Arbitration Matters

October 28, 2021May 4, 2022

NL – Pre-judgment attachment order granted re possible damages payable from arbitration -#548

In Sandford v Astaldi, 2021 NLSC 130, the plaintiffs sought a pre-judgment attachment order pursuant to s. 27 of the Newfoundland and Labrador Judgment Enforcement Act on the exigible property of defendant Astaldi Canada Inc. They also asked that defendants Muskrat Falls Corporation (“MFC”) and Nalcor Energy be prohibited from dealing with Astaldi property they hold in a manner that would be likely to hinder the plaintiffs in the enforcement of any judgment they may obtain against Astaldi in their litigation. The exigible property at issue was: (a) monetary damages which Astaldi hoped to receive as a result of a private commercial arbitration against MFC and Nalcor; and (b) proceeds held by MFC and Nalcor from the sale of equipment owned by Astaldi. The issue on the application was whether there were reasonable grounds to believe that Astaldi “is dealing” or “is likely to deal” with its exigible property otherwise than for the purpose of meeting its reasonable and ordinary business expenses; and, if so, whether the manner of it so dealing would likely seriously hinder the plaintiffs in enforcement of a judgment. Justice Thompson granted the pre-judgment attachment order on the ground that Astaldi was no longer conducting business at all in the province, which meant that it was not dealing with its exigible property at all, nor meeting its expenses.

October 27, 2021May 4, 2022

Québec – No referral to arbitration; arbitration clauses intended to “subvert” litigation process – #547

In Sigounis c. Sigounis, 2021 QCCS 4185, as part of his ruling addressing several interim applications, Justice Pinsonnault refused to refer the parties to arbitration in a drawn-out family dispute. The underlying oppression remedy action was commenced by the Plaintiff Jimmy Sigounis against his father, Defendant Nicolas Sigounis, and sister, Defendant Argyro Sigounis (“Argyro”), regarding the family’s interests in various private corporations (the “Chenoy Corporations”). While the action was ongoing, the father sold his interests in the Chenoy Corporations to co-Defendant Argyro (the “Transaction”). Thereafter, the father passed away and his widow (the Plaintiff’s, mother Eleni Sigounis), who had previously not been involved in the action, took over as “Defendant in Continuance of Suit” in her capacity as the estate’s liquidator and universal legatee. The Plaintiff and his mother then learned of the Transaction, which they both viewed as prejudicial to their interests; including that the Transaction potentially left the estate insolvent. Accordingly, the mother made several filings with the Court, including a Cross-Application and a Declaration of Intervention against Argyro (the “Filings”), seeking the cancellation of the Transaction. In response, Argyro brought the subject interim applications, including an application to refer all matters raised in the Filings to arbitration pursuant to the identical arbitration clauses in the Transaction agreements. In rejecting Argyro’s application, Justice Pinsonnault found that the dispute, as a whole, fell within one of the exceptions in the arbitration clauses as “a severe dispute over family matters” thus rendering the dispute outside the scope of the arbitration clauses in the Transaction agreements. In addition, Justice Pinsonnault took issue with the timing of the Transaction, which took place over two years after the action was commenced, and the Defendants’ intentions of subverting the litigation process by including the arbitration clauses in the event that the Transaction was contested.

October 26, 2021May 4, 2022

Ontario – Court of Appeal does not address whether Vavilov changed the standard of review – #546

In Ontario First Nations (2008) Limited Partnership v. Ontario Lottery and Gaming Corporation, 2021 ONCA 592, Justice Jamal (as he then was), writing for the Court of Appeal, found that it was unnecessary to address whether Vavilov changed the standard of review analysis in Sattva and Teal Cedar in an appeal from a commercial arbitration decision. Justice Jamal held that the parties’ disagreement as to how the applicable principles of contractual interpretation should be applied to the contractual facts is, absent an extricable error of law, an exercise of contractual interpretation by a first-instance decision maker on a matter of mixed fact and law that attracts appellant deference. Further, the Court should refrain from deciding issues of law that are unnecessary to the resolution of an appeal.

October 25, 2021May 4, 2022

Québec – Consideration of scope and applicability of arbitration clause – #545

In Dr. Catherine Morin-Houde Dentist Inc. v. Dr. Marie-Ève Costisella Inc., 2021 QCCS 4109, Justice Faullem of the Québec Superior Court reviewed the applicability of an arbitration clause and in doing so set out a number of principles relevant to an understanding of the scope of arbitration clauses and the assessment of arbitral jurisdiction.

October 22, 2021May 4, 2022

Alberta – Award was “abbreviated” to save time and costs – #544

In Alvarez v Alvarez, 2021 ABQB 717, Justice Malik denied leave to appeal an arbitrator’s award on a question of law pursuant to section 44(2) of the Arbitration Act, RSA 2000, c. A-43. He found that no question of law was raised. However, the case raises issues concerning s. 44(1) of the Act, which allows a party to ask the tribunal to “correct typographical errors, errors of calculation and similar errors in the award” and s. 40, which permits a party to ask the tribunal to “explain any matter” in the award. The arbitrator issued an Award, and later at the request of the applicant, a Corrected Award, which included a “nominal correction”. It also addressed the applicant’s requests for correction, but made no changes to the Award. Before Justice Malik, the applicant argued (unsuccessfully) that the Award and Corrected Award contained errors of law. Justice Malik noted that the, “[a]rbitrator acknowledged that the Award was abbreviated to save time and costs, that just because he had not set out every fact or argument did not mean he had not considered them, and that a party could request additional reasons should they wish to pay the additional cost.” The applicant argued on the application for leave to appeal that the arbitrator had not explained his Award sufficiently. The decision does not indicate whether the parties requested an abbreviated award to save time and costs. The Award was issued 8 months after the close of hearings.

