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.
The background facts – There was a car crash on August 31, 2021, involving a person insured by Royal and Sunalliance (“RSA”). RSA paid statutory accident benefits to the injured person, Ms. W, but disputed its responsibility to do so under the priority rules set out in the Insurance Act, RSO 1990, c I.8, s 268. In March of 2024, RSA commenced arbitration under Ontario’s regulatory scheme for resolving insurance priority disputes (Disputes Between Insurers, O Reg 283/95).
Given the way the Insurance Act priority rules work, ownership of the involved vehicle was a central question in the arbitration. The accident report indicated that the vehicle was owned by a Mr. D.; however, Ms. W denied knowing Mr. D. She said the vehicle belonged to her roommate, Mr. H. To clarify the matter, the arbitrator ordered the OPP to disclose its investigation file. The OPP objected that the order exceeded the arbitrator’s authority but indicated it would comply with a court order, so long as it included certain standard terms.
The Application – RSA then sought a court order under section 29(4) of the Act. As the Court stated, RSA’s application tested whether section 29(4) permits a court to order third-party disclosure in support of arbitration before the evidentiary hearing.
The Court began its analysis of section 29(4) with reference to section 29(1) of the Act, which reads: “A party may serve a person with a notice, issued by the arbitral tribunal, requiring the person to attend and give evidence at the arbitration at the time and place named in the notice.” At first glance, Section 29(1) may seem like an appropriate mechanism for the kind of non-party disclosure RSA sought, as it appears to authorize the arbitral tribunal to compel a stranger to the arbitration to “attend and give evidence”.
However, section 29(1) also includes the qualifying words “at the arbitration”. Citing Alexander M. Gay, Alexandre Kaufman & James Plotkin, Arbitration Legislation of Ontario: A Commentary, 4th edition (Toronto: Thomson Reuters, 2023), page 420, the Court (at para. 6) reasoned that section 29(1) is a “notable exception to the rule that arbitral tribunals cannot compel non-parties, but it only applies to attendance at the arbitration hearing itself, not to pre-hearing procedure.”
In contrast to section 29(1), section 29(4) addresses the “taking of evidence for an arbitration.” (emphasis added). The Court (at para. 7) considered that choice of language significant: “In my view, this language suggests that the provision is intended to cover situations where court intervention is sought to facilitate pre-hearing disclosure.”
The Court found support for this interpretation in Jardine Lloyd Thompson Canada Inc. v. SJO Caitlin, 2006 ABCA 18 (“Jardine”), notwithstanding that Jardine –a case relating to an international arbitration – was decided under article 27 of the UNCITRAL Model Law (incorporated in the International Commercial Arbitration Act, R.S.A. 2000, c. I-5). Article 27 of the Model Law provides: “The arbitral tribunal or a party with the approval of the arbitral tribunal may request from a competent court of this State assistance in taking evidence. The court may execute the request within its competence and according to its rules on taking evidence.”
Jardine arose out of an insurance coverage arbitration. The arbitral tribunal granted an application of one of the respondent underwriters (“Catlin”) to obtain pre-trial discovery from a non-party – Jardine Lloyd Thompson (“JLT”) – including examinations for discovery of four current or former JLT employees. The arbitral tribunal’s order expressly authorized Catlin to seek the assistance of the Court of Queen’s Bench of Alberta to obtain the examinations for discovery. JLT challenged the authority of the arbitral tribunal to order pre-hearing examinations for discovery of non-parties and disputed that Article 27 of the Model Law permitted the Alberta Court of Queen’s Bench to assist.
The Court of Queen’s Bench ruled, at paras. 69-73, that the arbitral tribunal lacked the authority to compel a non-party. Of more relevance to the RSA case, it read article 27 of the Model Law to be limited to assisting with compelling the taking of evidence at the arbitration hearing itself, not as part of a pre-hearing discovery process. That restrictive interpretation followed authorities from Hong Kong and England & Wales construing statutory language derived from article 27.
The Alberta Court of Appeal reversed this decision. In its view, article 27 of the Model Law is not limited to the taking of evidence at the hearing. The Court of Appeal acknowledged ABQB’s reference to English and Hong Kong authorities (more on this in the Commentary, below), but then turned to the language of article 27 as enacted in Alberta:
“The Model Law is part of the law of Alberta. It must be interpreted in accordance with the ordinary meaning to be given to the terms in their context and in light of its objects and purposes. Article 27 speaks of ‘assistance in taking evidence’. In my view, it is a gloss to add, by implication or otherwise, the words ‘at the hearing’. Those words are not there.”
The Alberta Court of Appeal concluded, at paras. 43-44, that, “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”, which, in Alberta, includes pre-trial disclosure from and examinations for discovery of third parties.
Further, the Court distinguished RSA’s application under section 29(4) from the application in Link 427 General Partnership v. His Majesty the King, 2023 ONSC 2433 (“Link”). At first glance, Link may seem to provide precedent for the notion that section 29(4) of the Act does not authorize pre-hearing discovery from third parties to assist an arbitration. After all, paragraph 1 of Link makes clear that the applicant invoked section 29(4): “Link 427 General Partnership […] commenced this application pursuant to s. 29(4) of the Arbitration Act, 1991, S.O. 1991, c. 17, on March 3, 2023.”
