Québec – court authorizes defendant to apply outside delay for referral to arbitration – #009

Mandatory wording in Québec’s Code of Civil Procedure, CQLR c C-25.01 does not prevent a litigant from demanding a stay of court proceedings and referral to arbitration beyond a time limit set by the rules.  The Québec court in Ferme Cérélait inc. v. Ferme Roch Vincent inc., 2017 QCCS 3260 granted an application which was outside a clear but not strict time limit. 

Defendants in the litigation applied for an order referring the parties to arbitration as per the parties’ contractual undertaking to arbitrate.  The obstacle to their application is article 622 C.C.P. which imposes a 45 day delay in which to do so and which uses the word “must” : 

Article 622 Unless otherwise provided by law, the issues on which the parties have an arbitration agreement cannot be brought before a court even though it would have jurisdiction to decide the subject matter of the dispute. 

A court seized of a dispute on such an issue is required, on a party’s application, to refer the parties back to arbitration, unless the court finds the arbitration agreement to be null. The application for referral to arbitration must be made within 45 days after the originating application or within 90 days when the dispute involves a foreign element. Arbitration proceedings may be commenced or continued and an award made for so long as the court has not made its ruling. 

The parties cannot, through their agreement, depart from the provisions of this Title that determine the jurisdiction of the court or from those relating to the application of the adversarial principle or the principle of proportionality, to the right to receive notification of a document or to the homologation or the annulment of an arbitration award. 

Plaintiff’s litigation had been instituted on January 31, 2017.  Defendants’ motion to refer to arbitration was dated April 5, 2017. 

Between the date of service of the litigation and Defendants’ motion, the parties as litigants negotiated and signed a litigation timetable, referred to as a “Protocol” in the C.C.P.   Plaintiff signed the Protocol March 22, 2017 followed by Defendants on March 28, 2017.  Article 148 C.C.P. requires the parties to file the signed Protocol no later that 45 days after service of the litigation on Defendants in commercial and civil matters. 

Article 148 The parties are required to co-operate to either arrive at a settlement or establish a case protocol. In the case protocol, the parties set out their agreements and undertakings and the issues in dispute, indicate the consideration given to private dispute prevention and resolution processes, describe the steps to be taken to ensure the orderly conduct of the proceeding, assess the time completing these steps could require and the foreseeable legal costs, and set the deadlines to be met within the strict time limit for trial readiness. 

The case protocol covers such aspects as 

(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 warranted by the complexity of the case or by special circumstances, the parties may agree on a complementary protocol to provide for points that cannot be determined at the case protocol stage or identify certain points on which they were unable to reach an agreement. 

As set out above, the Protocol lists several procedural steps which litigants are obliged to consider and accomplish.  The steps agreed to in the Protocol must be completed no later than six months from the date on which the Protocol is presumed to have been accepted by the court or other optional departure points set out by article 173 C.C.P. 

Defendants applied outside the 45 day delay set by article 622 C.C.P. despite the use of the mandatory terms “must be made”.   

Mr. Justice Steve J. Reimnitz relied on one of his recent, prior statements on the role of and access to arbitration, Gestion PMOD inc. c. 9e Bit (2015) inc. (9218-9216 Québec inc.), 2017 QCCS 2542 which favoured honouring parties’ wishes to proceed to arbitration. Referring to doctrinal text authored by Mr. Justice Pierre J. Dalphond, as he then was, Le grand collectif – Code de procédure civil (commentaires et annotations), (Cowansville: Éditions Yvon Blais) page 2465, which opined that the delay was not a strict time limit or “de rigueur” and could be extended by the court for plausible reasons.  The author wrote that the court should not use a party’s failure to raise the delay as a pretext for refusing to enforce the parties’ undertaking.  The court should also, conversely, refuse to refer the parties to arbitration if the case is ready for a hearing when a party makes the request.  To refer the parties at that point would be contrary to the C.C.P.’s rules on proportionality. 

Prior case law had also determined that the 45 delay was not a strict limit : Plourde v. Faltour inc., 2016 QCCS 1410.

Article 84 C.C.P. gives judges some discretion to extend delays which the C.C.P. does not expressly declare to be mandatory. 

Article 84 A time limit described by this Code as a strict time limit cannot be extended unless the court is convinced that it was impossible in fact for the party concerned to act sooner. If the court considers it necessary, any other time limit may be extended or, in an urgent situation, shortened by the court. When the court extends a time limit, it may relieve a party from the consequences of failing to comply with the original time limit. 

Litigants cannot simply ignore the delay and opt to raise the arbitration clause at a later point. Both the caselaw and the doctrine require a plausible reason and that the application not be made after too many steps on the Protocol have been completed and the C.C.P. subjects the extension to the court’s discretion. 

Reimnitz J. determined that the parties’ negotiation of the Protocol and their exchanges before its signature kept alive the application for referral to arbitration option.  Defendants’ cooperation with Plaintiff on the negotiation of the Protocol is expected, Reimnitz J. observed, in light of the introductory articles of the new C.C.P., articles 18 – 20 C.C.P. which urge cooperation and proportionality.  If a litigant flags its intention to reserve its right to apply for a referral to arbitration outside the delay, then the other party ought to signal its own opposition to any application being filed outside that delay.   

Reimnitz J. concluded that, on the facts of the case, Defendant had flagged its intention on or by April 7, 2017 and Plaintiff had not objected.  Reimnitz J. found their exchanges, albeit brief and isolated, to be a determinative circumstance in his consideration of whether to extend the 45 day delay.  Coupled with the fact that application was filed 64 days after service of the litigation, just outside the 45 day delay, Reimnitz J. granted the extension and referred the parties to the arbitration to which they had agreed.