Québec – court telephones its own choice of potential candidates during court hearing to appoint arbitrator – #113

In Gestion PMOD Inc. v. 9E Bit (2015) Inc., 2018 QCCS 3594, Mr. Justice Jean-Guy Dubois demonstrated the court’s efforts to assist arbitral parties advance with their chosen form of dispute resolution. Dubois J. not only clarified the nature of each parties’ position to their dispute before granting Plaintiff’s motion to appoint an arbitrator but placed two (2) telephone calls during the court hearing to a pair of candidates of his own choosing and, confirming the second candidate’s acceptance and rate, appointed him as arbitrator. Dubois J. also closed his reasons with a clearly defined, non-binding obiter dictum section in which he articulated what he had determined was the scope of the dispute and the parties’ respective positions.

Gestion PMOD Inc. (“PMOD”) and 9E Bit (2015) Inc. (“9E”) entered into a September 11, 2015 asset purchase agreement (“Agreement”). Disputes arose over non-payment by 9E to PMOD of amounts due under the Agreement. Having served a notice of arbitration, PMOD as Plaintiff applied to have the Superior Court appoint an arbitrator to hear the parties’ dispute and proposed two (2) names as potential arbitrators.

9E accepted that the arbitration was valid but disputed whether PMOD had properly complied with the Agreement. In particular, 9E as Defendant argued that PMOD had not sent a proper notice of arbitration. The Agreement, at article 8.7(b), required the notice of arbitration to summarily set out (i) the facts at the base of the disagreement and (ii) the demands made by the claimant submitting the notice and (iii) the competence (abilities/jurisdiction) of the arbitrator.

(Note: the term “competence” can mean, in the context given in the Agreement, either the abilities or the jurisdiction of the arbitrator).

Much of the reasons for decision detail Dubois J.’s successful efforts to coordinate a written exchange of adequate statements of both parties’ positions for the arbitration. Dubois J. was reluctant to appoint an arbitrator if there was still uncertainty about the scope of the arbitration. 9E admitted that it had not paid the sums sought by PMOD but alleged that the reason for its non-payment was due to PMOD’s actions and that it sought unspecified damages of $80,000.00 as a counterclaim. Further to his efforts, the debate was narrowed and clarified somewhat by the exchange of positions in writing and will likely be further articulated before the arbitrator.

The decision is worth noting for Dubois J.’s flexibility in appointing the arbitrator. Québec’s Code of Civil Procedure, CQLR c C-25.01 (“C.C.Q.”) provides sparse guidance or limits on how the court should proceed.

Article 625 C.C.Q If the appointment of an arbitrator proves difficult, the court, on a party’s request, may take any necessary measure to see to the appointment.
For example, if a party fails to appoint an arbitrator within 30 days after having been required by another party to do so, the court may make the appointment. As well, the court may appoint an arbitrator if, 30 days after two arbitrators are appointed, they cannot agree on the choice of the third arbitrator.

Neither party accepted the other’s proposals for an arbitrator and Dubois J. had no arguments against the abilities of any of the choices. Faced with the disagreement, during the hearing, from the courtroom, Dubois J. telephoned a candidate of his own choice, a retired judge. That first candidate declined to accept the appointment. Undeterred, Dubois J. then made a second telephone call to another candidate, an attorney. Dubois J. noted that that attorney had been called to the Bar in 1969 and his hourly rate was set out in the reasons. That candidate accepted the appointment. Dubois J. then issued an order granting the application to name an arbitrator and appointed as arbitrator the second candidate he had contacted by phone during the hearing.

In his reasons, in the closing paragraphs 35-48, in a section entitled “Obiter Dictum”, Dubois J. offered to clarify for the arbitrator his understanding of the parties’ dispute. He did so expressly as obiter dictum so not to bind the arbitrator to Dubois J.’s own appreciation of the statements submitted by the parties. Dubois J. stated that his intention in doing so was to enable the arbitral process to proceed all the more quickly if possible by identifying the simple, albeit vaguely stated, disagreement over why payment was not made.