Québec – arbitration agreement with optional wording not a complete undertaking to arbitrate – #186

In Prométal inc. v. Maxim Construction inc., 2019 QCCS 1207, Mr. Justice Bernard Tremblay refused to refer the litigants to arbitration, holding that they had failed to agree in a clear and unequivocal way to exclude the resolution of their disputes from the courts.  To allow defendant to present its motion for referral, Tremblay J. applied the longer 90 day delay available under article 622 of Québec’s Code of Civil Procedure, CQLR c C-25.01 to do so, holding that the standard, shorter 45 day delay did not apply because some of the dispute involved elements outside of Québec.

Maxim Construction Inc. (“Maxim”), as general contractor, retained Prométal Inc. (“Prométal”) as sub-contractor, to manufacture and install a steel structure as part of the work necessary to resurface a Bathurst, N.B. building.  Prométal claimed that Maxim had caused delays in the work and failed to pay Prométal amounts which Maxim had acknowledged were owing for the delays.  Maxim claimed that Prométal had failed to perform its obligations prompting both parties to unilaterally resiliate their contract.

Prométal sued Maxim in Superior Court claiming $356,159.28 in unpaid sums and damages.

Maxim presented two (2) motions to the Superior Court: referral to arbitration under article 622 of Québec’s Code of Civil Procedure (“C.C.P.”) provides and dismissal under article 167 C.C.P. for lack of jurisdiction under article 3148 of Québec’s Civil Code of Québec, CQLR c CCQ-1991 (“C.C.Q.”).  Prométal objected, claiming that Maxim was too late to present its declinatory motion.

Tremblay J. had to decide if Maxim’s motions were timely.

Article 622 C.C.P. stipulates that the motion for referral to arbitration must be made within 45 days after the action commenced or within 90 days when the dispute involves a foreign element. So long as the court has not made its ruling, the arbitration may be commenced or continued and an award made.

Prométal objected to Maxim’s motion, which Maxim filed 85 days after Prométal’s service of the action, claiming it had been filed too late.

Tremblay J. disagreed.  First, he agreed with Maxim that the dispute involved an element outside of Québec and therefore triggered a the longer 90 day period.  Second, he determined that the 90 day period provided by article 622 C.C.P. prevailed over article 166 C.C.P.’s shorter 45 day period. 

Tremblay J. held that the shorter delay in article 166 C.C.P. was not de rigueur because the referral to arbitration was also a consideration that had to be taken into account when determining whether the court had jurisdiction under article 3148 C.C.Q. The latter stipulates that “Québec authorities have no jurisdiction where the parties have chosen by agreement to submit the present or future disputes between themselves relating to a specific legal relationship to a foreign authority or to an arbitrator, unless the defendant submits to the jurisdiction of the Québec authorities.

The shorter, 45 day period in article 622 C.C.P. coincides with the requirement in article 149 C.C.P. that the case protocol (a form of litigation timetable) be negotiated by the litigants and filed with the court office within 45 days after service of the summons.  See below for more on Québec’s case protocol.

Tremblay J. then considered the merits of the Maxim’s motion to refer the parties to arbitration.

He looked first to Zodiak International v. Polish People’s Republic, [1983] 1 SCR 529, 1983 CanLII 24, referring to its description at p. 533 of a complete undertaking to arbitrate.

A complete undertaking to arbitrate, described variously as true, real or formal, is that by which the parties undertake in advance to submit to arbitration any disputes which may arise regarding their contract, and which specifies that the award made will be final and binding on the parties.

This may be contrasted, first, with a clause which is purely optional. It may also be contrasted with a “pre-judicial” or “condition precedent” arbitration clause, which requires the parties to submit their dispute to arbitration, but does not preclude an action in the ordinary courts of law once the arbitration is completed. It may further be contrasted with the submission defined as follows

Québec’s Court of Appeal in C.C.I.C. Consultech international v. Silverman, 1991 CanLII 2868 reiterated the principle and determined that an arbitration agreement which is not mandatory and uses optional language in not a complete undertaking.  A similar result occurred in Great-West Life Insurance Company v. Cohen, 1993 CanLII 3978 in which the Court of Appeal held that, when the wording is imprecise, the interpretation favouring access to the courts should prevail.

