In EDT GCV Civil c Société de transport de Montréal, 2025 QCCS 256,the Court dismissed an application to set aside a domestic arbitral award based, among other grounds, on a refusal to exercise jurisdiction. Plaintiff, EDT GCV Civil (“EDT”), contended, among other things, that the arbitral tribunal refused to exercise jurisdiction over certain claims and that this constituted jurisdictional error based on the doctrine of infra petita described especially in international commercial arbitration. In its judgment, the Court regrettably declined to comment on whether this doctrine may apply under Québec law as a ground to set aside a domestic arbitral award.
Background – The arbitration arose in the context of a large construction project. EDT was the general contractor on the project and Defendant, Société de transport de Montréal (“STM”), was the client. The parties disputed who was liable for overages, unforeseen conditions of the building site and scheduling delays.
Arbitration Agreements – EDT and STM executed an arbitration agreement to address claims asserted by EDT against STM during the course of the project. The parties later modified the arbitration agreement to broaden its scope and to include claims by EDT’s subcontractors against EDT. The modified arbitration agreement expressly contemplated that EDT’s claims against STM would include claims made against EDT by its subcontractors and suppliers. A portion of the arbitration agreement excerpted in the Court’s decision reads:
[AUTHOR’S TRANSLATION]
“3. The parties agree that any dispute arising out of or in connection with the Contract or its execution which results from or relates directly or indirectly thereto, will be definitively settled by the three arbitrators identified above in accordance with the Code of Civil Procedure of Quebec.
Claims by subcontractors and suppliers
31. EDT’s claim shall include claims of its subcontractors and suppliers (collectively, the “Subcontractors”) against it, provided that:
31.1 only the claims of the Subcontractors that EDT believes should be submitted to STM shall be submitted in this arbitration, within EDT’s claim (“Subcontractors’ Claim”);
31.6 in the event that STM asserts a counterclaim against EDT, the latter may oppose any available recourse, including a warranty claim against any of the subcontractors who may be concerned (…)”
[ORIGINAL AS EXCERPTED IN THE COURT DECISION]
« 3. Les parties conviennent que tout différend découlant du Contrat ou en lien avec celui-ci ou son exécution qui en découle ou qui s’y rapporte directement ou indirectement, sera tranché définitivement par les trois arbitres identifiés ci-devant conformément au Code de procédure civile du Québec. »
Réclamations des sous-traitants et fournisseurs
31. La réclamation d’EDT inclura des réclamations de ses sous-traitants et fournisseurs (collectivement, les « Sous-traitants »), à son encontre, étant entendu que :
31.1 seules les réclamations des Sous-traitants qui doivent, selon EDT, être soumises à la STM le seront dans le présent arbitrage, et ce à l’intérieur de la réclamation d’EDT (« Réclamation des Sous-traitants »);
[…]
31.6 advenant que la STM fasse valoir une demande reconventionnelle contre EDT, cette dernière pourra y opposer tout recours disponible, incluant un appel en garantie contre l’un ou l’autre des sous-traitants qui pourrait être concerné (…) »
EDT also executed an arbitration agreement with 5 of its subcontractors, such that subcontractor’s claims against EDT could be submitted to the same arbitral tribunal that would adjudicate claims between EDT and STM in the same arbitral proceedings.
The arbitration agreement between EDT and its subcontractors expressly did not create any legal relationship between the subcontractors and STM.
Arbitral Proceedings and Award(s) and Rectified Award – In April, 2024, the arbitral tribunal issued a first award after a 36-day hearing on the merits. In its award, the tribunal granted, in part, claims made by both EDT and cross-claims made by STM. The tribunal moreover granted claims made against EDT by its subcontractors.
This first award, however, omitted to rule on claims from two of the five subcontractors involved in the arbitration against EDT. STM and the subcontractors sought to rectify the initial award, and a hearing was held in July, 2024. Later in July, 2024, the tribunal rendered two complementary awards, which granted the subcontractors’ claims in whole against EDT. It then rectified the initial award to address two other uncontested elements.
EDT sought set aside both the initial, rectified, and the complementary awards. It contended that the arbitral tribunal omitted or refused to determine STM’s liability to indemnify EDT for amounts EDT was ordered to pay its subcontractors. EDT argued that, since the tribunal’s mandate included such claims, the omission or refusal to render a decision on them constituted jurisdictional error, warranting set aside under art. 646(5) Code of Civil Procedure (“CCP”), for an excess of jurisdiction. EDT also contended that the arbitral tribunal violated EDT’s right to be heard under art. 646(4) CCP. These provisions read in relevant part:
“The court cannot refuse to homologate an arbitration award or a provisional or safeguard measure unless it is proved that
[…]
(4) the party against which the award or measure is invoked was not given proper notice of the appointment of an arbitrator or 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 (…)”
Regarding jurisdictional error, EDT contended that an arbitral tribunal’s omission or refusal to rule on a matter that was submitted to its jurisdiction constitutes a negative excess of jurisdiction based on the doctrine of infra petita, recognized by some commentators of international commercial arbitration, which can be imported, EDT argued, into Québec law via art. 646(5) CCP. In short, EDT submitted that the tribunal exceeded its mandate by refusing to decide claims that were properly put to it, as contemplated by the arbitration agreement.
