Québec – arbitration imposed by statute remains consensual if opportunity available to renounce – #204

In Boisvert v. Selvaggi, 2019 QCCS 1673, Mr. Justice Kirkland Casgrain dismissed an attempt at judicial review of an award issuing from arbitration imposed by statute.  Relying on the reasoning and result in Conseil d’arbitrage des comptes des avocats du Barreau du Québec v. Marquis, 2011 QCCA 133, Casgrain J. held that such arbitrations remain consensual if the legislation allows opportunity to renounce to its application.  Being consensual, such arbitrations were subject not to judicial review but to annulment proceedings based on limited grounds familiar to practitioners practising international commercial arbitration.

The Superior Court decision involved two (2) awards (“sentences arbitrales”) issued by a council of arbitration (“Council”) constituted by the process set out in the Regulation respecting the conciliation and arbitration procedure for the accounts of advocates, CQLR c B-1, r 17 (“Regulation”).  That Regulation issued under the Act respecting the Barreau du Québec, CQLR c B-1 which, itself, issued pursuant to the Professional Code, CQLR c C-26.  Similar dispute resolution processes are created in the same stream of legislation, from Professional Code, to self-governing legislation to related regulations, for many other professional orders practicing in Québec.

Casgrain J. described Plaintiff’s application as seeking both judicial review and annulment of two (2) awards and examined each avenue in turn. By oral application made at the hearing of Plaintiff’s application to annul, Defendants sought the homologation of the awards.

Casgrain J. distinguished between the two (2) avenues set out in Plaintiff’s materials : (a) judicial review – articles 34 Code of Civil Procedure, CQLR c C-25.01 (“C.C.P.”) and 529 C.C.P. et seq.; (b) annulment – article 648 C.C.P.  The key provisions read as follows:

Article 529 C.C.P. In a judicial review, the Superior Court may, depending on the subject matter,

(1)   declare inapplicable, invalid or inoperative a provision of an Act of the Parliament of Québec or the Parliament of Canada, a regulation made under such a law, an order in council, a minister’s order or any other rule of law;

(2)   evoke, on a party’s application, a case pending before a court, or review or quash a judgment rendered by a court or a decision made by a person or body under the authority of the Parliament of Québec, if the court, body or person acted without jurisdiction or in excess of jurisdiction, or if the procedure followed was affected by some serious irregularity;

(3)   direct a person holding an office within a public body, a legal person, a partnership or an association or another group not endowed with juridical personality to perform an act which they are by law required to perform, provided the act is not of a purely private nature; or

(4)   dismiss a person who, without right, is occupying or exercising a public office or an office within a public body, a legal person, a partnership or an association or another group not endowed with juridical personality.

Except in the case of lack or excess of jurisdiction, judicial review is available only if the judgment or the decision cannot be appealed or contested.

An application for judicial review must be served within a reasonable time after the act or the fact on which it is based.

For annulment, article 648 C.C.P. provides that an arbitration award may only be challenged by way of an application for its annulment.  Such applications are subject to the same rules, appearing in article 646 C.C.P., as those governing an application for the homologation of an arbitration award, with the necessary modifications. 

Article 646 C.C.P. The court cannot refuse to homologate an arbitration award or a provisional or safeguard measure unless it is proved that

(1)   one of the parties did not have the capacity to enter into the arbitration agreement;

(2)   the arbitration agreement is invalid under the law chosen by the parties or, failing any indication in that regard, under Québec law;

(3)   the procedure for the appointment of an arbitrator or the applicable arbitration procedure was not observed;

(4)   the party against which the award or measure is invoked was not given proper notice of the appointment of an arbitrator or of the arbitration proceedings, or it was for another reason impossible for that party to present its case; or

(5)   the award pertains to a dispute not referred to in or covered by the arbitration agreement, or contains a conclusion on matters beyond the scope of the agreement, in which case only the irregular provision is not homologated if it can be dissociated from the rest.

The court cannot refuse to homologate the arbitration award on its own initiative unless it notes that the subject matter of the dispute is not one that may be settled by arbitration in Québec or that the award or measure is contrary to public order.

(a) Judicial review – Casgrain J. dismissed Plaintiff’s attempt at judicial review.  The Court of Appeal in the 2011 Conseil d’arbitrage des comptes des avocats du Barreau du Québec v. Marquis had decided that the arbitration of attorneys’ accounts was consensual despite being created by statute.  As a result, Casgrain J. held that the state of the law in Québec prevented the court from undertaking judicial review.

Conseil d’arbitrage des comptes des avocats du Barreau du Québec v. Marquis had considered a pair of awards issued by different Councils constituted for different disputes over attorneys’ accounts.  The unanimous Court of Appeal decision, authored by Mr. Justice Pierre J. Dalphond, distinguished between (i) consensual arbitration subject to annulment proceedings on limited grounds familiar to those practising in international commercial arbitration and (ii) administrative proceedings subject to judicial review. 

