Québec – court refers litigants to arbitration despite requesting party not signing arbitration agreement – #038

The Québec Superior Court in 9302-7654 Québec inc. (Team Productions) v. Bieber, 2017 QCCS 1100 determined that both litigants were bound by an arbitration agreement even if one had not personally signed the arbitration agreement.  Mr. Justice Daniel Dumais also reviewed the facts provided to him in court to conclude that the litigation raised a dispute which, though potentially extracontractual, fell with the large scope of the parties’ arbitration agreement.  

9302-7564 Québec Inc., dba Team Productions (“Team Productions”), an event promoter, sued Defendant, Justin Bieber (“Bieber”), a performing artist, for $650,000.00 for lost earnings potential, damage to reputation and punitive damages following Bieber’s non-appearance at an event in Montréal and a message Bieber posted to social media about Team Productions. Bieber submitted that the parties were bound by an arbitration clause and applied to have the dispute referred to arbitration in California. 

Team Productions raised two objections to Bieber’s motion to refer to arbitration.  First, it claimed that Bieber was not a party to the contract containing the arbitration clause.  Second, it argued that the substance of the claim was defamation, an extra-contractual claim under article 1457 of Québec’s Civil Code of Québec, CQLR c CCQ-1991 and therefore beyond the scope and reach of the arbitration clause even if Bieber was a party to it. 

Bieber had not personally signed the contract.  The contract, entitled “Artist Engagement Agreement”, is signed by Bieber’s agent, Mr. Smith Entertainment inc. (“MSE”).  Dumais J. anlayzed the wording and purpose of the contract. 

The first paragraph identified the parties and their status. 

Agreement made this 28th day of July 2015, between Mr. Smith Entertainment inc. (herein referred to as «Furnishor» and «Mr. Smith») a fully authorized booking agency on behalf of the artist Justin Bieber (herein referred to as «Artist») and Benoit Dimuro on behalf of Team Productions (herein referred to as «purchaser».  

The essence of the agreement was for Team Productions to hire Bieber to perform at the event and to use social media to promote the event.  The agreement specified the role of MSE as acting on Bieber’s behalf and not engaging its own liability in doing so. 

3. MR. SMITH as Agent for Artist: Purchaser and Artist understand and agree that MR. SMITH is acting solely as an agent for Artist under this Agreement. Neither MR. SMITH or any of MR. SMITH’S employees or agents shall be liable for Artist’s Appearance or non-appearance or any breach of any obligation by any party hereunder. 

Dumais J. cited the terms of the dispute resolution clause, including the undertaking to arbitrate in California.   

ARBITRATION, ALL DISPUTES ARISING UNDER, CONCERNING, RELATING TO OR TOUCHING ON THIS AGREEMENT WILL BE SUBMITTED TO BINDING ARBITRATION IN LOS ANGELES, CALIFORNIA BEFORE A SINGLE ARBITRATOR FOR PROMPT RESOLUTION. IT IS AGREED THAT THE ARBITRATOR WILL BE INSTRUCTED TO RESOLVE THE DISPUTE USING THE MOST COST EFFECTIVE, EFFICIENT RULES AS ARE REASONABLE. THE PARTIES AGREE TO BE BOUND BY THIS PROVISION AND THE RESULTS OF SUCH ARBITRATION. THE PARTIES UNDERSTAND THAT THIS PROVISION WILL ELIMINATE THE RIGHT TO A JURY TRIAL.” (capitals in the original) 

He determined that the wording of the arbitration agreement “used very large terms to describe the kind of dispute covered by arbitration” and that it is “difficult to find a description wider than that“. 

A second contract was signed but was not identical aside from being for the same event. The agreement was had more exact wording regarding what Bieber could say, specifying that “Artist is not to make any disparaging remarks regarding event, purchaser or venue“.  

The event was not held and Bieber issued a social media message which contained statements which Team Productions disputed and found defamatory.  

Dumais J. summarized the parties’ positions.  The parties disputed whether privity of contract existed and whether the terms of the arbitration agreement included the cause of action raised by Team Productions.  The role of the second contract added to the confusion but raised the same issues.  Dumais J. in his analysis limited the role of this second contract given that Team Productions alleged that it did not receive a copy of it until after it initiated litigation. 

Dumais J. began his analysis by flagging the introductory article to the new Code of Civil Procedure, CQLR c C-25.01:

 Article 1 To prevent a potential dispute or resolve an existing one, the parties concerned, by mutual agreement, may opt for a private dispute prevention and resolution process. 

The main private dispute prevention and resolution processes are negotiation between the parties, and mediation and arbitration, in which the parties call on a third person to assist them. The parties may also resort to any other process that suits them and that they consider appropriate, whether or not it borrows from negotiation, mediation or arbitration. 

Parties must consider private prevention and resolution processes before referring their dispute to the courts. 

