Despite having “no difficulty accepting” the arbitrator’s conclusion that non-party witnesses had testimony “relevant to the issues in the Arbitration and material to its outcome”, Mr. Justice Gordon C. Weatherill in Octaform Inc. v Leung, 2021 BCSC 73 opted to adjourn an arbitral party’s applications to issue subpoenas in assistance of an arbitration conducted under the International Commercial Arbitration Act, RSBC 1996, c 233. Weatherill J. did affirm that arbitrations are “autonomous, self-contained, self-sufficient processes”, did acknowledge that “[i]t is the task of the Arbitrator to determine the truth” and did note that the arbitrator had not varied his initial approval of the subpoenas request after having participated in fourteen (14) days of hearing. Nonetheless, Weatherill J. considered the applications “premature”. He commented on whether one witness had been duly contacted and recorded that the other witness had set conditions on potentially attending. The witnesses did have over three (3) months between service of the October 9, 2020 applications and the January 14, 2021 hearing at which the witnesses were represented and could have addressed any concerns about willingness to participate. Weatherill J. still opted to see whether either witness in the future “unreasonably refuses to provide written evidence in chief and attend the hearing of the Arbitration for viva voce examination in chief, cross-examination and re-examination”. At that future time he advised “I will consider issuing the requested subpoenas”.
In an arbitration governed by B.C.’s International Commercial Arbitration Act, RSBC 1996, c 233, Claimant submitted two (2) applications to the court for the issuance of two (2) subpoenas to witnesses located respectively in B.C. and in Ontario (“Applications”).
Claimant filed its Applications after fourteen (14) days of hearing in the arbitration. Respondent in the arbitration did not participate in the hearing before Weatherill J. The witnesses, L and C, were not parties to the arbitration but “are parties to related proceedings and arbitrations brought by [Claimant] in BC”.
To introduce the Applications, Weatherill J. flagged the complexity of the dispute brought before him and the source of key facts.
“[6] The background to this dispute is lengthy and involves arbitrations and separate proceedings in this province as well as actions in courts in Nevada, Florida, and Wisconsin. There is no question that these disputes are being litigated vigorously by experienced commercial litigation counsel.
[7] In brief, [Claimant] claims that several of its former employees, including the petition respondents, [C] and [L], acted both independently and in a conspiracy with others, to establish a competing business using [Claimant]’s confidential information, its employees, and its manufacturer to make and sell to [Claimant]’s customers unlawfully produced inter-connectable PVC concrete forming systems, PVC liner panels, and trims.
[8] As is typically the case in such actions, knowledge of the allegedly improper conduct is almost solely within the possession of the alleged perpetrators and conspirators”.
When presenting its Applications, Claimant named L and C as respondents and notified them of the Applications. Weatherill J.’s reasons record exchanges made by the parties or counsel with L but not with C in advance of the arbitration hearing. As noted by Weatherill J., L and C “are parties to related proceedings and arbitrations brought by [Claimant] in BC”.
Claimant instituted arbitration proceedings against two (2) former employees in September 2016. Early into the arbitration, the arbitrator advised the parties to the arbitration that he would apply the International Bar Association Rules on the Taking of Evidence in International Arbitration (“IBA Rules on the Taking of Evidence”). During the course of the arbitration, the arbitrator issued a series of procedural orders, including Order No. 4, Order No. 21 and Order No. 23 highlighted in Weatherill J.’s reasons respectively at paras 12, 25 and 31.
Among other arrangements, Order No. 4 stipulated that “evidence in chief at the hearing of the arbitration would be led by way of written witness statements, that each witness could be briefly examined in chief and that each witness would then be cross-examined and re-examined viva voce”.
Order No. 21 issued much further into the arbitration process.
Both parties had elected to list L and C as witnesses in the arbitration. Claimant initially listed both L and C but, after Respondent listed them, Claimant removed both L and C. Later, Respondent removed L and C from its list and Claimant then sought to have L and C testify. Claimant provided no record of any exchanges with C. At the hearing C affirmed not having been contacted by Claimant prior to Order No. 21.
Claimant had exchanged with L but L, on August 28, 2020, expressed a limited willingness to “provide written responses to written questions” and then subject to his conditions. L stated that he would answer in writing questions “if they are reasonable and not directed at your client’s claims against him, which are the subject of other proceedings”.
