Arbitration Matters

November 6, 2023November 3, 2023

Ontario – Appeals combined where stay of proceedings impacts class certification – #788

In Davis v Amazon Canada Fulfillment Services, ULC, 2023 ONCA 634 the Court combined two appeals initiated in two different courts arising from a single decision that concerned two interrelated motions. One was an appeal of a stay of proceedings in favour of arbitration granted pursuant to s. 7 of the Arbitration Act, 1991, S.O. 1991, c. 17 (“Arbitration Act”) and the other was an appeal of a decision denying class certification. The Plaintiff appealed the decision denying class certification to the Divisional Court, as required by the then applicable version of the class proceedings legislation [Class Proceedings Act, 1992, S.O. 1992, c 6 (“CPA”)] and appealed the stay decision to the Court of Appeal. The Plaintiff then applied to the Court of Appeal to transfer the class certification appeal from the Divisional Court to the Court of Appeal and join it to the stay appeal. The Court granted the application. It concluded that to do so was in the interests of the administration of justice. The Court found that, as some of the proposed class members (although not the representative plaintiff) were alleged to be subject to arbitration agreements, “the appeal of the stay decision goes directly to who may be class members and is completely premised on certification being under consideration” (para. 14). The Court was of the view this finding weighed strongly in favour of the appeals being combined “so that they can be managed, sequenced, considered, and decided taking into account and specifying the effect a decision in one may have on the other” (para. 13).

October 27, 2023October 30, 2023

Ontario – Court defines arbitral record where arbitration not recorded – #787

In Reed v. Cooper-Gordon Ltd. et al, 2023 ONSC 5261, the Court granted in part the plaintiff’s motion for leave to appeal an employment and shareholder related arbitral award on a question of law under s. 45 of the Arbitration Act, 1991. The plaintiff’s claims were originally raised by way of action, then proceeded by arbitration. The plaintiff/claimant in the arbitration claimed, among other things, that the arbitrator had wrongly determined the notice period for pay in lieu of notice, overlooked certain claims for unpaid bonuses and RRSP contributions, and incorrectly valued his shares in the underlying arbitration relating to his exit from the defendant. The Court held that the arbitrator’s error in computing the notice period and his lack of reasons relating to certain claims justified granting leave to appeal. The Court denied leave on the remaining issues. Because the parties had not recorded the arbitration, the record was limited to pleadings filed in the Superior Court of Justice that defined the issues for arbitration, the parties’ arbitration agreement, the Arbitration Award and Costs Award, the shareholders’ agreement and the parties’ Partial Minutes of Settlement on a particular issue.

October 26, 2023October 20, 2023

Québec –Waiver of arbitration after court proceedings, despite letter proposing arbitration– #786

The Superior Court of Québec in 13647846 Canada inc. c. Phase III Wellington Griffintown inc., 2023 QCCS 3589 dismissed an application for a stay of proceedings in favor of arbitration on the grounds that: (i) it was made too late without justification, and (ii) the plaintiffs had waived their recourse to arbitration by submitting their dispute to the Superior Court first. Here, the plaintiffs brought legal proceedings with respect to a matter that was subject to an arbitration agreement. They then proposed arbitration by letter, which the defendants rejected. When the plaintiffs sought a stay of part of their own proceedings in favour of arbitration pursuant to Article 622 of the Québec Code of Civil Procedure (“CCP”), the Court found that they were out of time. The 45-day time period for the stay motion started when the court proceedings were commenced, and the stay application was not made within this period. It was irrelevant that their letter was sent within the 45-day period. The Court also found that plaintiffs had waived their right to arbitrate.

October 25, 2023October 20, 2023

Alberta –Stay of Arbitration Granted Where Potential For “Forensic Prejudice” – #785

In Dow Chemical Canada ULC v Nova Chemicals Corporation, 2023 ABCA 217, the Appellant Dow Chemical Canada ULC (“Dow”) obtained leave to appeal a decision of a lower court, which declined to make a declaration of invalidity of the arbitration or grant an injunction prohibiting the continuation of the arbitration pursuant to section Section 47 of the Arbitration Act, RSA 2000, c A-43. In Dow Chemical Canada ULC v Nova Chemicals Corporation, 2023 ABCA 262, a single judge of the Alberta Court of Appeal ordered a limited stay of the ongoing arbitration until a panel of the Court could decide the appeal. In that context, the judge found that “forensic prejudice” was sufficient to obtain the limited stay of arbitration. This referred not to prejudice to the applicant, but to the possibility that if Dow were correct that the arbitration were invalid, it might “embarrass the justice system” to allow the arbitration to proceed when it should not have.

