Arbitration Matters

October 10, 2022October 7, 2022

Québec –Property Appraisal Process not Contrary to Public Order– #668

In Hypertech Real Estate Inc. v. Equinix Canada Ltd, 2022 QCCS 3368, Justice Corriveau dismissed an application to annul an arbitral award on the basis that a property appraisal process was “contrary to public order” pursuant to Article 646 of the Québec Code of Civil Procedure (“the CCP”). Under the terms of an option to purchase property (the “Property”), Hypertech Real Estate Inc. (“Hypertech”) and Equinix Canada Ltd. (“Equinix”) submitted appraisal valuations. Purchaser Equinix’s appraisal was some $60,000,000 lower than seller Hypertec’s. In arbitration, Hypertec maintained that Equinix’s appraisal was so flawed it should be excluded from consideration. The arbitral tribunal reviewed the appraisal in “Phase I” of the arbitration and rendered an award finding that the appraisal contained no fundamental flaws. Hypertec unsuccessfully argued before Justice Corriveau that the arbitral tribunal erred in two respects: (1) in its interpretation and application of rules of public order; and (2) that the award reasons were insufficient, which was contrary to public order.

October 6, 2022October 13, 2022

Ontario – No oral hearing required even if one party requests it – #667

Optiva Inc. v Tbaytel, 2022 ONCA 646, raises two issues of interest to arbitration law. First, the Appellant (Optiva) made a jurisdictional objection to the arbitrator’s ruling allowing the Respondent (Tbaytel) to bring a motion for summary judgment. The arbitrator then issued a procedural order in which he ruled that he had jurisdiction. After hearing the motion, the arbitrator issued a partial award on the merits, which was in favour of Tbaytel. Optiva applied to the Ontario Superior Court of Justice to “decide the matter” of the arbitrator’s jurisdiction and to set aside the partial award, both pursuant to s.17 (rulings and objections re jurisdiction) of the Ontario Arbitration Act, 1991, S.O. 1991, c. 17 (the “Act”). However, the application judge found that Optiva had failed to bring its application on time and dismissed it. Pursuant to s. 17(8), it was required to do so within 30 days of the arbitrator’s jurisdiction ruling, not after the issuance of the partial award on the merits. The Ontario Court of Appeal agreed with the application judge and dismissed Optiva’s appeal, but for different reasons. The application judge erred in finding that Optiva was out of time to ask the Court to “decide the matter” because the preliminary ruling was not jurisdictional. Relying upon Inforica Inc. v. CGI Information Systems and Management Consultants Inc., 2009 ONCA 642, the ruling that the matter could proceed by summary judgment was procedural, not a ruling on the arbitrator’s “own jurisdiction”; therefore, s. 17 was not engaged. However, the appeal was dismissed because the arbitrator was entitled to decide matters of procedure, both under the Act and under the parties’ arbitration agreement, and did so. Second, the Court of Appeal held that s. 26(1) of the Act does not require an oral evidentiary hearing, even if one party requests it.

September 29, 2022September 29, 2022

Ontario – No appeal lies from preliminary jurisdictional decision – #666

In Iris Technologies Inc. v. Rogers Communications Canada Inc., 2022 ONCA 634, the Ontario Court of Appeal quashed a motion for leave to appeal from the lower court’s decision in which it was asked to “decide the matter” of arbitral jurisdiction under the Ontario Arbitration Act, 1991. The Court of Appeal confirmed its earlier decision, United Mexican States v. Burr, 2021 ONCA 64, made under the Ontario International Commercial Arbitration Act, 2017. The Court also made it clear that no appeal lies from lower court decisions which “decide the matter” of arbitral jurisdiction when the question comes before the court as a preliminary issue before the final award is rendered.

September 28, 2022April 20, 2023

Alberta – Master’s stay decision appealable despite no appeal under Arbitration Act – #665

In Agrium v Orbis Engineering Field Services, 2022 ABCA 266, the majority of a three-member panel of the Court of Appeal of Alberta (the “Court of Appeal”) dismissed an appeal to overturn a decision staying the action in favour of arbitration. The Appellant, Agrium, Inc. (“Agrium”), commenced an action against the Respondents, Orbis Engineering Field Services Ltd., Elliott Turbomachinery Canada Inc., and Elliott Company (together, the “Respondents”), in relation to a dispute arising out of the parties’ services contract that included a mandatory arbitration agreement. The Respondents defended the claim, including on the ground that the arbitration agreement barred the action pursuant to s 7 of Alberta’s Arbitration Act (the “Act”). The Respondents’ initial application to stay the action was dismissed by Master Prowse on the grounds of waiver and attornment. The Respondents then appealed to a Justice of Alberta’s Court of King’s Bench. Before Justice Dilts, Agrium relied upon s 7(6) of the Act, which states that “[t]here is no appeal from the court’s decision under this section”. Agrium argued that thisprohibited the appeal. Justice Dilts dismissed this argument and allowed the Respondents’ appeal on the grounds that: (1) an appeal was permitted notwithstanding s. 7(6); and (2) the Respondents’ conduct did not amount to a waiver of their right to arbitrate. The majority of the Court of Appeal upheld Justice Dilts’ decision based on a similar analysis. Of note, Justice Wakeling wrote a 44-page dissenting opinion, which includes 140 paragraphs and 152 footnotes, as compared with the 34- paragraph majority decision (!).