The arbitrator heard Claimant and Respondent and held a September 18, 2020 case management conference to resolve the uncertain attendance of the L and C. Following additional September 21, 2020 correspondence from Claimant, excerpted at para. 24, the arbitrator issued a September 22, 2020 Order No. 21 in which he determined a number of facts and granted his leave and approval to Claimant to take whatever steps were legally available to obtain the testimony of L and C “at the hearing”.
“15. In relation to the Claimant’s request to obtain the testimony of [L] and [C], I am satisfied that they will not appear at the hearing voluntarily, and Respondents’ counsel will not commit to produce them at the hearing. I am satisfied from the witness statements …that the evidence of [L]and [C] would be relevant and material to the outcome of this proceeding”.
After service of the Applications on October 9, 2020, counsel for C contacted the arbitrator “expressing concerns” about Order No. 21, asserted that C had not be approached regarding her participation as a witness and requested that the arbitrator rescind the Order No. 21. The arbitrator declined, underlining that L was not a party to the arbitration before him and had no standing, adding further that confidentiality prevented him from providing information requested by C.
Two (2) weeks after service of the Applications, the arbitration hearing commenced. It ran for fourteen (14) days between October 26, 2020 and November 13, 2020 with further dates scheduled in 2021 for the weeks of March 15, April 5 and April 19.
After those hearing dates, on November 23, 2020 Claimant applied to the arbitrator for confirmation that it continued to have the arbitrator’s leave to seek the assistance of the court for the attendance of L and C. The arbitrator issued Order No. 23 on November 27, 2020 in which he determined there was no reason to vary or confirm his Order No. 21. See para. 31 of Weatherill J.’s reasons for the fuller text of the arbitrator’s comments.
The arbitrator’s determination in Order No. 23 issued six (6) weeks after Claimant had served the Applications on October 9, 2020. Order No. 23 issued in light of the arbitrator’s own exchanges with C and his involvement informed by fourteen (14) days of hearing coupled with urging by arbitral Respondents during the case management conference that Order No. 21 need not be confirmed.
“11. As submitted by the Respondents, normally my Procedural Order stands on its own and need not be confirmed. However, in this case there has been a relevant intervening event, namely 14 days of hearing during which [representatives of [Claimant]] have been cross-examined extensively by counsel for the Respondents and they have been subject to re-examination. Having heard their evidence fully, with the exception of one unrelated issue … I am left with no doubt that the evidence of each of [L] and [C] is relevant to this case and material to its outcome. There is no reason for me to make any further confirmation or to vary my order”.
As authorized by the arbitrator, Claimant served its Applications on October 9, 2020 pursuant to section 27 of the International Commercial Arbitration Act, RSBC 1996, c 233.
“Section 27 The arbitral tribunal, or a party with the approval of the arbitral tribunal, may request from the Supreme Court assistance in taking evidence, and the court may execute the request within its competence and according to its rules on taking evidence”.
The hearing before Weatherill J. proceeded January 14, 2021. L and C were represented by counsel.
In hearing the Applications, Weatherill J. referred to article 4.9 “Witnesses of Facts” of the IBA Rules on the Taking of Evidence:
“Article 4.9 If a Party wishes to present evidence from a person who will not appear voluntarily at its request, the Party may, within the time ordered by the Arbitral Tribunal, ask it to take whatever steps are legally available to obtain the testimony of that person, or seek leave from the Arbitral Tribunal to take such steps itself. In the case of a request to the Arbitral Tribunal, the Party shall identify the intended witness, shall describe the subjects on which the witness’s testimony is sought and shall state why such subjects are relevant to the case and material to its outcome. The Arbitral Tribunal shall decide on this request and shall take, authorize the requesting Party to take or order any other Party to take, such steps as the Arbitral Tribunal considers appropriate if, in its discretion, it determines that the testimony of that witness would be relevant to the case and material to its outcome”.
Weatherill J. acknowledged the arbitrator’s extensive involvement in the facts and recorded the arbitrator’s conclusion that “he was “left with no doubt” that the testimony of each [C] and [L] is relevant to the issues in the Arbitration and material to its outcome”. Referring also to the arbitrator’s determination of that relevance and materiality, Weatherill J. affirmed that he had “no difficulty accepting that this is the case”.
