In Bombardier Inc. v. Alstom Rail Sweden AB, 2026 ONCA 528, the Court of Appeal for Ontario dismissed an appeal from an order staying an Ontario action in favour of ICC arbitration. The Court held that the motion judge did not err in finding it arguable that a non-signatory affiliate could avail itself of an arbitration clause in an agreement it did not sign. Since Canadian case law on non-signatory issues is thinner than elsewhere, this case is an important one to consider.
Background – Bombardier Inc. (“Bombardier”), the plaintiff/appellant, was the parent of a group of transport companies. It sold one of its subsidiaries, BAHS, to another of its then-subsidiaries, BT Sweden. The transaction was completed in a 2017 share purchase agreement (2017 BAHS SPA). The 2017 BAHS SPA provided for a tax-loss purchase price adjustment and contained an attornment clause submitting disputes to the Ontario courts under Ontario law.
In 2020, Alstom Rail Sweden AB (“Alstom”), the defendant/respondent, acquired BTUK (another Bombardier entity) and its subsidiaries from Bombardier. One of the subsidiaries acquired in this transaction was BT Sweden (renamed Alstom Sweden on closing). This transaction occurred under a separate sale and purchase agreement (2020 Blizzard SPA). Therefore, the parties to that agreement were Bombardier and Alstom. The 2020 Blizzard SPA contained a clause terminating certain tax-sharing arrangements, with some reservations, between all members of the BTUK group and its “Affiliates”. The 2020 Blizzard SPA contained an arbitration agreement providing for ICC arbitration for disputes between “parties”.
In 2021, Swedish tax authorities ruled in BAHS’s favour on certain tax loss issues. In light of this, Bombardier sought a purchase price adjustment of $24,462,275.64 from Alstom under the 2020 Blizzard SPA using the 2017 BAHS SPA’s formula. Alstom refused and Bombardier sued Alstom in Ontario for breach of the 2071 BAHS SPA.
Separately, Alstom commenced an ICC arbitration against Bombardier and BTUK in 2022 under the 2020 Blizzard SPA’s arbitration clause, to which they were all signatories. The Alstom claims did not relate to the tax loss issue.
The Superior Court Stay Motion – Alstom Sweden brought a motion before the Superior Court for a stay of Bombardier’s Ontario action. It took the position that the Ontario action’s subject matter belonged in the arbitration and argued that it could compel Bombardier to arbitrate pursuant to the arbitration clause in the 2020 Blizzard SPA because it was an “affiliate” pursuant to the 2020 Blizzard SPA. Notably, the arbitration agreement stated that it bound the “parties”, a term defined elsewhere in the 2020 Blizzard SPA as the parties to the agreement. Alstom Sweden was not a “party” to the 2020 Blizzard SPA. Bombardier maintained that its claim was for breach of the 2017 BAHS SPA, which was a separate agreement conferring exclusive jurisdiction on the Ontario courts.
The motion judge granted the stay. Applying the Peace River Hydro Partners v. Petrowest Corp., 2022 SCC 41 framework, the Court found it arguable that Alstom Sweden was an “Affiliate” under the 2020 Blizzard SPA and could benefit from its arbitration clause. He noted that if the arbitral tribunal declined jurisdiction, the Ontario action would be “reactivated”.
Court of Appeal Decision – Bombardier appealed on three grounds: 1) no arbitration agreement existed as between Bombardier and Alstom Sweden because Alstom Sweden was not a party to the 2020 Blizzard SPA; 2) the motion judge had disregarded corporate separateness; and 3) the motion judge had failed to properly interpret the two agreements together, including the 2017 BAHS SPA’s attornment clause.
The Court of Appeal dismissed the appeal. It held that determining whether an arbitration agreement exists is itself the first Peace River prerequisite, assessed on an arguable-case standard. The Court confirmed that a motion judge makes no final determination on the scope of an arbitration agreement or the parties to it since those questions are for the tribunal to decide in the first instance. It found the motion judge had considered the broad “Affiliate” definition in the 2017 BHAS SPA and its repeated use in the 2020 Blizzard SPA, and that it was open to him to find it arguable that Alstom Sweden fell within it. This was despite the fact that the “parties” definition in the 2020 Blizzard SPA was unhelpfully circular.
The Court also invoked Peace River at paras. 104-105 for the proposition that a non-signatory can become bound by operation of law, and that “party” under the International Commercial Arbitration Act, 2017 includes a person “claiming through or under a party”. Bombardier’s corporate-separateness and contractual-interpretation grounds simply recast the first ground of appeal.