September 27, 2022September 26, 2022

Québec – Interests of justice require closely linked disputes to be arbitrated – #664

In Tessier v 2428-8516 Québec inc., 2002 QCCS 3159, Justice Dufresne granted an application for a declinatory exception in respect of an originating application, and referred two disputes involving ownership of two closely connected companies to arbitration where the shareholders of only one of the two companies involved in the disputes were subject to an arbitration agreement. Justice Dufresne found that the disputes were linked. He relied upon the interests of justice and the principle of proportionality and found that [informal translation]“rather than depriving the shareholders of the first [company] of the effects of the arbitration clause, the shareholders of the second [company] should be ordered to be subject to it.”

September 26, 2022September 26, 2022

Alberta – Court reviews preliminary jurisdictional award for correctness de novo – #663

In Ong v Fedoruk, 2022 ABQB 557, Justice Bourque confirmed that under subsection 17(9) of the Alberta Arbitration Act(“the Act“), the court reviews preliminary jurisdictional awards in domestic arbitrations for correctness on a de novo basis. In doing so, Ong aligned the standard of review and procedure in Alberta with the decision of the Ontario Divisional Court in The Russian Federation v. Luxtona Limited, 2021 ONSC 4604 (“Luxtona”), a case decided under the comparable provision of Ontario’s International Commercial Arbitration Act, 2017, SO 2017, c 2, Sch 5 (“ICAA”), which implements the UNCITRAL Model Law on International Commercial Arbitration (“Model Law”). However, it diverged from Ace Bermuda Insurance Ltd. v Allianz Insurance Company of Canada, 2005 ABQB 975 (“Ace Bermuda”), an international case which applied a review standard of “reasonableness, deference & respect” under Alberta’s International Commercial Arbitration Act, RSA 2000, c I-5, which also implements the Model Law. That case as a precedent may now be in doubt, considering the trend in Canadian and other Model Law jurisdictions in favor of non-deferential review of preliminary jurisdictional decisions of arbitral tribunals.

September 23, 2022April 13, 2023

B.C. – Material misapprehension of evidence is an extricable error of law – #662

In Escape 101 Ventures Inc. v March of Dimes Canada, 2022 BCCA 294, Justice Voith (for the Court) allowed an appeal of a commercial arbitral award on two grounds of significance: (1) the arbitrator demonstrated a material misapprehension of evidence going to the core of the outcome – this constituted an extricable error of law subject to appeal; and (2) an appeal is allowed with respect to “any question of law arising out of an arbitral award”, but this is not limited to errors arising from the formal award of the arbitrator. Here, the error was patent from the record, but was not apparent in the arbitrator’s reasons. The Court remitted the issue back to the arbitrator for reconsideration rather than substitute its own decision because there was no record of the proceedings, so it lacked the necessary evidentiary foundation to do so. (This was also the first appeal under the new B.C. Arbitration Act, S.B.C. 2020, c. 2.)

September 15, 2022September 9, 2022

Ontario – Action abuse of process – even against new defendant – where issues already arbitrated – #661

In Doria v Warner Bros. Entertainment Canada Inc. et al., 2022 ONSC 4454, Justice Koehnen granted the Defendants’ motion to strike the Plaintiff’s Statement of Claim pursuant to Rule 21.1(3)(d) of the Ontario Rules of Civil Procedure, R.R.O. 1990, Reg. 194 on the ground that it was an abuse of process because it sought to relitigate issues that were previously decided by an arbitrator. The Plaintiff argued that s. 139 of the Ontario Courts of Justice Act. R.S.O. 1990, c. C.43, allowed him to bring a subsequent proceeding for the same or similar relief against a person who was jointly liable and who was not bound by a previous judgment. Justice Koehnen found that s. 139 did not apply these circumstances, where the Plaintiff had a full opportunity to have his entire claim adjudicated in the arbitration, was awarded judgment, and had fully collected on the judgment. The Plaintiff’s complaint was that the arbitrator did not grant him his full damages. The fact that the Defendants were not parties to the arbitration and therefore not bound by the award was irrelevant.

September 14, 2022September 9, 2022

Ontario – Court of Appeal upholds “single proceeding” insolvency model over recourse to arbitration – #660

In Mundo Media Ltd. (Re), 2022 ONCA 607, Court of Appeal for Ontario Justice Julie Thorburn dismissed a motion for leave to appeal a decision denying a motion to stay a receiver’s court proceeding. The Appellant/Moving Party sought the stay on the basis of an international arbitration agreement. Justice Thorburn found no reversible error in the motion judge’s choice to apply the “single proceeding model”, applicable in insolvency proceedings, with the effect that the Appellant/Moving Party, one of the insolvent company’s debtors, could not require the receiver to arbitrate its claim rather than litigate it. Together with the Superior Court’s decision below, this decision provides important guidance on the interplay between arbitration agreements and claims advanced in the bankruptcy and insolvency context.

September 13, 2022September 9, 2022

Alberta – Successful enforcement of right to arbitrate attracts triple “tariff” costs – #659

In Barrel Oil Corp v. Cenovus Energy Inc., 2022 ABQB 488, Justice M.H. Hollins granted a Respondent who successfully defended an application to stay an arbitration the Respondent had commenced, triple “tariff” costs, equating to just over 40% of the Respondent’s out of pocket costs. The Court rejected the Respondent’s plea of full indemnity costs, finding they were inappropriate in this case.