However, on a closer read, Link does not so limit section 29(4). The applicant in Link had obtained an “interim order” requiring two non-party witnesses to attend examinations for discovery. The applicant then asked the Court to “enforce” the interim order under section 29(4) of the Act. For the Court, the framing of both the arbitrator’s order and the application were critical. At (para. 7), the Court explained, “there is no application before me to ‘make orders’ or ‘give directions’, but rather an application to enforce an interim procedural arbitral decision.” The arbitrator’s order sought to compel non-parties over whom the arbitrator had no jurisdiction, and the applicant had (wrongly) asked the Court to enforce it; because the application did not seek assistance pursuant to section 29(4), the Court dismissed it.
Having found that section 29(4) authorizes the Court to order pre-hearing disclosure from non-parties in support of an arbitration, the Court explained at para. 10 why it was appropriate to grant the discretionary relief RSA sought. The Court considered: (1) the relevance of the information, (2) the burden of compliance, and (3) the alignment of the relief with the legislative goal of “resolving priority disputes efficiently through arbitration.” Given the centrality of the question as to the ownership of the car, the Court found the OPP’s investigative file was likely “highly relevant.” The burden of compliance was not a major feature of this case, given OPP’s willingness to comply. And the Court found that granting the application would align with the objectives manifest in Ontario’s regulatory scheme to resolve priority disputes by arbitration.
Contributor’s Notes:
This case helpfully clarifies the paths available for litigants (and arbitrators) seeking information from third parties in connection with an arbitration.
First, Link shows the importance of framing an application for non-party discovery carefully. The Ontario Superior Court of Justice refused an application under section 29(4) of the Act because the applicant framed its request as one to “enforce” an arbitrator’s procedural order for discovery against a non-party. In contrast, in Royal and Sunalliance, the applicant asked the Court to order disclosure, not to enforce the tribunal’s order.
This difference is subtle, yet crucial. In the former scenario, granting the application as drafted would have involved the Court enforcing an order over a non-party which the tribunal had no authority to issue. Under the latter scenario, the application engaged the Court’s statutory authority to assist the arbitral process pursuant to s. 29(4). This distinction explains why the Court in Royal and Sunalliance mused, in dicta at para. 9, that the outcome in Link “could have been different” if the application had been properly brought under section 29(4).
For a more thorough exploration of issues raised in Link, see James Plotkin’s previous post: Ontario – Arbitral Tribunal lacks power to order third-party discovery – #779.
Second, the citation to Jardine warrants a further comment about the interpretive tools the Court of Appeal used. To start, the Alberta ICAA incorporates the 1985 version of the UNCITRAL Model Law. To interpret its article 27, the Court of Appeal referred, at paras. 22-23, to the ICAA’s provisions on interpretation (which are set out in section 12, and apply in addition to Article 2 of the Model Law itself). The Court of Appeal acknowledged contrary Hong Kong and English authorities but proceeded to rule purely as a matter of Alberta statutory interpretation.
Interestingly, in 2006 UNCITRAL amended the Model Law to expressly address concerns over fragmentation in its interpretation, adding Article 2A:
“Article 2A. International origin and general principles (1) In the interpretation of this Law, regard is to be had to its international origin and to the need to promote uniformity in its application and the observance of good faith. (2) Questions concerning matters governed by this Law which are not expressly settled in it are to be settled in conformity with the general principles on which this Law is based.”
Alberta’s enactment of the Model Law does not include Article 2A. If it had when Jardine was decided, would the Court of Appeal have been on solid ground ignoring those foreign authorities?
Third, litigants and counsel should take care to review the applicable statute before setting out to obtain discovery from non-parties. They are not the same. This caution up-front may avoid the disappointment of the applicant in Link. For example, section 29(4) of the Ontario Act does not require a party to a domestic arbitration to first get permission from the arbitral tribunal before seeking the assistance of the Court (although it may be good practice to do so). Section 29(5) of the Alberta Arbitration Act, RSA 2000, c A-43,is nearly identical to Ontario’s section 29(4). The British Columbia Arbitration Act, SBC 2020, c 2, s 29, goes further, authorizing a domestic arbitral tribunal to issue subpoenas directly to a non-party in certain circumstances, or to request the assistance of a court if needed. On the other hand, a party to an international arbitration must have the permission of the arbitral tribunal before seeking court assistance in taking evidence under Article 27 of the Model Law.
Finally, from a comparative law perspective, it is worth observing that discovery from non-parties remains complex under the United States Federal Arbitration Act (“FAA”). Section 7 of the FAA provides, in relevant part, “[t]he arbitrators selected […], or a majority of them, may summon in writing any person to attend before them or any of them as a witness and in a proper case to bring with him or them any book, record, document, or paper which may be deemed material as evidence in the case.” The dominant view among U.S. federal courts of appeal is that section 7 of the FAA only permits discovery from a non-party in the presence of at least one arbitrator. However, in practice, after an arbitral subpoena is issued requiring a witness to appear at a hearing with certain documents, the party seeking discovery will often then negotiate to dispense with the need for the hearing while still obtaining the documents. This approach has been tested and approved in the Second Circuit (which includes New York).