He mentioned that arbitration is voluntary, a decision to submit to a third party in preference to the courts, and reflects an expression of the parties’ contractual autonomy.  Dumais J. referred to the Québec Court of Appeal’s expansive statements in support of arbitration made in Laurentienne-vie, Cie d’assurances inc. v. Empire , Cie d’assurance-vie, 2000 CanLII 9001:

(unofficial translation) “[80] Arbitration is a fundamental right of citizens and is a form of expression of their contractual freedom.  It should not be considered as an attack on the state’s justice monopoly.  Arbitration should actually be perceived as an alternative dispute resolution form which responds, according to circumstances, to certain goals – speed, a decision by one’s peers, cost saving, etc. – sought by the parties. 

 He referred to both the C.C.Q. and the C.C.P. for provisions stipulating that the courts have no jurisdiction if a parties have chosen to submit their dispute to arbitration. 

Article 3148, al. 2 C.C.Q. However, Québec authorities have no jurisdiction where the parties have chosen by agreement to submit the present or future disputes between themselves relating to a specific legal relationship to a foreign authority or to an arbitrator, unless the defendant submits to the jurisdiction of the Québec authorities. 

Article 622 C.C.P. 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. 

Dumais J. then referred to the Supreme Court of Canada’s statements in Dell Computer Corp. v. Union des consommateurs, [2007] 2 SCR 801, 2007 SCC 34 and in Rogers Wireless Inc. v. Muroff, [2007] 2 SCR 921, 2007 SCC 35 as support for their strong endorsement of the competence-competence principle, reserving to the arbitration tribunal the jurisdiction to rule on its jurisdiction.  He also footnoted references to two other key Québec Court of Appeal cases which also followed the same approach: Groupon Canada inc. v. 9178-2243 Québec inc., 2015 QCCA 645 and Storex Industries Corp. v. Dr Byte USA, l.l.c., 2008 QCCA 100.

He concluded that if the validity and applicability of the arbitration agreement are in issue and the contestation requires a review of evidence, the matter must be referred to the arbitration tribunal to rule on its jurisdiction.  Only if the contestation involves a question of law and can be answered by a superficial examination of documents should and can the court make the determination.  Doing so, Dumais J. observed, “allows to avoid the possibility of a double debate (i.e. the losing party before the arbitrator, on the question of competence, asks the Court to review the decision.  It is more efficient and observes the principle of proportionality. 

 Dumais J. held that the parties’ arguments on competence could be decided by the court. 

[48] Here, the Court considers that the parties arguments to support their position on competence are either questions of law or mixed questions that can be answered by the analysis of written evidence, namely the contracts and the judicial demand. There is no needs of testimony or further evidence to decide the matter of competence. Hence, the Court intends to rule on the question of competence. 

Dumais J. considered the facts submitted before him to determine if Bieber was a party to the contract containing the arbitration clause even if he had not personally signed it.  He concluded that a mandate existed between Bieber and Team Productions, listing several indicia supporting his conclusion.   

(1) the wording of the contract expressly mentions that MSE acts on Bieber’s behalf as Bieber’s agent.  If MSE acted on its own behalf, this wording would be unnecessary;  

(2) the contract’s purpose is to hire Bieber; 

(3) MSE cannot be held liable if Bieber breaches any of the obligations set out in the contract.  It would be “illogical” for MSE to not be liable but to be the object of the agreement; 

(4) all the contract’s obligations refer to Bieber, not MSE and one of Team Productions’ allegations of breach is that Bieber had not fulfilled his commitments to promote the event.  As well, only Bieber can cancel the contract. 

(5) Bieber acknowledged MSE’s right to represent him.   

(6) The payment to MSE does not undermine the binding nature of Bieber’s obligations.  This mention may be considered a direction of payment, common in contracts.  

The terms of the arbitration clause were large enough to encompass the cause of action in defamation framed by Team Productions.  Applying the Supreme Court of Canada’s comments in Desputeaux v. Éditions Chouette (1987) inc., [2003] 1 SCR 178, 2003 SCC 17 on the scope of arbitration, he gave the scope “a liberal interpretation”.  Along the same lines, he pointed to Citec Administration inc. v. Corporation du parc d’affaires La Rolland, 2010 QCCS 1059 as a further example of a liberal interpretation.  Dumais J. was careful to confirm whether the cause of action which sounded in extracontractual (tort) liability could find its source in the contract. 

[69] Do we have here such a connection between the content of the arbitration clause and the nature of the lawsuit? 

[70] The Court believes so. It is true that the essence of the claim rests on defamation. But the circumstances and the source of the attacked statement originate from the contract. 

[71] The tweet itself links the alleged defamation (being a liar) to the breach of contract. Furthermore, it was written the morning of the event. It is aimed at explaining why the Defendant will not appear as scheduled. 

[72] It might be different if the alleged defamation took place on another date without reference to the contract. Then, the connection might very well be missing. But here, a liberal interpretation of this broad clause conducts to the existence of a link between the contract and what is written in the tweet. 

Dumais J. held that the arbitrator could hear the evidence in greater detail, including the reasons for which certain terms were drafted as they were.  On the whole, he concluded that the cause of action for defamation is related to the parties’ obligations: “Not only does it touch it, but it flows from the contract.” 

Dumais J. referred the parties to arbitration, without costs.