Arbitration Matters

April 25, 2022April 25, 2022

Ontario – Arbitrators can decide non-legal business disputes, but not in this case – #608

The case 1107051 Ontario Ltd. v. GG Kingspa Enterprises Limited Partnership, 2022 ONSC 1847 concerned the jurisdiction of an arbitrator to decide a business dispute that was not legal in nature. The Applicant, 1107051 Ontario Ltd. (“110”), applied to “set aside” a decision of an arbitrator to assume jurisdiction over a dispute about whether a major real estate development project at King Street West and Spadina Avenue in Toronto (the “Project”) should include a hotel component when the parties were deadlocked on the issue. Section 17(8) of the Ontario Arbitration Act allows a party to apply to the Court to “decide” a jurisdictional issue if, as here, an arbitrator decides it as a preliminary question, as opposed to with the merits. Justice McEwen granted the “set aside”. He agreed with the arbitrator that the dispute was of a business nature and not legal and, further, that parties could arbitrate such non-justiciable disputes if they clearly and specifically intended to do so. In this case, although the arbitration clause was described as broad, the dispute was beyond its scope because the dispute was required by the clause to arise “under this Agreement”. That meant the dispute had to be about more than just anything to do with the Project. It had to concern the rights and obligations of the parties under the Agreement. Although a hotel was contemplated as part of the Project, it was not a required component. Further, express authorization to determine a business issue would have been necessary.

April 22, 2022April 22, 2022

Ontario – Best practices: pre-appointment communications and application to appoint arbitrator – #607

In Magna International Inc. v Granite Real Estate Inc., 2022 ONSC 2200, Justice Myers granted the application of Magna, the tenant in a lease agreement, for an order appointing an arbitrator to fix the rent for a renewal term of the lease. The parties agreed that the tenant had validly renewed the lease, but could not agree on the rent for the renewal period. Respondent Granite, the landlord, opposed the appointment of the arbitrator for two reasons: (1) the evidence in support of the application was insufficient; and (2) the arbitration clause in the lease was invalid because it contained permissive, rather than mandatory, language and was too vague because it did not specify either the seat or the applicable rules of the arbitration. Justice Myers set out the preferred approach for both communicating with the proposed arbitrator in circumstances in which the parties are not cooperating and the kind of evidence that should be adduced on an application for a court order appointing the proposed arbitrator, using the analogy of the process for the court appointment of a receiver/trustee in bankruptcy. Also, he found that the issues relating to the validity of the arbitration clause were to be referred to the arbitrator under the competence-competence principle.

April 15, 2022April 13, 2022

Ontario – Continuing confusion over nature of court review of arbitration – #606

In PCL Constructors Canada Inc. v Johnson Controls, 2022 ONSC 1642, Justice Conway heard and dismissed four applications, two by PCL and two by Johnson, relating to two arbitrations arising out of disputes over the construction by PCL of the Humber River Regional Hospital (“the Humber Arbitration) and the Milton District Hospital (“the Milton Arbitration”). PCL brought applications to the court, pursuant to s. 17(8) of Ontario Arbitration Act, 1991, S.O. 1991, c. 17 (“the Act”), to “decide the matter” of the tribunal’s ruling on jurisdiction as a preliminary matter. Justice Conway applied the “correctness” standard of review; the arbitrators both ruled correctly that they had jurisdiction and that the prerequisites to arbitration in the arbitration clause did not constitute conditions precedent to arbitration. Johnson brought applications under s. 8(2) of the Act, which provides that the court may determine any question of law that arises during an arbitration on an application if the parties or the tribunal consent. The issue concerned a party’s right under the contract to apply to the court for a reconsideration of the arbitrator’s determination. That right had not crystallized because the arbitration continued and no determination had been made.

April 14, 2022April 12, 2022

Newfoundland and Labrador – No attornment to court jurisdiction where arbitration mandatory under treaty – #605

In Newfoundland and Labrador v Nunatsiavut Government, 2022 NLCA 19, the Court of Appeal of Newfoundland and Labrador (the “Court”) allowed the Province’s appeal of a trial decision in respect of a dispute pursuant to the Labrador Inuit Land Claims Agreement(the “Treaty”). The Court found that the parties were required to arbitrate their dispute, even though this issue was raised for the first time on appeal. At first instance, the trial judge agreed with the claim of the Nunatsiavut Government (“Nunatsiavut”) against the Province for a share of revenue related to the exploitation of land subject to the Treaty. On appeal, the Province challenged, for the first time, the jurisdiction of the Supreme Court of Newfoundland and Labrador (the “Superior Court”) to have adjudicated the matter in light of the requirement for mandatory arbitration under the Treaty. Central to the Court’s finding on appeal was its determination that the parties could not “attorn” to the Superior Court’s jurisdiction despite the fact that the Province did not raise the issue of jurisdiction before the trial judge. The Court found that “[56] [g]iven the clear language of the treaty that the parties must proceed to arbitration to resolve the disputes over revenue sharing, the parties cannot ‘attorn’ to the jurisdiction of the Court because the jurisdiction of the provincial Superior Court has been removed by these terms.”