October 15, 2021May 4, 2022

Ontario – Challenge to arbitrator’s integrity to be determined using bias test – #543

In Farmer v Farmer, 2021 ONSC 5913, the appellant wife appealed three arbitral awards arising out of a five-day family arbitration pursuant to s. 45(6)(a) of the Ontario Arbitration Act, 1991, SO 1991, c. 17. The wife’s grounds for appeal included that the arbitrator’s reasons were deficient and that the arbitrator’s “Clarification/Explanation Award” rendered after the parties complained that he had omitted certain issues in his first award, was an “after-the-fact” justification for the first award. The arbitrator admitted that he had had difficulty with his dictaphone when he had drafted the first award so that certain portions of it were inadvertently omitted, but said in the “Clarification/Explanation Award” that all issues had been considered. Justice Finlayson found that the “presumption of integrity” which applies to judges also applies to arbitrators and that the wife had to meet a test “similar to” the “reasonable apprehension of bias test” to rebut that presumption. She did not do so and this ground of appeal was dismissed. Justice Finlayson also concluded that the arbitrator’s reasons were insufficient, and substituted his own decision on one issue.

October 14, 2021May 4, 2022

Ontario – Court denies stay of order authorizing CCAA sale process despite ongoing arbitration – #542

In Urbancorp Toronto Management Inc. (Re) 2021 ONCA 613, Justice Miller refused to grant a stay pending appeal of an order in a CCAA proceeding authorizing the sale of an interest in a property development. The moving party unsuccessfully argued that the sale should be postponed until the conclusion of an ongoing parallel arbitration, the outcome of which would materially impact the value of the interest. If the sale process was not postponed, the moving party argued, the ongoing arbitration would chill the sale process and it would be impossible to know if a higher sale price could be achieved. Justice Miller held that he could not substitute his own evaluation of the efficacy of the sale process over that of the lower court judge, who had dismissed as speculative the argument that the sale process would suffer a chilling effect.

October 13, 2021May 4, 2022

Québec – Court favors arbitration even for related, but non-signatory, parties – #541

In 10053686 Canada inc. v. Tang, 2021 QCCS 3467, Justice Geeta Narang declined jurisdiction with respect to a dispute arising out of a Franchise Agreement. Plaintiffs were the franchisees and a director of a franchisee. Defendants were directors and shareholders of the franchisor. Justice Narang referred the case to private arbitration following Defendants’ demand for declinatory exception because the Franchise Agreement contained an arbitration clause. Justice Narang first concluded that the arbitration agreement was a “complete undertaking to arbitrate”, in conformity with the Supreme Court of Canada decision in Zodiak International v. Polish People Republic, [1983] 1 S.C.R. 529. She concluded that all allegations in the Plaintiffs’ claim were related to the franchisor-franchisee relationship and covered by the arbitration agreement. Secondly, she recognized the Legislator’s intention to favor a private dispute resolution mechanism over the public justice system whenever the parties have expressed the intention to resolve their dispute out of court. Thirdly, she granted Defendants’ demand for a declinatory exception, even though all Defendants and one of the Plaintiffs were non-signatories to the arbitration agreement. In interpreting the arbitration agreement liberally, she concluded that in this context ignoring the arbitration agreement because the Defendants were not parties to the arbitration agreement would be to rely upon a “blind technicality”.

October 12, 2021May 4, 2022

B.C. – Stay of portion of counterclaim not “improper bifurcation”; arbitration agreement bifurcated disputes – #540

In Mazzei Electric Ltd. v Western Canadian Construction Company Ltd., 2021 BCSC 1873, the Plaintiff applied to stay a portion of the counterclaim brought by the Defendant, on the basis that it was covered by the parties’ arbitration agreemeement. Justice W.A. Baker granted the stay while permitting the remainder of the counterclaim to proceed. In reaching her decision, she interpreted and applied a detailed and industry-specific dispute resolution clause, which allowed the parties to commence court proceedings to preserve a lien right. Justice Baker found that the Plaintiff’s lien action did not prevent it from seeking to have the Defendant’s counterclaim on other issues in dispute stayed in favour of arbitration.

October 7, 2021May 4, 2022

Ontario – Award enforcement application met with merits arguments in leave to appeal/set aside cross-application #539

In Fogler, Rubinoff LLP v Houle, 2021 ONSC 5626, Justice Vermette heard two applications following an arbitration concerning the assessment of two accounts rendered by applicant, Fogler, Rubinoff LLP, to its clients, respondents Conrad and Sheila Houle. The arbitrator issued an award requiring the respondents to pay. After they did not do so, Foglers brought an enforcement application pursuant to s. 50 of the Ontario Arbitration Act, 1991, S.O. 1991, c. 17. Upon such application, the court “shall” grant judgment so long as the requirements of s. 50(3) are not met – the appeal/set aside deadline has not yet elapsed, there is a pending appeal/set aside application, or the award has been set aside or the arbitration is the subject of an award of a declaration of invalidity. In other words, the merits of the award are not relevant. The respondents did not initially appeal the award, but then brought a cross-application – challenging both jurisdiction and the merits – seeking to set aside the award pursuant to s. 46(1)3 of the Arbitration Act or, in the alternative, leave to appeal the award under s. 45(1). Justice Vermette found that the set aside application was really a request to review the substance of the award on the basis that the arbitrator’s decision was unreasonable or incorrect. She also dismissed the motion for leave to appeal on the ground that it did not raise a question of law. Whether the facts met the required legal test was a matter of mixed fact and law. Therefore, given the dismissal of the respondent’s cross-application, she granted the Foglers enforcement application.