Québec – Intervention by appointing authority not permitted on challenge to decision – #613

In Mullen v. Nakisa inc., 2022 QCCS 1164, Justice Lacoste rejected a request that the Canadian Commercial Arbitration Centre (the “CCAC”), an appointing institution, be permitted to intervene in an appeal of a decision by an arbitrator appointed by it. Applying the higher threshold for interventions in private litigation, Justice Lacoste held that there was no reason to permit the CCAC to intervene as it would not add any substance to the arguments on appeal.

Sierra Digital Inc. contracted to assist Nikisa Inc. in installing and operating the software of one of Nikisa’s clients (the “Project”). A dispute arose and Sierra commenced arbitration proceedings against Nikisa pursuant to the clause in their contract for the Project. Nikisa defended the arbitration and initiated a counterclaim.

Separately, Nikisa brought an action in the Superior Court in Quebec against two employees of Sierra, Mullen and Kumar, who were non-parties to the contract and the arbitration clause, based upon the same facts that were raised in the arbitration. Nikisa alleged that Mullen and Kumar had stolen confidential information when completing the Project. Nikisa pleaded that Mullen and Kumar were not proper parties to the arbitration because they were not parties to the contract. Its only recourse was to sue them in court. When the Superior Court dismissed that claim on jurisdictional grounds (the work, alleged wrongful acts, and personal jurisdiction of the defendants were outside of Canada), Nikisa then sought to add them as personal respondents to its counterclaim in the ongoing arbitration.

Nikisa asked the arbitrator, appointed by the CCAC to hear the dispute with Sierra, for permission to amend its defence and counterclaim in the arbitration to add Mullen and Kumar, making the same allegations as it had in the court action. Without notice to Mullen and Kumar, the arbitrator granted the request and also issued an order that Mullen and Kumar be bound to the existing arbitration schedule. When Mullen and Kumar informed the arbitrator that they would challenge his jurisdiction to have made those orders, the arbitrator agreed to hear the challenge on condition that his fees were paid. Mullen and Kumar refused to comply and the arbitrator did not hear their challenge. They then brought an appeal to the court, seeking that the arbitrator’s order adding them to the arbitration be set aside.

The CCAC sought leave to intervene. It argued that, “it can shed useful light on the Tribunal regarding its rules and the operation of commercial arbitration in Québec, in particular regarding Québec laws and international instruments”. The court dismissed its request.

The law on intervention, as set out by the Québec Court of Appeal in Dunkin’ Brands Canada Ltd. v. Bertico Inc., 2013 QCCA 867, is clear that granting intervention is a discretionary matter. While Article 187 of the CCP requires that the intervention be expedient and warranted given the questions at issue, the decision as to whether it is appropriate to grant leave to intervene also expressly includes consideration as to whether there is a public interest. The court in Dunkin’ noted that matters of public law have a lower threshold for leave to intervene than private disputes. In addition, the intervening party should not merely express views that would be voiced by the parties in the proceedings, or be a repetition of similar positions. As noted by the court in Dunkin’, the exercise of the discretion calls for an assessment of both the advantages and disadvantages of having the proposed intervener’s additional perspective.

In the recent decision of Attorney General of Québec, Centre for Gender Advocacy, 2021 QCCA, 1300, the Québec Court of Appeal reiterated that, in exercising its discretion to grant permission to intervene, the importance of the issues in dispute, particularly as to whether they involve a matter of public interest, and the usefulness of the proposed intervener’s contribution to the debate are the key considerations.

Applying this test, the request of the CCAC was denied. The case was a private dispute. The fact that it may have an impact on the CCAC or other parties did not elevate it to public litigation as any decision from a court, on any matter, would be a legal precedent. Here, the representations would add nothing to the arguments. It was not enough that the CCAC had specific expertise on issues that were relevant to the appeal where it would only be adding its voice to that of one of the parties. Though this would be a friendly and voluntary intervention, it would not be timely or helpful. The request for intervention was dismissed with costs payable to Mullen and Kumar.

Contributor’s Notes:

First, this decision is consistent with the jurisprudence from numerous courts across Canada regarding interventions. Increasingly, courts have made it clear that interveners must add something to the arguments already before it. The new practice direction by the Supreme Court of Canada on interventions is one such example. This approach to intervention certainly is not unique to arbitration cases that come before the court.

Second, intervention in arbitration cases may be more difficult as arbitration is, in most circumstances, a private dispute. The parties have chosen to take their disputes outside of the court system and have contractually agreed to have their private dispute determined elsewhere. Doing so is an indication that the parties are not concerned with any legal precedent to be set by their matter or any broader public interest. Here, although CCAC had appointed the arbitrator and had its own interest in ensuring that the issues were fully understood by the court, that was not sufficient where ultimately the appeal was about a particular decision by one arbitrator involving a specific group of parties.

Third, for a similar outcome in which an arbitral institution was denied leave to intervene in a jurisdiction-based challenge to an arbitral award, see the decision of HZPC Americas v. Skye View Farms, 2018 PESC 47, which is summarized in an earlier case note:  P.E.I. – arbitral institution denied leave to intervene in jurisdiction-based challenge to arbitral award – #145. In comparison, where the issue before the court is one that will be important for the development of arbitration beyond the parties in the litigation, interventions will still be permitted – see, for example, the intervention on a motion for leave to appeal in Leon v. Dealnet, 2021 ONSC 7192, which is summarized in an earlier case note: Ontario – Motion to quash appeal dismissed in light of conflicting policy implications – #558.