April 13, 2022April 13, 2022

Nova Scotia – Self-inflicted compliance issues no basis to object to arbitration – #604

In Install-A-Floor Limited v. The Roy Building Limited, 2022 NSSC 67, the applicant, Floors Plus, sought an order appointing an arbitrator pursuant to the dispute resolution provision of its contract with the respondent, the Roy. The respondent opposed the application on two grounds: (1) the applicant lost its right to pursue arbitration as the limitation period had expired; and (2) the applicant did not adhere to certain contractual requirements and as such was disentitled to apply for the appointment of an arbitrator. Justice Norton granted the relief sought and ordered the arbitrator be appointed pursuant to the parties’ contract. On the evidence before him, Justice Norton found that the arbitration was commenced in compliance with the applicable limitation period. He also found that there was nothing in the parties’ contract to indicate that the respondent was relieved of its contractual obligations to participate in the dispute resolution process, and further, that the respondent could not rely on compliance issues created by its own conduct to object to arbitration.

April 11, 2022April 18, 2022

Québec – Annulment: no review of the merits, even if award wrong – #603

In Balabanian v. Paradis, 2022 QCCS 959, Justice Harvie reaffirmed clearly that courts have no jurisdiction to revisit the merits of an arbitral award or the arbitrator’s reasons and assessment of the evidence when a party is seeking homologation or annulment of an arbitral award. This judgment is one of many in a saga involving opposing co-owners regarding the management and maintenance of their property. The co-ownership contract included an arbitration agreement. A group of co-owners alleged a lack of transparency and equity by Balabanian in the management and maintenance of the property. The dispute against Balabanian resulted in two arbitrations and court proceedings, taking place in parallel. Justice Harvie’s decision concerned the second arbitration process. The group of co-owners sought the homologation of the second arbitral award, while Balabanian asked for its annulment. Balabanian contested the award for numerous reasons, including: the arbitrator’s appointment because of his lack of independence and neutrality, the lack of jurisdiction of the arbitrator, the award going beyond the scope of the arbitration agreement, the violation of the fundamental right to be heard and, more generally, the merits of the award itself. Justice Harvie dismissed every argument made by Balabanian against the award, reaffirming the strict scope of analysis of homologation/annulment grounds according to sections 645 and 646 CCP.

April 8, 2022April 7, 2022

Ontario – Order denying leave to appeal award interlocutory, leave to appeal required – #602

In Mills v Thompson, 2022 ONSC 1525, Justice Charney, sitting as an Ontario Divisional Court judge, quashed an appeal of the decision of a Superior Court judge denying leave to appeal an arbitral award. The question before him was, “whether a party requires leave to appeal from a decision denying leave to appeal [an arbitral award on a question of law] or may appeal a denial of leave to appeal as of right”. Justice Charney confirmed recent Ontario Court of Appeal jurisprudence holding that a decision of the Superior Court of Justice granting or denying leave to appeal an arbitral award is an interlocutory order in respect of which leave to appeal is required under s. 19(1) of the Ontario Courts of Justice Act, R.S.O., 1990, c. 43, as amended. Any other conclusion would defeat the purpose of the appeal provision in the Ontario Arbitration Act, 1991, S.O. 1991, c. 17, s. 45, which is intended to minimize judicial interference in arbitration. It would be incongruous to allow an appeal of a denial of leave decision as of right, when no such right is provided with respect to an appeal of the correctness of the award itself. The Appellant had not sought leave of the Divisional Court to appeal. Justice Charney quashed the appeal.

April 1, 2022May 4, 2022

Québec – Expert opinion unenforceable; not an arbitral award – #601

In 9429-1143 Québec inc. c. Mishmash — Collectif expérientiel, 2022 QCCS 351, Justice Collier declared that a decision issued by an accounting firm did not constitute an arbitration award in the circumstances of the case and could therefore not be homologated. He concluded that the parties did not intend to submit a question for final determination by the accounting firm and that the latter had not exercised quasi-judicial functions.

March 31, 2022March 28, 2022

B.C. – Arbitration clause covered contract not tort claims – #600

In Harris v Isagenix International, 2022 BCSC 268, Justice Branch dismissed the defendants’ motion to stay a personal injury action in favour of arbitration, despite an arbitration clause in the parties’ contract. The plaintiff sought damages for personal injuries arising from her use of the defendants’ wellness products. She asserted that the defendants were negligent in the design, manufacture, distribution, marketing and supply of these products (“the Products”). She also relied upon the Business Practices and Consumer Protection Act, S.B.C. 2004, c. 2 (“BPCPA”). The plaintiff was not only a consumer but also sold the products as part of the defendant’s marketing program. She signed two contracts as a result of which she became a “Preferred Customer” of the Products and, later, an “Associate” entitled to sell the products. She placed orders for the Products for herself while she was a “Preferred Customer” and for herself and others as an “Associate”. Therefore, she “wore two hats”. Justice Branch found that the arbitration clause in the applicable contract covered only potential contract claims, not tort claims. The plaintiff’s action was allowed to proceed.

March 30, 2022March 28, 2022

Ontario – Opportunity to clarify how arbitration interfaces with registering land interests – #599

In Green Urban People Ltd. v. Berthault, 2022 ONSC 737, the Divisional Court (Justices Sachs, Morgan and D.L. Edwards) granted leave to appeal on the issue of whether a certificate of pending litigation (“CPL”) can be issued by the court in face of an arbitration agreement.