October 24, 2023October 20, 2023

Alberta – Third party beneficiary of contract bound by arbitration clause – #784

In Husky Oil Operations Limited v Technip Stone & Webster Process Technology Inc, 2023 ABKB 545, the issue before the Court was whether a third party beneficiary of a contract was bound by the contract’s arbitration clause in a dispute concerning the contractual warranties. The Court answered the question in the affirmative. While the plaintiff was not a party to the contract containing the arbitration clause, it was given rights to enforce certain warranties. Since the plaintiff chose to enforce its third party rights under the contract, it was bound by the contract’s arbitration clause. The plaintiff was required to arbitrate its warranty claims, which were time-barred, as the limitation period had expired. However, the plaintiff’s negligence claims were not arbitrable as they did not arise out of the contract and those claims, which were brought by way of action, were not affected by the expiry of the limitation period to arbitrate.

October 23, 2023October 30, 2023

Manitoba – Procedural choices made for efficiency bind losing parties – #783

With what the Respondent must hope is the final chapter of a long and expensive saga, in Christie Building Holding Company, Limited v Shelter Canadian Properties Limited, 2023 MBCA 76 (CanLII), the Court of Appeal confirmed parties must live with the consequences of their decisions on how to conduct the arbitration. The parties agreed to forego obtaining transcripts of the arbitration and the formalities of entering thousands of documents as exhibits (only five were formally marked as such). C lost the arbitration and clearly regretted its agreement to limit the evidentiary record. The nature of the “record” was at the heart of the Applicant C’s two trips to the Manitoba Queen’s Bench, one to the King’s Bench, and two to the Court of Appeal. C was unsuccessful at every turn. In the end, the Court of Appeal did not agree the lower court had mistakenly declined jurisdiction by rejecting C’s attempt to recreate the record by adducing affidavit evidence of what was formally before the arbitrator. In the circumstances, the Court held the “record” would consist of the two awards and accompanying reasons, the pleadings, and the five marked exhibits.

October 13, 2023November 2, 2023

Québec – Arbitrator’s ruling on jurisdiction not an award – even if evidence heard – #782

In ADREQ (CSD) Estrie c. Lavoie, 2023 QCCS 3372 [ADREQ], the Court found that under the principle of competence-competence, unless only questions of law are engaged, an arbitrator retains the right to make determinations as to its own jurisdiction at first instance. The competence-competence principle dictates that arbitrators are competent to determine their own jurisdiction. A jurisdictional decision does not become an “award”, even though the arbitrator heard evidence relating to the substance of the dispute before deciding that he lacked jurisdiction.

October 12, 2023October 10, 2023

Ontario – A pathological med-arb clause – #781

Stothers v Kazeks, 2023 ONSC 5021 is a perfect example of the confusion about the med-arb process that I covered in my last case note: Med-arb process was “fundamentally flawed” – #775. If you want to skip to the language of the pathological so-called med-arb clause without the factual background in this case, just scroll down to just above the Editor’s Notes section.

October 11, 2023October 10, 2023

Québec – Arbitration clauses bind parties only, even if parallel proceedings – #780

In Clinique Ovo inc. v. Elite IVF, 2023 QCCA 1097 , the Court determined that an arbitration clause barred some, but not all third-party claims. The factual matrix underlying this decision is convoluted: two agreements; similar but not identical arbitration clauses; and multiple actors. The background facts are sensational: an alleged fraudulent in vitro impregnation involving parties in Geneva and Cyprus; a birth in Monaco; disputed support payments required from a bewildered father; and, inevitably, litigation with third-party claims raising issues of arbitration clause interface with the court proceedings. Against this backdrop, the Court of Appeal decision is grounded in a key and decisive first principle: arbitration clauses bind parties to the agreement, not strangers.

October 10, 2023October 13, 2023

Ontario – Arbitral tribunal lacks power to order third-party discovery – #779

In Link 427 General Partnership v. His Majesty the King, 2023 ONSC 2433, the Court refused to enforce an arbitrator’s interim procedural order purporting to compel third-party discovery. This decision highlights the limits of an arbitral tribunal’s procedural authority over strangers to the arbitration agreement, the complexities of which I highlight in my Contributor’s Notes below.