In ADRAQ (CSD) Laurentides c. Hamelin, 2024 QCCS 2324, the Court dismissed a motion brought pursuant to section 648 CCP to stay an application for annulment of an award to give the arbitrator the opportunity to correct it to eliminate the grounds for annulment. This is the first case to consider section 648 CCP. The Court developed the list of factors to be considered on such a motion. It also ruled that it has broad discretion in deciding a motion for a stay under section 648. In light of the preceding, the Court ruled that the judge deciding the merits of the application for annulment should decide the stay motion. That judge would have a better understanding of the case to determine whether a stay is appropriate considering the allegations, including alleged bias against the arbitrator, which the Court found were serious, and the respondent’s denial of the very existence of any grounds for annulment, leaving no place at this stage, for the arbitrator to correct his award. Therefore, the Court dismissed the respondent’s demand to stay the application for annulment.
Background – The judgment gave very few details about the nature of the dispute that gave rise to the arbitration and about the arbitration award itself. The parties went through four days of hearing, following which the arbitrator issued the award in favour of the respondent. A few months later, the applicant sought annulment of the award and asked the Court to refer the dispute to another arbitrator. More specifically, the applicant asserted that the arbitrator had refused or omitted to rule on two disputed issues and also was biased.
The application – In response to the application for annulment, the respondent sought a stay to allow the arbitrator to take such action as was necessary to eliminate the grounds for annulment pursuant to section 648 CCP. The respondent argued that a stay would conform to the principle of proportionality in allowing the arbitrator to review the applicant’s allegations and revisit his award.
Section 648 CCP provides (among other things) that an arbitration award may only be challenged by way of an application for an annulment and that the court, on request, may stay the application for annulment for the time it considers necessary to allow the arbitrator to take such action as will eliminate the grounds for annulment.
The decision – No previous judgment had examined section 648 CCP and only two previous judgements had ruled on section 947.3 CCP, which preceded section 648 CCP without significant modification. (See Morneau v. Balian, 2007 QCCA 315 and Langelier v. Langelier, 2004 CanLII 43588 (QCCS)) Section 947.3 stated that, “on the application of one party, the court, if it considers it expedient, may suspend the application for annulment for such time as it deems necessary to allow the arbitrators to take whatever measures are necessary to remove the grounds for annulment.”
In light of these two previous rulings which granted a stay based on the legislator’s intent to favour the validity of awards by giving the possibility to the arbitrator to remove grounds for annulment when suitable, the Court concluded that it had broad discretion to order a stay and that the following factors shall be taken into account:
- When the stay is sought within the proceedings;
- The effort and resources invested by the parties in the arbitration proceedings;
- The nature of the grounds alleged against the arbitration award; and
- Whether the impartiality of the arbitrator is challenged.
In developing this test and listing the applicable criteria, the Court clarified the Court’s intention outlined in the case law under section 947.3 CCP.
First, the Judge examined the grounds on which the application for annulment was sought. He concluded that they were prima facie serious.
Second, he ruled that the Court seized with deciding the merits of the application for annulment would be in a better position to examine whether it should be stayed and the matter returned to the arbitrator to correct the award, if required. In particular, the Court accepted the applicant’s argument that the respondent was denying the very existence of any grounds for annulment, leaving no place, at this stage, for the arbitrator to correct his award.
Lastly, the Court ruled that the arguments of the arbitrator’s alleged bias should be examined before granting a stay. Therefore, the Judge seized with deciding the merits of the application would be in a better position to decide if a stay is an appropriate remedy in the circumstances of this case.
Therefore, the Court dismissed the respondent’s motion for a stay of the application for annulment of the arbitration award.
Contributor’s notes:
This decision is the very first that analyzes article 648 CCP. The Court developed the criteria to guide judges when seized with a demand for a stay of an application for annulment.
In quoting Morneau v. Balian, 2007 QCCA 315, which considered section 947.3 CCP, the Court also stated that the legislator intended to avoid annulment of an arbitration award by allowing the possibility to return the award for completion or correction by the arbitrator when appropriate. This may occur, for example, when the arbitrator has ruled on an argument without having fully heard the parties’ arguments. If no allegation of bias is raised, the same arbitrator should be allowed to hear the parties’ arguments and review the award if required. In staying and permitting the correction, the Court avoids the annulment of the award as the ultimate sanction.
Perhaps the same policy rationale applies to the set-aside provisions in other arbitration legislation. For example, section 45(8)of the Alberta Arbitration Act, RSA, Chapter A-43, states that a court may, instead of setting aside an award, remit it back to the tribunal and give directions on the conduct of the arbitration.
Even though the Court did not grant the stay in the present case, practitioners and judges should hear the call to use article 648 CCP to protect the award when suitable.