Québec – Arbitrator’s ruling on jurisdiction not an award – even if evidence heard – #782

In ADREQ (CSD) Estrie c. Lavoie, 2023 QCCS 3372 [ADREQ], the Court found that under the principle of competence-competence, unless only questions of law are engaged, an arbitrator retains the right to make determinations as to its own jurisdiction at first instance. The competence-competence principle dictates that arbitrators are competent to determine their own jurisdiction. A jurisdictional decision does not become an “award”, even though the arbitrator heard evidence relating to the substance of the dispute before deciding that he lacked jurisdiction.

The underlying dispute – The respondent (also the respondent in the arbitration) was L’ADREQ, an association which houses children experiencing difficulty. The applicant (claimant) contracted to house such children pursuant to the terms of the “Specific Agreement”. The parties’ obligations were further governed by the “Collective Agreement”, to which the Minister of Health and L’ADREQ were direct signatories, as well as the “Letter of Understanding”, an integral part of the Collective Agreement. The Specific Agreement and the Letter of Understanding contained identical arbitration clauses. 

The applicant commenced arbitration against L’ADREQ, arguing that the association requiring her to house a child with autism spectrum disorder was contrary to the Specific Agreement’s terms. The respondent institution raised a jurisdictional challenge at the outset; the arbitrator considered the parties’ arguments for five days before deciding that he did not have jurisdiction over the matter. 

Over one month after the decision was issued, the applicant sought judicial review and an annulment of the decision, pursuant to Article 648 [an award may only be challenged by way of an application for its annulment] of the Code of Civil Procedure, C.Q.L.R. c. C-25.01. The applicant argued that the decision was in effect an “award” and thus subject to the three-month “strict time limit” for filing an application for its annulment under Article 648. In contrast, the respondent argued that the Superior Court of Québec had no jurisdiction to annul the agreement given that the arbitral decision was on a jurisdictional issue, and thus subject to the 30-day time limit under Article 632. That provision states that if an arbitrator rules on its own jurisdiction, a party may, within 30 days after being advised of the decision, ask the court to rule on the matter. A decision of the court recognizing the jurisdiction of the arbitrator cannot be appealed. 

The Court’s decision – The Court agreed with the respondent and dismissed the application as out of time. Article 632 was the operable provision; the fact that the arbitrator heard evidence prior to making a finding that he had no jurisdiction did not render his decision an “award” reviewable under Article 648. 

The Court relied on Cannatechnologie inc. c. Matica Enterprises Inc., 2022 QCCA 758 at paras. 9–10, which concluded that under the competence-competence principle, unless only questions of law are in dispute, an arbitrator has the jurisdiction to decide the matter—not the courts. A party dissatisfied with the arbitrator’s decision can apply for a reconsideration by the court under Article 632, but even then, the court only has the power to assess whether the arbitrator erred with respect to the decision on jurisdiction. If the court finds that the issue falls within the arbitration agreement, it must remit the matter to the arbitrator for an assessment on its merits. 

The Court found it is not unusual for an arbitrator to hear evidence before deciding on jurisdiction, as such issues typically raise questions of fact or mixed questions of fact and law. Here, the Court recognized that it was necessary for the arbitrator to understand the evidence relating to the various agreements in order to decide whether the arbitration clause gave him jurisdiction to resolve the dispute. 

The Court held that where questions of fact or questions of mixed law and fact arise, the matter must be remitted to the arbitrator, citing Uber Technologies Inc. v. Heller, 2020 SCC 16 at para. 34 [Uber]. Uber refers to the doctrine established in Dell Computer Corp. v Union des consommateurs, 2007 SCC 34 and summarized in its companion case, Rogers Wireless Inc. v. Muroff, 2007 SCC 35 at para. 11 as follows:

“… The majority of the Court held that, when an arbitration clause exists, any challenges to the jurisdiction of the arbitrator must first be referred to the arbitrator. Courts should derogate from this general rule and decide the question first only where the challenge to the arbitrator’s jurisdiction concerns a question of law alone. Where a question concerning jurisdiction of an arbitrator requires the admission and examination of factual proof, normally courts must refer such questions to arbitration. For questions of mixed law and fact, courts must also favour referral to arbitration, and the only exception occurs where answering questions of fact entails a superficial examination of the documentary proof in the record and where the court is convinced that the challenge is not a delaying tactic or will not prejudice the recourse to arbitration. 

Here, the Court was not required to remit the matter to the arbitrator, as the application was dismissed because the applicant had failed to meet the 30-day deadline. Thus, even where an arbitrator has heard evidence prior to finding that they are without jurisdiction, the merits of the decision cannot be judicially reviewed because Article 623 is the aggrieved party’s only recourse.

Contributor’s Notes: 

First, this case builds upon an earlier decision by the Québec court, summarized in a case note published last month: Québec – No evidence permitted in support of annulment application – #765. In that decision, Glen Eagle Resources Inc. v. Gem Yield Bahamas Ltd., 2023 QCCA 686 [Glen Eagle], the Court of Appeal similarly declined to give the courts broader powers over an arbitrator’s decision. Glen Eagle additionally held that the parties may not tender evidence in an annulment application. The interplay between these two decisions demonstrates the courts’ ongoing unwillingness to encroach upon an arbitrator’s authority.

Second, this unwillingness is further demonstrated when considering two other recent cases: Groupe Dimension Multi Vétérinaire inc. c. Vaillancourt, 2020 QCCS 1134 at para. 10, leave to appeal to SCC ref’d, 39198 (15 October 2020) [Group Dimension] and Brazeau (County) v. Drayton Valley (Town), 2022 ABQB 443 [Brazeau]. 

Brazeau similarly held that an arbitrator’s jurisdictional ruling is not an award, and thus subject to the 30-day time limit when seeking review by the courts. Rather than dealing with the issue using the principle of competence-competence, however, the Court arrived at the same conclusion by applying statutory interpretation principles. Brazeau found that an “award” was distinct from a “ruling”, reasoning that the legislature’s use of the two words indicated an intention that the words hold different meanings. Group Dimension was referred to in ADREQ. There, the Court emphasized that under an Article 632 reconsideration, a reviewing judge is not called upon to assess the arbitrator’s decision, such that it is not even necessary to determine the applicable standard of review. 

Accordingly, while the jurisdictional question itself is not subject to deference, the courts have underscored the need to yield control to an arbitrator where the parties have indicated their preference for disputes to be resolved in arbitration, not in the courts. 

For a summary of Cannatechnologie inc., please refer to this case note. The author wishes to thank Yomi Wong and Sadie Howe for their assistance.