Québec – court issues oral judgment dismissing contestation to homologation disguising a challenge to merits – #025

The Court of Québec issued an oral judgment in 9143-0439 Québec inc. v. OAM Aluminium distributeur inc., 2017 QCCQ 1364  dismissing Defendant’s characterization of arbitral award as non-observance of applicable arbitration procedure or matters beyond the scope of the arbitration agreement.  The Court determined that the homologation stage was not an appeal of the award or an opportunity to challenge the merits.

Defendant resisted Plaintiff’s homologation, invoking the provisions of paragraphs (3) and (5) of article 646 of Québec’s Code of Civil Procedure, CQLR c C-25.01 (“C.C.Q.”):

Article 646  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.

First, Defendant argued that the arbitration procedure had not been followed because the arbitrator had been mandated to interpret the contract but omitted to interpret a particular article, namely article 6.

Second, Defendant argued that the arbitral award exceeded the terms of the arbitration agreement.  Defendant submitted that the interest granted in the award was beyond the terms of the agreement between the parties.  It argued that the arbitration agreement provided that the arbitrator would interpret the parties’ contract but had omitted to interpret clause 6 on which Defendant relied to contest owing interest.

Mr. Justice François Bousquet issued a short, oral judgment on the bench. Bousquet J. reminded the parties that the homologation of an award was not an appeal and it was not the place to analyze if the award was well-founded or not.  He found that Defendant’s first argument, based on article 646(3) C.C.Q., was unfounded because that provision dealt with the conduct of the arbitration proceeding and not the substance of the award itself.

For Defendant’s second argument, Bousquet J. framed the issue before him as whether the arbitrator omitted to analyze Defendant’s arguments regarding clause 6 of the contract and its application to the interest.

Bousquet J. identified the arbitrator’s reasoning and analysis on interest at a section of the arbitral award.  While he found the analysis ‘succinct’, he found that it adequately explained why the arbitrator granted the interest.  Bousquet J. therefore dismissed Defendant’s second ground contestation of the homologation on the basis of article 646(5) C.C.Q.

Bousquet J. dismissed Defendant’s contestation and homologated the orders in the arbitral award.