The Court also made the following noteworthy comment about the competence-competence principle:
“[51] As a final point, I note that it is clear from the extensive record before this court that the question of whether the Ontario Superior Court of Justice or the ICC has jurisdiction is one requiring much more than “superficial review” and not one where the necessary conclusions can be drawn from facts that are either evident on the face of the record or undisputed by the parties. While BI argues that the reasons of the motion judge were “perfunctory,” the more fulsome review it urges on this court belong (sic) in arbitration.”
The Court dismissed the appeal, with costs to Alstom Sweden.
Commentary:
First, there appears to be an unfortunate mistake in the motion judge’s reasoning. Unlike B.C.’s International Commercial Arbitration Act, Ontario’s International Commercial Arbitration Act, 2017 does not contain a definition of “party”. For reference, B.C.’s international act defines a “party” as “party to an arbitration agreement and includes a person claiming through or under a party”. It seems the motion judge uncritically relied on a passage from Peace River, which arose under the then-in-force version of B.C.’s domestic arbitration statute, without confirming that the same definition is found in the Ontario international Act. It is not. This offers an opportunity for an important reminder to practitioners: do not assume every enactment of the Model Law in Canada, or abroad for that matter, is identical. Indeed, there are other unique features to the B.C. statute not found in other Canadian enactments of the Model Law.
The Court of Appeal does not seem to have picked up on this legislative difference, which may have changed the analysis. This is especially so given the 2020 Blizzard SPA separately defines “party” and “affiliate”. The term affiliate appears nowhere in the arbitration clause, which only uses the word “party”:
“The parties irrevocably agree that all disputes arising out of or in connection with this Agreement including any question regarding the validity, termination or any subsequent amendment of the Agreement, shall be finally settled in accordance with the Rules of Arbitration (the Rules) of the International Chamber of Commerce (the ICC).”
Highly sophisticated international corporations represented by counsel saw fit to distinguish parties from affiliates and opted to use only the term “parties” in their arbitration agreement. The Court of Appeal effectively validated reading a defined term into the arbitration agreement that isn’t there.
Another problem with the reasoning is that Alstom Sweden was not “claiming through or under” a party to the 2020 Blizzard SPA. Alstom Sweden was the defendant in the Ontario action. It is unclear whether Alstom Sweden was a party to the pending ICC arbitration. As the Court states in a footnote, the arbitration was confidential and documents related to it were covered by a sealing order. However, assuming Alstom Sweden was not a claimant in the arbitration, I have some difficulty seeing how it could have even arguably been “claiming” anything, much less claiming through or under a party to the arbitration clause in the 2020 Blizzard SPA.
I pause to note that there may have been other bases for concluding Alstom Sweden could avail itself of the arbitration clause in the 2020 Blizzard SPA. These include agency, estoppel, the more controversial “group of companies doctrine”, among others. I say “may” because the Court of Appeal’s reasons are unclear on whether another of these non-signatory theories might have applied. However, given the Alstom group was represented by skilled counsel experienced in international arbitration, I suspect they would not have left one of these arguments on the table if it was there.
Second, some followers of the case law may have noticed what I have observed as a serious erosion of the competence-competence prima facie framework for stay motions first articulated in Dell and later commented on in Uber and Peace River. (See for example Friel v. HUB International Limited, 2026 ONCA 313.) I believe this has happened because determining whether an arbitration agreement covers a dispute is a question of contract interpretation. The Supreme Court of Canada tells us this is a question of mixed fact and law. However, in most cases, that contract interpretation exercise can actually be done entirely based on reading the contract terms, giving them their “ordinary grammatical meaning”, or through a very superficial review of the record to the extent the factual matrix bears any relevance to the dispute resolution provision. And to be frank, it usually does not.
However, in this case, the Court of Appeal seems to swing in the other direction. It points to the voluminous record as support for the notion that deciding whether Alstom Sweden can come under the arbitration clause could not be assessed on a superficial review of the record. However, nowhere does it point to anything about the factual matrix that might be relevant to determining the issue. To the contrary, and as is usually the case, the analysis appears to turn entirely on the wording of the agreements. If so, then the amount of raw material the parties filed is neither here nor there. Of course, it is possible the Court of Appeal heard argument on this and simply chose not to reference it. But if the Court was going to make this point about how the issue could not be conclusively assessed based on a superficial review of the record (i.e., the contract language), it would have been useful to better understand the basis for that conclusion.