EDT referred to two paragraphs of the initial and rectified awards which it said manifested the Tribunal’s refusal to exercise jurisdiction. In these paragraphs, the tribunal stated that subcontractors could not assert claims against STM through EDT, and that the tribunal had no jurisdiction on a claim by a subcontractor against STM in the following terms:
[AUTHOR’S TRANSLATION]
“[768] The subcontractors do not have a legal relationship with the STM, but only with EDT. They cannot assert, directly or through EDT, a claim against the STM.
[769] It should also be noted that the jurisdiction of the Tribunal does not extend to an appeal by a subcontractor against the STM.”
[ORIGINAL AS EXCERPTED IN THE COURT’S DECISION]
« [768] Les sous-traitants n’ont pas de liens contractuels avec la STM, mais uniquement avec EDT. Ils ne peuvent faire valoir, directement ou par l’intermédiaire de EDT, une réclamation contre la STM.
[769] Il faut aussi préciser que la compétence du Tribunal ne s’étend pas à un recours par un sous-traitant contre la STM. »
EDT also sought set aside of the complementary awards on the basis that the tribunal’s conclusions ordering EDT to make payments to its subcontractors did not take into account the contributory fault of STM.
Court’s decision-The Court dismissed the application for set aside.
On excess of jurisdiction, the Court disagreed with EDT that the excerpted paragraphs of the initial award constituted a refusal to exercise jurisdiction. It interpreted these paragraphs as an arbitral finding that claims made by subcontractors were inadmissible as against STM.
It further concluded that, even if this finding was incorrect at law, this error could not be characterized as jurisdictional error. It was rather an error of law, which is not valid grounds for set aside under Québec law.
The Court also rejected EDT’s claim based on a violation of the right to be heard on the ground that EDT chose not to submit pleadings in support of EDT’s claims against STM made on behalf of its subcontractors. The Court noted, in particular, that during a hearing in July, 2024, before the arbitral tribunal issued its complementary awards, EDT told the tribunal that it had not made representations on the admissibility of claims made by subcontractors against STM during pleadings because, in its view, the admissibility of those claims was obvious. EDT however acknowledged during the same hearing that it was not actively prevented from making any representations in that respect. On this basis, the Court determined that EDT had not been prevented from making representations on the admissibility of claims by its subcontractors against STM such that there was no violation of the right to be heard on this point.
Contributor’s Notes :
First, this decision inserts itself in the majority trend of Québec Superior Court cases that interpret the grounds for set aside under Québec law narrowly. This trend is generally salutary, and consistent with one of the main objectives pursued by many parties who choose to submit their disputes to arbitration, namely, finality. However, over time, an overly narrow construction of the grounds to set aside defective awards could perversely dissuade commercial parties from pursuing arbitration, particularly if they fear that there is no effective recourse against defective awards in all but the most patent cases. Here, without comment whatsoever on the merits of the decision (judicial or arbitral), the Court appears to give relatively short shrift to the argument that flow-through claims from the subcontractors to the client/owner (not uncommon in large construction projects) were not properly addressed in the award, given that such claims were expressly set out in the arbitration agreement between the parties, and also the Court’s finding that these claims were addressed in two short paragraphs of what appears to have been a complex matter (36-day hearing; more than 700-paragraph award).
Second, it is unfortunate that the Court did not seize the opportunity to comment on the applicability of the doctrine of infra petita to a set-aside application based on art. 646(5) CCP. In a landmark 2008 decision in Coderre c Coderre, 2008 QCCA 888 the Québec Court of Appeal recognized that arbitral law in Québec (both domestic and international) is based on the UNCITRAL Model Law on International Commercial Arbitration (“Model Law”), and accordingly, that it is appropriate for Courts to refer to international sources that interpret the Model Law in interpreting and developing the Québec arbitral law.
However, since that decision, Québec courts have appeared reluctant to seriously consider international sources interpreting the Model Law and to use them to further develop Québec law concerning the grounds of set-aside brought under arts. 646 and 648 CCP. Further, developing the law on arbitration in Québec would be consistent with the intention of the Québec legislature, as expressed in the Preliminary Provision and art. 1 of the CCP, to encourage alternative means of dispute resolution.
Third, this case also highlights the challenges associated with asserting a violation of the right to be heard (or due diligence in some jurisdictions) as grounds for set aside. Difficult issues arise in cases, such as this one, where a claim is decided by the arbitral tribunal based on an issue that was not explicitly or thoroughly canvassed during the pleadings, even though the parties had every opportunity to do so. If an arbitral tribunal considers, during deliberations, that a particular issue carries more weight in its decision than the parties appeared to give it, should the tribunal provide further opportunity for the parties to comment?
Fourth, in addition to setting out the matters in dispute and relief sought in the arbitral mandate (as appears to have been done in this case), parties may also consider (or the tribunal may request) submitting a list of contested and uncontested issues, as well as updated requests for relief to the arbitral tribunal prior to a hearing on the merits. Such practices may help avoid downstream issues regarding the scope of the arbitral mandate.