Despite the acknowledgement and affirmation, Weatherill J. refused to endorse the Applications for subpoenas. He determined that the arbitrator did not specifically mention the most recent correspondence regarding both witnesses C and L. Weatherill J. observed that witness C had not been formally asked to appear prior to the Applications and pointed to a letter from witness L expressing willingness to “provide written responses to reasonable written questions”.
“I find that neither [C] nor [L] has refused to voluntarily appear to give evidence at the Arbitration and submit to cross-examination. In my view, until such time as there is cogent evidence of such refusal, an application for a subpoena compelling their attendance is premature”.
Weatherill J. inserted his determination between two (2) affirmations regarding the arbitral process. First, at para. 32 he affirmed the status of arbitrations as “autonomous, self-contained, self-sufficient processes”.
“Arbitrations are autonomous, self-contained, self-sufficient processes pursuant to which the parties agree to have their disputes resolved by an arbitrator. Courts are required to show due respect for arbitrations, particularly in the commercial setting: TELUS Communications Inc. v. Wellman, [2019] S.C.R. 144 at paras. 54 and 56”.
The Supreme Court at para. 56 also advised that courts take a “hands off” approach.
Second, at para. 38 he affirmed that “[i]t is the task of the Arbitrator to determine the truth”.
Despite L and C being represented by counsel at the January 14, 2021 hearing and without any mention of whether either was now able to confirm willingness to participate, Weatherill J. opted to wait and see whether in the future either L and/or C “unreasonably refuses to provide written evidence in chief and attend the hearing of the Arbitration for viva voce examination in chief, cross-examination and re-examination”. Though the only apparent gap in the sequence appeared to be a letter to L asking her to testify and despite C only offering conditional willingness to respond in writing to questions deemed to be “reasonable”, Weatherill J. stated that the Applications were “premature”.
Weatherill J. adjourned the hearing of the Applications sine die, remained seized of the Applications and invited Claimant to reschedule their hearing “if either [C] or [L], or both, refuse to appear voluntarily at the hearing of the Arbitration after such appearance has been reasonably requested by the petitioner”. He closed with the mention that, in that event “I will consider issuing the requested subpoenas”.
urbitral notes – First, section 29 of B.C.’s forward-looking, updated Arbitration Act, SBC 2020, c 2 in effect as of September 1, 2020 ought to pre-empt similar results for arbitrations governed by that legislation.
Second, between the October 9, 2020 service of the Applications on L and C and the January 14, 2021 hearing, L and C had had over three (3) months in which to confirm their willingness to participate without condition. Weatherill J.’s reasons make no mention of either L or C declaring their willingness to attend as witnesses in the arbitration or do so without condition.
Third, Weatherill J. did not mention that he was applying the condition, stipulated in the IBA Rules on the Taking of Evidence, that a witness must first confirm that he or she “will not appear voluntarily”. If those non-binding rules only guide the parties, they do not bind or benefit non-party witnesses. Query whether and how the latter witnesses can invoke the ‘guidance’ offered by non-binding rules to delay replying to subpoenas authorized in an arbitration. If either witness did invoke them at the hearing, then did either L and/or C confirm then their willingness to appear? The reasons are silent. It is also doubtful that those non-binding rules are exhaustive of the scope of conditions which govern arbitral tribunal’s authorized requests for assistance in aid of arbitration.
Fourth, when asserting that arbitrations are “autonomous, self-contained, self-sufficient processes”, Weatherill J. referred to para. 56 of TELUS Communications Inc. v. Wellman, 2019 SCC 19, [2019] 2 SCR 144. The Supreme Court at that para. 56, in turn, alerted readers that it drew that phrasing from para. 14 of Inforica Inc. v. CGI Information Systems and Management Consultants Inc, 2009 ONCA 642. In the latter decision, the Ontario Court of Appeal underlined that arbitration’s immunity from oversight was “strictly limited to those situations contemplated by the [Arbitration] Act”. The Ontario Court made no mention of non-binding rules, such as the IBA Rules on the Taking of Evidence, as giving the courts additional jurisdiction for involvement.
