Arbitration Case Notes Archives - Arbitration Matters

April 24, 2024April 19, 2024

B.C. – Consumer protection claim survives stay application through last-minute amendment – #830

Polanski v Vancouver Career College (Burnaby) Inc. concerns a defendant’s stay application brought under s. 7 of the Arbitration Act, SBC 2020, c 2 (“Arbitration Act”). The Court dismissed the application to stay certain claims made under s. 172 of the British Columbia Business Practices and Consumer Protection Act (“BPCPA”). The Court, relying on various appellate cases, held that s. 172 restricted the parties’ ability to agree to arbitrate and that the policy objectives of s. 172 would not be served by private and confidential arbitration. Why did the court need to re-articulate this well-established principle? Perhaps because the defendant needed to pivot after it had initially brought the application in response to the plaintiffs’ changing positions. The plaintiffs only added the s. 172 claims in the face of the stay motion and then only consented to the stay of the remainder of their claims for damages, including under s. 171 of the BPCPA, at the hearing of the application – no doubt, to the dismay of defence counsel who were facing a moving target. (A brief refresher for those in need it: s. 172 provides for private enforcement of consumer protection claims in the public interest, while s. 171 provides for a private remedy for damages or loss.)

April 22, 2024April 19, 2024

Ontario –“Fraud” does not include “constructive fraud” for set-aside application deadline – #829

Campbell v Toronto Standard Condominium Corporation No. 2600, 2024 ONCA 218, considered the meaning of “fraud” under section 46(1)9 of the Ontario Arbitration Act, 1991, SO 1991, c, 17. It provides that a court may set aside an award on the ground that, “the award was obtained by fraud.” The first issue before the Court was whether “fraud” includes “constructive fraud.” The main issue, however, was the interpretation to be given to sections 47(1) and (2), which provide that an application to set aside an award shall be commenced within 30 days after the applicant has received the award – except if the applicant alleges corruption or “fraud”. The Court found that “fraud” does not include “constructive fraud, which means that the Respondents were out of time to bring their set-aside application. It found that a broadening of the definition of fraud is not consistent with the statutory objectives to narrow the grounds for court interference in arbitrations. The Court expressed the view that the allegation of constructive fraud was made for the purpose of circumventing the statutory time limit for bringing a set-aside application. (This case is also useful for its summary of basic arbitration law principles. If you need a quick update or refresher of these, see my Editor’s Notes below for a “cheat sheet”.)

April 12, 2024April 5, 2024

B.C. – Stay in favour of non-party to arbitration agreement in multi-party construction dispute – #828

In Vancouver Pile Driving Ltd. v. JGC Constructors BC Ltd., 2024 BCSC 344, the Court granted two applications to stay litigation arising out of a large multi-party construction dispute in favour of arbitration. The first Applicant was a contractor which had a subcontract with the Plaintiff that provided for mandatory arbitration, unless the dispute involved the owner or other project participants. The second Applicant was the owner, a non-party to the subcontract, which argued that if the litigation was stayed against the contractor, it should be stayed against the owner as well. The Court applied section 8 of the International Commercial Arbitration Act, R.S.B.C. 1996, c. 233 (“ICAA”) to stay the proceedings against the first Applicant. The Court also stayed the action against the second Applicant owner pursuant to section 10 of the Law and Equity Act, R.S.B.C. 1996, c. 253 to prevent a multiplicity of proceedings.

April 10, 2024April 5, 2024

Ontario – Abuse of process precludes re-litigating arbitrator bias allegation – #827

La Française IC 2 v. Wires, 2024 ONCA 171 involved an appeal from a judgment recognizing and enforcing an arbitration award obtained by the Respondent. The Appellant/Claimant in the arbitration, entered into a funding agreement. The arbitration arose when the Appellant/Claimant commenced proceedings seeking recovery of fees under the funding agreement. The central issue before the Court was whether the doctrine of abuse of process prevented the Appellant/Claimant from arguing on the application to enforce the judgment that the arbitrator was biased, when that issue had already been dismissed by the arbitral institution that heard and decided the challenge.

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.

