Arbitration Case Notes Archives - Page 24 of 92

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 6, 2022December 9, 2022

Ontario – Shareholders dispute stayed where 2 of 3 agreements had arbitration clauses – #690

In 12823543 Canada Ltd. v Mizrahi Commercial (The One) GP Inc., 2022 ONSC 6206, Justice Penny granted an application to stay the proceeding commenced before the Superior Court of Justice and referred the matter to the appropriate arbitral tribunal to decide its jurisdiction. He found that the moving parties had raised an arguable case as to the application of the relevant arbitration agreements to the dispute and that the principle of compétence-compétence therefore favoured directing the parties to address their arguments to the arbitral tribunal regarding its jurisdiction. Only two of the three agreements at issue contained an arbitration agreement and yet Justice Penny was swayed by the nature of the dispute, grounded in a broad oppression claim, and considered that the Applicant’s allegations raised issues that went straight to the ability of the shareholders to make decisions of fundamental significance to their joint project.

December 5, 2022August 8, 2023

Alberta – Court of Appeal to clarify its jurisdiction in arbitration matters – #689

In Schafer v Schafer, 2022 ABCA 358, Justice Pentelchuk ordered further briefing on the court’s jurisdiction to hear an appeal from an order of the Alberta Court of King’s Bench refusing permission to appeal under section 44(2) of the Arbitration Act, RSA 2000, c A-43 (the “Arbitration Act”). Although the amounts in dispute were relatively small, the case engaged several foundational questions. The first involved the overlapping, and sometimes dissonant, statutory jurisdiction of the Court of Appeal in matters ancillary to arbitration. Second, Justice Pentelchuk saw merit in providing interpretive guidance to parties and counsel on the appeal rights which flow from the arbitration agreement signed by the parties, which was said to be “standard” in family law arbitration in Alberta. She accordingly granted permission to brief the issue of jurisdiction to a panel of the Court of Appeal, in order to provide clarity in situations where the Judicature Act, Rules of Court, and Arbitration Act intersect. Justice Pentelchuk also asked the parties to address whether the arbitration agreement was a standard form agreement (which could make its interpretation an issue of law rather than mixed law and fact), and apply to adduce fresh evidence on that question, if necessary.

December 2, 2022December 1, 2022

Ontario – Narrow basis for excess jurisdiction set aside challenges reaffirmed – #688

In Mensula Bancorp Inc. v. Halton Condominium Corporation No. 137, 2022 ONCA 769, the Ontario Court of Appeal overturned a Superior Court set aside decision and restored an arbitral award. The Court reiterated and underscored directives from Alectra Utilities Corporation v. Solar Power Network Inc., 19 ONCA 254: There is a narrow basis for set aside challenges to arbitral awards on the ground of alleged excess of jurisdiction. Review of the substance of the arbitral award is not authorized. The correctness or reasonableness of the arbitrator’s decision is irrelevant. Set aside is not an appeal.

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 23, 2022November 28, 2022

Ontario – Refusal to respond not a waiver to arbitrate – #686

In Justmark Industries Inc. v. Infinitus (China) Ltd., 2022 ONSC 5495, Justice Williams granted the Defendant/Moving Party’s motion to stay the court action in favour of arbitration. The Plaintiff/Responding Party Justmark Industries Inc. (“Justmark”) commenced the court action for breach of contract against the Defendant/Moving Party Infinitus (China) Ltd. (“Infinitus”). The contract, however, contained an arbitration clause requiring disputes to be arbitrated in Hong Kong by the Arbitration Committee of the International Trade Council (the “ITC”) pursuant to the law of the United Kingdom. As such, Infinitus brought a motion under s 9 of Ontario’s International Commercial Arbitration Act, 2017 (the “ICAA”), which incorporates Article 8(1) of the UNCITRAL Model Law on International Commercial Arbitration (the “Model Law”), to stay the proceedings. In response, Justmark alleged that Infinitus had waived its right to arbitration and thus rendered the arbitration agreement “inoperative” under Model Law Article 8(1). Justmark claimed that Infinitus’s failure to respond to its requests to commence arbitration amounted to waiver. Justice Williams, however, dismissed Justmark’s argument on the grounds that there was no evidence that “[16] … Infinitus had the requisite ‘unequivocal and conscious intention,’ or any intention, to abandon its right to arbitrate.”

November 22, 2022November 18, 2022

Alberta – Arbitral award enforced despite Russian sanctions – #685

In Angophora Holdings Limited v. Ovsyankin, 2022 ABKB 711, Justice Romaine dismissed an application by an arbitral award debtor to stay enforcement of the award issued in favour of a party indirectly owned and controlled by Russian bank Gazprombank JSC, which is an entity subject to Russian sanctions.

November 21, 2022November 22, 2022

Ontario – Defendant to stayed action may commence arbitration – #684

In Star Woodworking Ltd. v. Improve Inc., 2022 ONSC 5827, the defendant condominium corporation sought an order that the Court appoint an arbitrator to hear and resolve the plaintiffs’ claims against it. The plaintiffs had originally commenced actions in the Ontario Superior Court of Justice, and a number of claims were stayed as they were required to be brought in arbitration pursuant to the Condominium Act, 1998, SO 1998, c 19, and the Arbitration Act, 1991, SO 1991, c 17. Justice Myers rejected the plaintiffs’ argument that they could not be forced to be claimants in an arbitration if they did not wish to do so. Justice Myers held that the arbitration was properly commenced pursuant to section 23 of the Arbitration Act, 1991.

November 18, 2022November 23, 2022

Federal – Amazon purchasers’ class-action competition claims referred to arbitration – #683

In Difederico v. Amazon.com, Inc., 2022 FC 1256, Justice Furlanetto of the Federal Court granted Defendants’ motion to refer to arbitration claims asserted under section 45 of the Competition Act, RSC 1985, c C-34 (the “Competition Act”) by a proposed class representative plaintiff. Of interest to arbitration observers, the judgment considered the circumstances which qualify as “commercial legal relationships” within the meaning of the United Nations Foreign Arbitral Awards Convention Act, RSC 1985, c 16 (2nd sup) (“UNFAACA”), the statute which implements the New York Convention into the federal law of Canada. The New York Convention, Article II(3), requires a court of a contracting State, at the request of a party, to refer claims covered by an arbitration agreement to arbitration, unless the arbitration agreement is null and void, inoperative, or incapable of being performed. This case also features detailed analysis of the access-to-justice exception to the competence-competence principle recognized in Uber Technologies, Inc. v. Heller, 2020 SCC 16 (“Uber”).

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”).