“[14] It is clear from the structure and purpose of the Act in general, and from the wording of s. 6 in particular, that judicial intervention in the arbitral process is to be strictly limited to those situations contemplated by the Act. This is in keeping with the modern approach that sees arbitration as an autonomous, self-contained, self-sufficient process pursuant to which the parties agree to have their disputes resolved by an arbitrator, not by the courts. As Inforica states in its factum, “arbitral proceedings are presumptively immune from judicial review and oversight“. The Act encourages parties to resort to arbitration, “require[s] them to hold to that course once they have agreed to do so” and “entrenches the primacy of arbitration over judicial proceedings . . . by directing the court, generally, not to intervene“: Ontario Hydro v. Denison Mines Ltd., [1992] O.J. No. 2948 (Gen. Div.), Blair J.”
The Supreme Court endorsed the approach that only legislation prevail and not reliance on non-binding standards. See Telesat Canada v. Boeing Satellite Systems International, Inc., 2010 ONSC 4023 para. 71(e) which illustrates how arbitral parties can mention that they “permit the Tribunal to seek guidance from, but not be bound by” such rules. See also para. 129.
Fifth, the reasons make no express mention of the burden resting on any of the parties or witnesses to justify a grant or refusal of the request for assistance. Applications to quash a subpoena typically involve debated objections that the evidence sought is on its face irrelevant, immaterial, redundant or subject to a recognized privilege. None of those objections arose. Regarding which party or witness may bear the burden when seeking to quash a subpoena, consider MacKeigan v. Hickman, 1988 CanLII 7124 (NS SC) pp. 306-309 for differing views. In the present case, the approach taken appears to place that the burden lay on the arbitrator.
Sixth, section 29(8) of B.C.’s new Arbitration Act expressly incorporates application of the Subpoena (Interprovincial) Act, RSBC 1996, c 442 (“SIA”). In addition to other provisions, section 5(1) of the SIA sets out limited involvement for courts when presented with a subpoena which appears “necessary” to the proceeding as well as “reasonable and essential” to the administration of justice. Section 29 of B.C.’s new Arbitration Act, SBC 2020, c 2 includes limited conditions to a court providing assistance and identifies no grounds for successfully challenging a subpoena issued by the arbitral tribunal, other than required compliance with the content listed in section 29(2).
Seventh, see Jardine Lloyd Thompson Canada Inc. v. SJO Catlin, 2006 ABCA 18 paras 43, 45, 46 regarding courts’ involvement in article 27 applications for assistance.
“[43] It is correct, of course, that the parties themselves cannot by their own agreement intrude into the affairs of a third person so as to entitle them to take evidence of any nature from such person. But the Model Law empowers a tribunal to seek the assistance of the court to take evidence in a manner consistent with the laws of the place of the arbitration. The policy of the law is to provide assistance to tribunals in appropriate circumstances where the tribunal has satisfied itself that the evidence is relevant to the issues before it.
…
[45] I emphasize that the statute has a number of safeguards. Such requests for examination are not taken at the whim of one of the parties. The tribunal must first be satisfied that the evidence may be useful for purposes of the arbitration before the tribunal can be expected to seek the assistance of the court or to give leave to one of the parties to do so. A tribunal must always weigh the competing relevant interests and value, including the time and expense of the addition discovery, and should be careful in the exercise of its powers.
…
[46] The court is not obliged to grant its assistance. The court will examine the reasons for the request and must be satisfied that the request is reasonable and in accordance with the practices of the court. In this case, the Court had before it a carefully reasoned decision of a tribunal composed of experienced and knowledgeable counsel who have determined that such discovery evidence is necessary for purposes of the arbitration proceedings and in accordance with discovery practice in Alberta. There is no reason to thwart this request for assistance if Article 27 can reasonably be interpreted, as I have held it can be, to permit the request for assistance in taking evidence to include evidence by way of discovery”.
Despite being reversed on appeal, the court in first instance, did anticipate the approach adopted by the Court of Appeal. See In the Matter of the International Commercial Arbitration Act, R.S.A. 2000, C. I-5, 2005 ABQB 509 at para. 72. The court in first instance took a narrower view of the assistance and inserted a “gloss” which unduly limited the permitted assistance to the merits hearing. Despite that narrow view, the court in first instance did endorse deference to arbitration tribunal’s acting in their jurisdiction. There is no suggestion in Weatherill J.’s reasons that the arbitrator acted in any way beyond his jurisdiction.
“[72] Put another way, I would hold that when the assistance of this Court is sought under Article 27 of the Model Law to enforce an order of an arbitration panel, this Court ought not to look behind an order made within the authority or jurisdiction of the arbitration panel even though the Court itself would not, according to its own process, have made such an order”.