March 29, 2024April 1, 2024

B.C. – Leave to appeal interim award premature until arbitration concludes – #825

Brown v Smithwick, 2024 BCCA 83 is about an application for leave to appeal an interim award brought pursuant to section 59 of the British Columbia Arbitration Act, SBC 2020 c 2 (“Arbitration Act”). The Applicant sought leave to appeal on the ground that the arbitrator had erred in law by concluding that a debt that the Applicant owed to the Respondent was a debt within section 178(1)(e) of the Bankruptcy and Insolvency Act, RSC 1985, c B03 (the “BIA”), as a debt that arises out of fraud, embezzlement, misappropriation or defalcation while acting in a fiduciary capacity. The reasons of the Court focused on the issue of whether the leave application was premature because the arbitration had not yet ended. The Court held that while it has the discretion to grant leave to appeal from an interim arbitral award, the circumstances of the case weighed against exercising that discretion, including: (1) early judicial intervention would interfere with the arbitration process that the parties had agreed to; (2) the Applicant had not demonstrated that it would be prejudiced by the adjournment; and (3) there could be multiple leave applications to the Court arising from the same arbitration. The Court adjourned the leave application pending the conclusion of the arbitration.

March 27, 2024April 1, 2024

Ontario – Affidavits of “reasonable and informed persons” inadmissible in bias challenge – #824

In The Law Society of British Columbia and Valerie Frances Hemminger, 2024 LSBC 7, a hearing panel of the Law Society of British Columbia Tribunal refused to admit twelve affidavits offered to support the Respondent’s allegation of a reasonable apprehension of bias on the part of the panel. The panel found the affidavits were inadmissible primarily because the “reasonable and informed person” part of the test for reasonable apprehension of bias is an objective legal fiction, not informed by a subjective person whose views may be assessed by evidence and then applied by a decision maker. Accordingly, the affidavits – which offered the opinions of self-professed “reasonable” people about the implications of procedural decisions at the heart of the Respondent’s challenge – were inadmissible.

March 25, 2024March 22, 2024

Alberta – A potential expansion of the exceptions to the competence-competence principle? – #823

In Orica Canada Inc v ARVOS GmbH, 2024 ABKB 97, the Court applied, and possibly expanded, the exception to the competence-competence principle that allows a Court to resolve a jurisdictional claim if there is a real prospect that referring the issue to arbitration would mean that it is never resolved. The Court also determined that, in an action between two parties without an arbitration agreement, where the defendant raises claims against a third party subject to an arbitration agreement, those third party claims cannot be included in the action and must be determined by arbitration, even if they are related to the issues between the plaintiff and defendant in the main action. However, any third party claims that are not subject to the arbitration agreement can proceed in the action.

March 15, 2024March 8, 2024

B.C. – Corrected award resets appeal time limits – #822

In Desert Properties Inc. v. G&T Martini Holdings Ltd., 2024 BCCA 24, the Court determined that when an arbitral tribunal corrects an award, the time to seek leave to appeal runs from the date of issuance of the corrected award (“Corrected Award”). The appeal limitation period is not linked to party receipt of the original award (“Original Award”), irrespective of whether the grounds of appeal concern award corrections. The Court’s decision under Arbitration Act, SBC 2020, c. 2 (the “Act”) is consistent with other authorities which have considered the interplay between corrected awards and time limits for award challenges.

March 13, 2024March 7, 2024

New Brunswick – Party autonomy includes ability to contract out of award – #821

The decision in Purrestore Management Services Inc., Gordon Gamble and Jason Reis v. Doiron, 2023 NBCA 110 concerns whether an arbitration clause in a franchise agreement that allowed a party to seek a de novo court trial if an arbitration award exceeded $100,000, conflicted with the mandatory provisions of the New Brunswick Arbitration Act, LRN-B 2014, c 100 (“Arbitration Act”). The franchisor had obtained an arbitration award against the franchisees for over $100,000 (“Arbitral Award”). The franchisees then sought a de novo trial, while the franchisor applied for judgment to enforce the Arbitral Award under s. 50 of the Act. The application judge affirmed the franchisees’ right to a de novo trial and dismissed the application for judgment. The franchisor appealed, arguing that the Arbitration Act provided that s.50 could not be contracted out of and, therefore, in the absence of an appeal or an application to set aside the Arbitral Award the franchisor was entitled to judgment. The Court of Appeal dismissed the appeal, concluding that the arbitration clause was not contrary to the Act as the Act permitted parties to contract out of s. 37, which provides that “an award binds the parties, unless it is set aside or varied under section 45 (appeal) or 46 (set aside)”. To obtain a judgment to enforce an award under s. 50, a binding award under s. 37 was required but the parties had contracted out of 37 with their agreement.