Arbitration Case Notes Archives - Page 7 of 95

January 2, 2025December 16, 2024

Josh’s 2024 Hot Topic – Consensual arbitration appeal mechanisms – #884

This year, in a landmark decision, McLaren Automotive Incorporated c.9727272 Canada Inc, 2024 QCCS 3457, the Québec Superior Court rendered a first-ever ruling that considered the validity of an arbitration appeal mechanism whereby the parties’ arbitration agreement allowed the appeal of an award to a different arbitrator. As reported in Arbitration Matters case note no. 864 (“Parties May Agree Upon an Arbitral Mechanism”), the Court found that such a mechanism does not offend public order principles set out in art. 622(3) of the Québec Code of Civil Procedure (“CCP”). Therefore, it found that Québec law does not prevent the parties from agreeing to an appeal mechanism in their arbitration agreement, even though it is not provided for in Québec arbitration law, which is based on the UNCITRAL Model Law.

December 30, 2024December 16, 2024

Julie’s 2024 Hot Topic – Exceptions to Competence-Competence Litigated in Appellate Courts in 2024 – #883

In 2024, for the first time, two appeal courts considered the “brick wall” exception to competence-competence set out in Uber Technologies Inc. v. Heller, 2020 SCC 16 (“Uber”).

December 20, 2024December 13, 2024

Alberta – Arbitrator’s Resignation does not terminate arbitration – #882

In Belanger v Pokol, 2024 ABKB 646, the Court dismissed an application by a party to the dispute to “be released from arbitration.” The Applicant argued that the resignation of the arbitrator following allegations of reasonable apprehension of bias effectively terminated the arbitration. The Court found that since the arbitration agreement provided for the appointment of a substitute arbitrator in the event of the arbitrator’s resignation, the arbitration was not terminated, and the parties were bound to continue. He ordered the parties to attempt to agree on a new arbitrator, failing which either party could apply to the Court to have one appointed.

December 18, 2024December 13, 2024

B.C. – Arbitrator Properly Appointed Despite No Signed Agreement – #881

In Pomerleau Inc. v 4HD Construction Ltd., 2024 BCSC 1973, the Court addressed two petitions. The first, by 4HD (the claimant/respondent by counterclaim in the arbitration), sought a ruling that the arbitrator had not, in fact, been appointed and declaring the award to be void or, alternatively, an order that the arbitrator be removed as arbitrator and the award set aside on the basis of a reasonable apprehension of bias. The second, by Pomerleau (the respondent/counterclaimant in the arbitration), sought recognition and enforcement of the award. The Court dismissed the first petition and granted the second. The arbitrator ruled that he had been appointed based on an email sent to him by 4HD advising him that he had been jointly selected as arbitrator and the had parties participated in the arbitration, even though no arbitration agreement was ever signed. The arbitrator issued an award dismissing the claims based on the claimant’s failure to prosecute the arbitration. The Court found that the arbitrator was correct that he had been properly appointed. The fact that the arbitrator was owed outstanding fees (only a few thousand dollars) by the claimant at the time he ruled on his appointment was insufficient to give rise to a reasonable apprehension of bias to justify setting aside the award.

December 16, 2024December 13, 2024

Ontario – Order of competence-competence analysis on stay motion challenged – #880

In Lochan v Binance Holdings Limited, 2024 ONCA 784 (“Binance”), the Court considered the appeal of the Motion Judge’s finding that an arbitration clause in a crypto trading agreement was void because it was contrary to public policy and unconscionable. The arbitration clause was part of a standard form contract between the appellant and crypto users. It provided that the appellant could change any part of the arbitration agreement, including the forum and governing law, and that users agreed to any amendments. On appeal, the appellant argued that the Motion Judge had failed to first consider the competence-competence principle in his analysis. The Court dismissed the appeal, finding that the Motion Judge had followed the approach of the Supreme Court of Canada in Dell Computer Corp. v Union des consommateurs, 2007 SCC 34 (“Dell”) and Uber Technologies Inc. v Heller, 2020 SCC 16 (“Uber”) when he considered the competence-competence principle before he considered if an exception to that principle applied to allow the court to consider if the clause was unenforceable.

