Arbitration Matters

August 16, 2023August 11, 2023

New Brunswick – Arbitration award not trigger for discoverability of related claim– #764

In Architecture 2000 Inc. v. Moncton, 2023 NBCA 50, a unanimous Court of Appeal summarily dismissed civil claims of breach of contract and negligence in the design and management of a building addition. While the appeal turned on New Brunswick’s limitations legislation, claims made in an earlier arbitration from the same construction project were crucial to this outcome, as explained below. The decision exemplifies problems that can arise in a dispute in which there are multiple contracts at issue, when some players are parties to some contracts but not others, and when an arbitration agreement covers only some of the disputes between the various contracting players.

August 15, 2023August 14, 2023

B.C. – No unfairness for procedural irregularity, no jurisdiction to review facts – #763

In Anins v. Anins, 2022 BCCA 441 (leave to appeal refused 2023 CanLII 64855 (SCC)), the Court of Appeal for British Columbia upheld a lower court decision dismissing a petition to set aside a family arbitral award based on errors of law and procedural unfairness. The Court of Appeal agreed with the B.C. Supreme Court that the Arbitrator did not cause any unfairness in failing to make a procedural direction in writing, nor were his reasons insufficient for omitting reference to certain statutory provisions. The Court of Appeal also agreed that the appellant’s grounds for appeal on the merits raised pure questions of fact. These were not appealable under B.C.’s then-applicable domestic arbitration statute.

August 14, 2023August 18, 2023

Alberta – Misapplication of separability principle in contract dispute – #762

Gutama Estate v Vital Property Services Inc., 2023 ABKB 436, is NOT an arbitration case and the contract at issue contained no arbitration clause. But bear with me! The case involved the alleged repudiation/termination of a shareholders agreement and the consequences to the rights and obligations of the parties as a result. The question: if the contract was repudiated/terminated, were all the parties’ rights unwound? The Court quoted from Heyman v. Darwins Ltd. (uniset.ca), the leading U.K. decision that established the common law principle of separability of the arbitration clause. The Court described Heyman v Darwins as a case that addresses the operation of an arbitration clause where the contract has come to an end: in circumstances in which the contract-terminating event did not go to the very existence of the contract, “it did not matter how the contract came to be terminated: the contract (including its arbitration clause) had existed, and the arbitration clause continued to operate….” The Court then extrapolated that concept and applied it more broadly: “[i]n other words, pre-existing and engaged contractual rights continued to operate despite the later termination (by whatever means) of the contract”. Applying that reasoning to this case where the shareholders agreement was alleged to have been repudiated or terminated by its own terms, the Court said that any such termination did not, “eclipse the agreement completely ie render it meaningless for all purposes and at all times… [i]nstead, crystalized rights and obligations would continue.” In other words, “the parties would be discharged from future obligations, but remain bound by rights and obligations that have accrued through partial performance”. Thus the Court imported part of a uniquely arbitration law principle with a specific public policy purpose, separability, into general contract law.

August 4, 2023August 1, 2023

British Columbia – Google wins stay of conspiracy claims; plaintiff refuses to arbitrate – #761

In Spark Event Rentals Ltd. v. Google LLC, 2023 BCSC 1115, the BC Supreme Court granted the Google Defendants a stay in favour of arbitration. The Court rejected Spark’s assertion that the applicable arbitration agreement prohibited it from commencing arbitration, and that the entire dispute with Google could not be resolved in arbitration. Spark had also sued affiliates of Apple in the action. Apple applied, unsuccessfully, to stay the action on the basis that it was so intertwined with the claims against Google that it would amount to an abuse of process for the BC litigation to proceed in parallel with an arbitration against Google on the same claims. However, Spark represented to the Court that if its claims against Google were stayed, it would not proceed with an arbitration; accordingly, the Court found that Apple’s stay application was moot. While the Court left the door open to Spark to arbitrate with Google, in effect the arbitration agreement appears to have provided a tactical shield for Google – for now. This may be a case to watch, as Canadian courts have not yet definitively ruled on the availability of joint and several damages from co-conspirators in private litigation under the Competition Act, RSC 1985, c C-3 4. Another unsettled question that may arise in due course is whether, in these circumstances, a party has a right of contribution and indemnity from a co-conspirator if it is ordered to pay more than its proportional share of damages.

August 3, 2023August 1, 2023

Ontario – Title of proceedings may be amended in recognition and enforcement proceeding – #760

IC2 Fund v Wires, 2023 ONSC 3879 addresses: (1) whether it is appropriate for a party seeking to enforce an international arbitral award to correct the title of proceedings in an enforcement proceeding where both abbreviated and formal names were used interchangeably in the arbitration; (2) whether an applicant using an abbreviated name has standing; and (3) whether a party resisting enforcement can do so on the basis of an arbitrator’s alleged partiality after such allegations were addressed in the arbitration, which decision was not challenged. Here, the applicant (the respondent in the arbitration) brought an application to enforce an arbitral award (the “Award”) relating to its costs of the arbitration. In the title of proceedings in the notice of application, the applicant used an abbreviated corporate name. In the absence of confusion around the party’s identity, including because the respondent (the applicant in the arbitration) had used both the formal and abbreviated names, the court granted leave to amend the notice of application to reflect the full corporate name and resolved the standing issue on the same basis. The court also recognized the Award, rejecting the allegations of partiality of the arbitrator. The respondent had previously made allegations in the arbitration about the arbitrator’s lack of impartiality, which were rejected. The respondent did not challenge this decision.

