrator on the basis of reasonable apprehension of bias. Justice Morgan rejected the Respondents’ request to appoint the same arbitrator and found that their proposal, among other things, violated the principle of deliberative secrecy. In the alternative, the Respondents agreed to the appointment of certain candidates on the Applicants’ list. Justice Morgan chose one of those, “resort[ing] to the entirely arbitrary approach of going in alphabetical order”.

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Québec– Court declines homologation based upon CCAA discretion – #625

In Arrangement relative a Rising Phoenix International Inc., 2022 QCCS 1675, Justice Collier considered the interplay between: (a) the right of the winning party in an arbitration to homologate or enforce an arbitral award in the courts in arbitration legislation; and (b) the stay of proceedings in effect when a corporation is granted creditor protection under the Companies’ Creditors Arrangement Act, R.S.C. 1985, c. C-36 (“CCAA”). Here, a creditor of the corporation obtained an arbitral award in its favour and applied to have it homologated and enforced as against the directors of the corporation in respect of their personal liability. Justice Collier found that the language of the CCAA and the Amended and Restated Initial Order did not stay proceedings involving a director’s liability for personal wrongdoing, even if those wrongful acts occurred while the person was a director of the company under creditor protection. However, he exercised his broad discretion under the CCAA to make orders that are consistent with the remedial objectives of the Act and extend the stay to third parties. Therefore, he refused the creditor’s application to homologate or enforce the arbitral award as against the directors personally because it would likely negatively affect the CCAA restructuring process.

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Ontario – Powers of Independent Accountant “acting as expert and not as arbitrator” – #622

In Elad Canada Operations Inc. v Rester Ontario Investments Inc., 2022 ONSC 2327, Justice Penny considered the role of an Independent Accountant retained by parties to a Share Purchase Agreement (“SPA”) to determine disputes relating to the calculation of post-closing purchase price adjustments. The Independent Accountant was to make a final determination, “acting as an expert and not an arbitrator”. In addition, the parties disputed the process for determination of the dispute after they had followed the information exchange protocol provided for in the SPA. The Vendor’s dispute notice disagreed with the Purchaser’s calculation of the adjustment and provided a narrative explanation. It argued that the Independent Accountant’s jurisdiction to make a final determination “based solely on the written submissions of the parties” referred to the information exchanged pursuant to the protocol and did not allow the Purchaser to provide “narrative” submissions in response to the Vendor’s dispute notice. Justice Penny disagreed and found that this was the first opportunity the Purchaser had to respond to the issues in dispute and that it was, “inconceivable that both the parties and the independent accountant would not reasonably expect that written submissions to the independent accountant would: a) identify the points in dispute; and b) set out each side’s position on those points” (para. 35). Once Justice Penny had interpreted the SPA, the issue of the correct calculation of the post-closing adjustment was to be decided by the Independent Accountant.

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Ontario – Arbitration or expert determination?  Stay granted, referral to “Independent Accountant” – #620

In 2832402 Ontario Inc. v 2853462 Ontario Inc., QBD Modular Systems Inc., and QBD Cooling Systems Inc., 2022 ONSC 2694, Justice Conway was asked to decide whether the parties had agreed to arbitration or expert determination. The parties had entered into a Share Purchase Agreement (“SPA”), which contained a dispute resolution clause to deal with disagreements as to post-closing purchase price adjustments, which disputes were to be determined by an “Independent Accountant”. A dispute arose and the Vendor brought a court application against the Purchaser for production of documents to allow it to calculate the post-closing adjustments. The Vendor argued that even if the parties had agreed to arbitration, the document production issue was outside the jurisdiction of the Independent Accountant. Justice Conway considered the various indicia of arbitration and concluded that the clause in the SPA was an arbitration clause. Therefore, she stayed the application and referred the production issue to the Independent Accountant. That issue was relevant to the Independent Accountant’s ability to decide the parties’ dispute as to the amount of the post-closing purchase price adjustment.

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