In particular, the Court of Appeal distinguished when and whether arbitration created by statute would be consensual or not.   The Court identified two (2) non-court dispute resolution methods available to parties involved in a dispute: the parties’ consensual submission to a third party under article 2638 of the Civil Code of Québec, CQLR c CCQ-1991 (“C.C.Q.”) and the submission by statute to the exclusive authority of a third party.  The first is private law.  The second is administrative law.  The Court held that access to the courts differed for each.  Desputeaux v. Éditions Chouette (1987) inc., [2003] 1 SCR 178, 2003 SCC 17, paras 47, 48 and 64, held that a consensual commercial arbitration was not subject to judicial review as would be an administrative decision.  The Court expressly held that there was no hybrid or middle ground which borrowed from both, one which would be both conceptually and practically difficult to implement.

The Court held that the dispute resolution process created by statute may still be consensual if it allows a party to renounce to it once the dispute arises.  In the arbitration of attorneys’ accounts, the Regulation provides that the client may renounce to the arbitration if it does not apply for arbitration within forty-five (45) days of the account being delivered.  Clients may wish to do so if they resist having their dispute determined by a Council composed of other attorneys who also charge fees in the same manner as the defendant attorney in the client’s case. The attorney may also apply to the Barreau for authorization to file litigation or, after the expiry of the forty-five (45) day delay, initiate litigation to recover on the account.  The client’s and the attorney’s opportunity to renounce was not identical.  Nonetheless, for the Court, the opportunity to renounce to the arbitration imposed by statute qualified the arbitration as consensual. 

The agreement to arbitrate imposed by statute might appear to be an adhesion contract, defined at article 1379 C.C.Q. as a contract in which the essential stipulations were imposed or drawn up by one of the parties, on its behalf or upon its instructions, and were not negotiable.  Despite being perceived or even qualified as an adhesion contract, the agreement remained consensual due to the opportunity to renounce to it. 

In Desputeaux v. Éditions Chouette (1987) inc., the Supreme Court at para. 47 expressly distinguished between two (2) types of statutory arbitration: those to which parties could renounce, such as the Act respecting the professional status of artists in the visual arts, arts and crafts and literature, and their contracts with promoters, CQLR c S-32.01 and those to which the parties were not able to renounce, such as labour arbitration. In its reasons, the Court referred also to Dell Computer Corp. v. Union des consommateurs, [2007] 2 SCR 801, 2007 SCC 34 and doctrinal authority, namely Frédéric Bachand, “Assujetissement d’un tribunal arbitral conventionnel au pouvoir de surveillance et de contrôle de la Cour supérieure et contrôle judiciaire d’ordonnances de procédures rendues par les arbitres”, (2001) 35 R.J.T. 465).

Casgrain J. wrote that, even if one disagreed with the reasoning in Conseil d’arbitrage des comptes des avocats du Barreau du Québec v. Marquis, that reasoning was the law and he was bound to apply it. (Note: Plaintiff had been involved in one (1) of the awards considered by the Court of Appeal in Conseil d’arbitrage des comptes des avocats du Barreau du Québec v. Marquis, and, as luck would have it, Casgrain J. was the applications judge of that same award.)

(b) Annulment – Casgrain J. also dismissed Plaintiff’s application for annulment based on paras (4) and (5) of article 646 C.C.P.  Plaintiff alleged that he had been prevented from making his proof or otherwise presenting his case.  In particular, Plaintiff alleged that he was prevented from adducing all his evidence, that he could not freely cross-examine the witnesses called by Defendants and that members of the Council were biased.

Casgrain J. disagreed.  Plaintiff had asked for two (2) hours to present his evidence and had been granted that amount.  The Council had offered him to present all the elements of evidence he wanted to present.  The minutes of hearing and the transcript demonstrated that Plaintiff could have cross-examined Defendants’ witnesses.  The Council’s behaviour disclosed not bias during the hearing.  Casgrain J. held that all those elements appeared from the record.

Plaintiff also challenged the awards on the basis that the Council had exceeded its jurisdiction by granting beyond the claims made when it ordered reimbursement of sums paid.  Casgrain J. disagreed. Article 30 of the Regulation allows Council to uphold or reduce the account in dispute and may also, if appropriate, determine the reimbursement to which a party may be entitled.

urbitral note – Though Casgrain J. deals with Québec legislation and relies on a prior Québec Court of Appeal decision, the structure of Court of Appeal reasoning is persuasive, lending itself to common law jurisdictions in which arbitration is also imposed on parties subject to limited but available renunciations. 

The Court of Appeal reasoning in Conseil d’arbitrage des comptes des avocats du Barreau du Québec v. Marquis draws on earlier Supreme Court of Canada cases based on disputes rising through the Québec courts.  Notwithstanding their sources in civil law, those Supreme Court decisions and the reasoning have offered and continue to offer guidance for commercial arbitration in common law jurisdictions.

In Conseil d’arbitrage des comptes des avocats du Barreau du Québec v. Marquis, the opportunity to renounce was asymmetrical but not enough to disqualify the arbitration from being consensual. The reasoning and the result may still differ in other courts which might require that both parties be given equal or like opportunities to renounce.