December 4, 2024December 3, 2024

Ontario – Court weighs in on standard of review post-Vavilov (and decides) – #879

In Burwell v. Wozniak, 2024 ONSC 1234, the Court grappled with the appropriate standard of review to apply to arbitral awards. The heart of the underlying dispute was whether the appellant Burwell’s promise of shares in his company was sufficient to establish an estoppel against him in favour of his former partner, Wozniak. This case is noteworthy because most cases since Vavilov have not weighed in on the issue and have simply said that, regardless of the standard of review, the appellant does not meet it.

December 2, 2024November 29, 2024

Ontario – Court Grants Extraordinary Remedy of Removing Arbitrator for Undue Delay – #878

In Maharajh v Mathura, 2024 ONSC 5737 (“Maharajh”), the Court granted an application to remove an Arbitrator for undue delay. The Arbitrator went silent for four months without explanation and then consented to the Applicant’s request that she resign. The Court was required to rule on the issue when the Respondent refused to consent. The delay was “undue” because the Applicant was prejudiced by it. This undermined the arbitration agreement. The parties could not cooperate, so their dispute returned to court.

November 22, 2024November 20, 2024

Québec – Peace River not considered where referral to arbitration sought under LACC/CCAA – #877

In 9327-6269 Québec inc. and Banque de Montréal, 2024 QCCS 3399, the Court dismissed the Creditor Applicants’ demand to lift the stay of proceedings under the Loi sur les arrangements avec les créanciers des compagnies (LACC)/ Companies’ Creditors Arrangement Act (CCAA) so that they could file proceedings against one of the Debtors (Laboratoires C.O.P. inc.) in a New York-seated arbitration, where they sought to be declared owners of potential tax credits and refunds to which they alleged they were entitled as part of the selling price under a Sale Purchase Agreement between the Applicants and the Debtors’ shareholders. The Sale Purchase Agreement contained an arbitration clause. The Applicants argued that under New York law the Sale Purchase Agreement created a constructive trust in their favour, as a result of which the tax credits and refunds received or to be received by the Debtor were never included in the Debtor’s assets. Therefore, the Applicants argued that they should not be subject to the CCAA. The Court dismissed the Applicants’ motion. Even if the Applicants obtained a favourable ruling from the arbitration tribunal, it would be ineffective because the constructive trust concept is not recognized under Québec law and it would be detrimental to other creditors of the Debtor. In any event, the arbitral award would not modify the distribution order of the Debtors’ assets to their creditors under the CCAA because, when a conflict of law arises, the CCAA’s application is governed by the lex fori, in this case Québec. Foreign law should not alter the outcome of the CCAA’s implementation due to its rehabilitative purpose. Therefore, lifting the stay would not help the Applicants and would only cause the CCAA procedure to be delayed.

November 20, 2024November 15, 2024

Ontario – Court endorses pre-hearing disclosure from non-parties to assist arbitration – #876

In Royal and Sunalliance Insurance v Ontario Provincial Police, 2024 ONSC 5505, the Court interpreted section 29(4) of Ontario’s Arbitration Act, 1991 (the “Act”) to allow courts to order non-party disclosure before an arbitration hearing. Section 29(4) states, “[o]n the application of a party or of the arbitral tribunal, the court may make orders and give directions with respect to the taking of evidence for an arbitration as if it were a court proceeding.” The Court’s order permits pre-hearing “discovery” of a non-party to the arbitration, as opposed to the taking of evidence at a hearing. The case sets out some considerations that may be relevant to future applications under this provision of the Act. This case highlights the need for parties seeking non-party disclosure in arbitration to carefully review the applicable legislation and frame requests for Court assistance accordingly.

November 18, 2024November 22, 2024

Ontario – Application to enforce award against non-party to arbitration stayed – #875

In Sociedad Concesionaria Metropolitana De Salud S.A. v Webuild S.P.A, 2024 ONSC 4491 the Court considered whether to grant an application to enforce an arbitral award against a non-party to the arbitration. The non-party had purchased assets of the unsuccessful party to the arbitration as part of a restructuring proceeding in Italy. The successful party to the arbitration and the non-party disagreed on whether the asset purchase included the transfer of the unsuccessful party’s obligations under the award to the non-party. The Court stayed the enforcement application pending a determination of that threshold issue by the Italian courts.