In Villeneuve v. Pelletier, 2010 QCCS 320, applying Great-West Life Insurance Company v. Cohen, the Superior  Court held that when faced with a vaguely worded arbitration agreement one must favour the courts at the expense of such agreements.  The Superior Court also stated that the language must be ‘unconditional, mandatory and not optional’, relying on C.C.I.C. Consultech international v. Silverman.  See also 9283-7459 Québec inc. v. Anfossi Tassé d’Avirro inc., 2018 QCCS 2548 and an earlier Arbitration Matters note on that case : “Québec court enforces parties’ requirement of post-dispute agreement to arbitrate

Tremblay J. then turned to the wording in the agreement between Prométal and Maxim.  The clause contained several provisions but lacked the necessary mandatory wording.

8.2.2 The parties shall make all reasonable efforts to resolve their dispute by amicable negotiations and agree to provide, without prejudice, frank, candid and timely disclosure of relevant facts, information and documents to facilitate these negotiations.


8.2.5 By giving a Notice in writing to the other party, not later than 10 working days after the date of termination of the mediated negotiations under paragraph 8.2.4, either party may refer the dispute to be finally resolved by arbitration under the Rules of Arbitration of Construction Disputes […]

The arbitration shall be conducted in the jurisdiction of the Place of the Work.

8.2.6 On expiration of the 10 Working Days, the arbitration agreement under paragraph 8.2.5 is not binding on the parties and, if a Notice in Writing is not given under paragraph 8.2.5 within the required time, the parties may refer the unresolved dispute to the courts or to any other form of dispute resolution, including arbitrations, which they have agreed to use.

Maxim claimed that it had been unable to serve a notice of arbitration within the ten (10) day delay.  It claimed impossibility on the basis that Prométal had sued so quickly in court first, that no arbitration notice had been given and the arbitration agreement was still valid. Tremblay J. dismissed this argument, holding that nothing prevented Maxim from serving its own notice of arbitration.

Tremblay J. further held that Prométal and Maxim had not used clear and unequivocal language, thereby failing to enter into a complete agreement to arbitrate.  He declined to refer the parties to arbitration.

Case protocol – In Québec, at the very onset of court litigation, litigants are required to co-operate in establishing a list of steps required to ready their dispute for hearing on them merits.  The list is called a “case protocol” and article 148 C.C.P. sets out the necessary steps which the litigants must indicate they have consider and other steps which they can, but are not obliged, to take.

The litigants must indicate in their case protocol that they have given consideration to “private dispute prevention and resolution processes” and, for those steps which will be taken in the court, the time and foreseeable legal costs.  For those steps which the litigants will take, they must also set deadlines to accomplish them in the strict time for trial readiness. 

Regarding trial readiness, each plaintiff is required under article 173 C.C.P. to ready its case for trial within six (6) months after (i) the day on which the case protocol is presumed accepted, (ii) the case management conference following filing of the case protocol or (iii) the date the case protocol is established by the court.

Article 148 C.C.P. lists the following steps that might be considered in the case protocol:

 (1) preliminary exceptions and safeguard measures; (2) the advisability of holding a settlement conference; (3) pre-trial written or oral examinations, their necessity and, if any are to be conducted, their anticipated number and length; (4) the advisability of seeking one or more expert opinions, the nature of the opinion or opinions to be sought and the reasons why the parties do not intend to jointly seek expert opinion, if that is the case; (5) the defence, whether it will be oral or written and, if written, the time limit for filing it; (6) the procedure and time limit for pre-trial discovery and disclosure; (7) foreseeable incidental applications; (8) the extension of the time limit for trial readiness, if an extension proves necessary; and (9) the methods of notification the parties intend to use.

If the case or special circumstances justify it, the litigants may also agree on a complementary case protocol to provide for steps that could not be determined earlier or regarding which they were unable to reach an agreement.