August 2, 2023August 1, 2023

Alberta – No discretion under Rules to correct procedurally flawed appeal of award – #759

In Kwadrans v Kwadrans, 2023 ABCA 203, the Alberta Court of Appeal considered the appeal of a chambers judge’s order that struck the appeal of an arbitration award in a family law dispute. The chambers judge held that the appellant, by filing a Notice to Attend Family Docket Court instead of an originating application, did not properly commence his appeal of the arbitral award within 30 days as required by the Alberta Arbitration Act, RSA 2000, c A-43 (“Arbitration Act”). The chambers judge issued an order striking the appeal. The Court of Appeal upheld the chambers judge’s finding and dismissed the appeal. Kwadrans makes clear that although the Arbitration Act is silent about how an appeal is to be commenced, rule 3.2(5) of the Alberta Rules of Court, Alta Reg 124/2010 (“Rules of Court”) fills that gap and requires that an appeal be made by originating application. Further, based on the authority of the Alberta Court of Appeal in Kwadrans and Allen v Renouf, 2019 ABCA 250, the Court does not have discretion to cure a procedural deficiency if the effect would be to extend a limitation period under the Arbitration Act. Kwadrans addresses issues that may arise as a result of the interplay between the Rules of Court and the Arbitration Act generally and has application to appeals of commercial arbitral awards.

August 1, 2023August 1, 2023

Ontario – Courts will also enforce agreements in favour of court proceedings – #758

In Eurofins Experchem Laboratories, Inc. v BevCanna Operating Corp., 2023 ONSC 4015, the Court dismissed an application by Defendant BevCanna Operating Corp (“BevCanna”) for a permanent stay of the action or alternatively, a permanent stay of any claims caught by the arbitration clause in the agreement between BevCanna and the Plaintiff, Eurofins Experchem Laboratories, Inc. (“Eurofins”). The Court found that Eurofins’s claim sought recovery of unpaid fees under the parties’ contract, even though it also included claims for breach of fiduciary duty and unjust enrichment. Claims for unpaid fees fell within an exception to the mandatory arbitration clause. It permitted (but did not require) claims for unpaid fees to be brought in the courts. In reaching this conclusion, the Court considered whether the essential character, or pith and substance of the dispute, was covered by the arbitration clause. This focus ensures that parties are held to their agreement and avoids attempts by clever counsel to plead their way around an arbitration clause.

July 20, 2023July 17, 2023

Ontario – When is an appeal of a stay decision barred? – #757

In Leon v Dealnet Capital Corporation, 2023 ONSC 3657, the Appellant, John Leon, appealed an order that stayed his action for breach of an employment contract in favour of arbitration, pursuant to section 7(1) of the Ontario Arbitration Act, 1991, S.O. 1991, c. 17 (“Arbitration Act”). Section 7(6) of the Arbitration Act provides that there is no appeal from stay decisions under section 7. However, the Appellant argued that section 7(6) did not apply in this case based on the recent decision of Goberdan v. Knights of Columbus, 2023 ONCA 327 (“Goberdan”) and the line of cases cited therein. Those cases stand for the proposition that if there is no arbitration agreement, the Arbitration Act does not apply and section 7(6) does not bar an appeal. In Goberdan, the motions judge concluded that there was no arbitration agreement because there had been no consideration for the contracts and therefore no contracts. As there was no arbitration agreement, the Court of Appeal found that the Arbitration Act including section 7(6) did not apply to bar the appeal. Here, it was argued that section 7(6) did not apply because the employment agreement, and therefore the arbitration clause, were void ab initio because the contract contracted out of the Employment Standards Act, 2000, S.O. 2000 c. 41 (“ESA”) contrary to the Ontario Court of Appeal decision in Heller v. Uber Technologies Inc., 2019 ONCA 1 (“Heller CA”). Heller CA held, among other things, that an arbitration clause in an agreement between a presumed employer and employee was invalid as it constituted an illegal contracting out of the ESA.

July 19, 2023July 17, 2023

Québec – Arbitrator’s past professional relationship not a cause of partiality – #756

In Tourigny v Chabot, 2023 QCCS 1976 (“Tourigny”), the Court homologated an arbitral award for costs, thereby dismissing the Defendants’ challenge based on an application to recuse the arbitrator on grounds of partiality.

July 18, 2023July 17, 2023

Federal – Stay test may vary – no Canadian standard arbitration stay provision – #755

In General Entertainment and Music Inc. v Gold Line Telemanagement Inc., 2023 FCA 148, a unanimous Federal Court of Appeal (Webb, Rennie, and Locke, JJA) upheld a stay of court proceedings in a copyright and trademark infringement action. As a result, complicated disputes about party identity will be resolved in the international arbitration, not by the court which heard the motion to stay. The decision underscores a key stay of proceedings principle: complex questions of fact or mixed fact and law relating to arbitral jurisdiction should first be referred to the arbitrator. This is so even in the absence of a standard statutory stay of proceedings provision, as occurred in this case. Stay considerations differ by jurisdiction and context, domestic or international, and it is not an invariable technical prerequisite that a party must apply for the stay before taking any step in the court proceedings.