My hot topic for 2022 is the treatment of arbitration agreements by the courts. Frequently, challenges to arbitral jurisdiction and appeals are brought on the basis of the scope and enforceability of an arbitration agreement. A review of a number of cases within the last year indicates a trend that a strongly, and often broadly drafted agreements are frequently the difference between a successful and unsuccessful court challenge. This case note will review a number of notable cases we have seen this past year.
In Baffinland v. Tower-EBC, 2022 ONSC 1990, summarized in Arbitration Matters Case Note Ontario – Set aside application failed; dispute covered by arbitration agreement, no objection to jurisdiction – #616, Justice Pattillo dismissed an application for an order granting leave to appeal the merits award and the costs award under section 45(1) of the Arbitration Act, 1991, S.O. 1991, c.17 (the “Act”) on the basis that the arbitration agreement precluded an appeal. In this case the arbitration agreement contained broad language that arbitration applied to, “a dispute (of any kind whatsoever) arising between the Parties in connection with or arising out of the Contracts or the execution of the Works.” Justice Pattillo found that this broadly worded arbitration agreement expressly provided jurisdiction to the tribunal to deal with each of the three issues that were raised on appeal.
In D Lands Inc. v. KS Victoria and King Inc., 2022 ONSC 1029, summarized in Arbitration Matters Case Note Ontario – Determining appeal rights in arbitration agreement in effect since 1960 Arbitration Act – #614, Justice Dietrich considered the effect of an arbitration agreement drafted in 1968 to determine whether the parties intended there to be appeal rights. Her Honour held that the words contained in the arbitration agreement that the tribunal’s award “is conclusive on the parties” and that judgment may be entered in any court having jurisdiction were not sufficiently clear to express an intention to contract out of a right to appeal.
In Travelers Insurance Company of Canada c. Greyhound Canada Transportation, 2022 QCCQ 4746, summarized in Arbitration Matters Case Note Québec – Parallel proceedings insufficient to justify disregard of arbitration agreement – #651, Justice Davignon considered the parties’ arbitration agreement and determined the parties intended their warranty dispute to proceed to arbitration while it was acceptable for a separate related dispute to proceed in the courts. In doing so, Justice Davignon gave full effect to the arbitration agreement even though it would result in parallel proceedings. In coming to this conclusion Justice Davignon emphasized the importance of party autonomy in granting them the right to oust the jurisdiction of the Québec courts by agreement on the issue of the warranty. Justice Davignon found that the intent of the parties was clear in their arbitration agreement and it was therefore valid. This autonomy should be respected to foster certainty and foreseeability in commercial relations.
In Pioneer Cannabis Corp. v. 2715615 Ontario Inc., 2022 ONSC 3998, discussed in Arbitration Matters Case Note Ontario: Stay ordered as promissory note captured by separate arbitration agreement – #643, Justice Robinson considered the scope of an arbitration agreement parties’ agreement to determine whether it covered claims relating to the defendants’ failure to pay amounts owing under a promissory note or whether the promissory note should be treated as a standalone agreement with its own governing terms. The arbitration agreement at issue was broadly drafted and included reference to “[…] all disputes, claims and controversies between the parties arising under or in connection with this Agreement or the [Retail Services Authorization Agreement][…]”. In that case, Justice Robinson held that the promissory note flowed from the parties’ contract RSAA and so was intertwined with the broadly drafted arbitration agreement.
In Biancucci v Buttarazzi, 2022 ONSC 4054, summarized at Arbitration Matters Case Note Ontario – Stay Granted where Competing Arguable Interpretations of Scope of Arbitration Agreement – #648, the arbitration agreement at issue was contained in a settlement agreement which stated “[a]ny disputes arising hereof will be determined by the arbitration panel”. There was also a reservation of rights in paragraph 8 with respect to certain properties. The scope of the arbitration agreement, and whether the dispute fell within that scope, was the heart of the dispute. Justice Myers found that the dispute arguably fell within the scope of the arbitration agreement and ordered a stay. He commented that in such circumstances “[n]ot only does the law favour deference to the arbitrators under the competence-competence principle, but here, the issues are infused with facts arising from various aspects of the arbitration itself…I can think of no one better situated to decide that factual issue than the arbitral panel.”
In conclusion, the law favours giving effect to arbitration agreements wherever the language is capable of bearing that interpretation. As noted by Justice Côté in Peace River Hydro Partners v. Petrowest Corp., 2022 SCC 41, in Canada there is “presumptive enforceability and overall predictability of arbitration agreements”. A clear and broadly drafted arbitration agreement will help provide parties with certainty that their contractual bargain to resolve their dispute by way of arbitration will be upheld by courts in Canada. It is worthwhile, therefore, for parties to spend the time at the outset to ensure their agreements are well drafted. Petrowest is discussed in Arbitration Matters Case Notes Supreme Court – Peace River v Petrowest Part 1: Separability Clarified? – #682 and Supreme Court – Peace River v Petrowest Part 2: no conflict between arbitration, bankruptcy law – #687.