In 9338-3941 Québec inc. v. 9356-2379 Québec inc., 2019 QCCS 1221, Madam Justice Danye Daigle referred the parties to arbitration despite the possibility that some of relief sought might not be covered by the arbitration agreement. Daigle J. preferred to have the arbitrator rule first on jurisdiction and then allow the parties to apply to the court for review or decision, rather than the reverse sequence. Doing so would respect the parties autonomy to choose how to resolve their disputes.
9338-3941 Québec Inc. (“Plaintiff”) had leased commercial space to 9356-2379 Québec Inc. (“Defendant”). Two (2) individuals signed on to the lease as guarantors to Defendant’s obligations.
Disputes arose and Plaintiff instituted court litigation alleging breach of the lease and seeking: (i) declarations from the court resiliating and annulling the lease; (ii) damages; and, (iii) an injunction evicting Defendant.
Defendants resisted, applying under article 622 of Québec’s Code of Civil Procedure, CQLR c C-25.01 (“C.C.P.”) to have the action dismissed and all parties referred to arbitration.
“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.”
Clause 20 in the lease provided for mediation and, failing resolution, arbitration.
informal translation – “20.1.1 – Any disagreement or dispute which may arise, namely but without limitation, regarding the interpretation or application of the present document, its performance, its nullity or its resolution, must be submitted to mediation before a notary mediator, designated jointly by the parties and accredited by an organism recognized by the Minister of Justice. …”
informal translation –“20.2 If no agreement is made within the sixty (60) days following the appointment of the mediator, the dispute will be decided definitively by way of arbitration, to the exclusion of the courts, according to the laws of Québec. Despite the preceding, the parties can at any moment jointly agree to extend the delay before submitting the dispute to arbitration.”
informal translation – “20.2.2 Unless the parties decide otherwise in an arbitration agreement, the arbitration will be conducted by a single arbitrator and will be conducted according to the rules of law and other dispositions of Québec’s Code of Civil Procedure in force at the time of the dispute. The arbitrator will be chosen jointly by the parties. The award will be written and will be final and executory, without appeal and will bind the parties. The costs related to the arbitration will be divided equally between the parties. The arbitration should be held in Trois-Rivières.”
informal translation – “20.2.3 The arbitration procedure does not apply to disputes or litigation concerning claims which are within the jurisdiction of the Small Claims division of the Court of Québec or which may be in the event that the plaintiff, in order to make itself eligible to go before that court, reduces its claim. That court would then have full jurisdiction to decide the dispute or litigation.
The present provisions regarding arbitration should not have the effect of restraining the parties’ rights to seek specific performance by way of injunction.”
Daigle J. noted that the arbitration agreement was not absolute in that it recognized the court’s role in granting injunctions. This stipulation could be considered recognition of the provisions of article 623 C.C.P. which provides that the court “on an application, may grant provisional measures or safeguard orders before or during arbitration proceedings.” See also articles 638-641 C.C.P. for provisions on the arbitrator’s own authority to grant exceptional measures.
Referring to Zodiak International v. Polish People’s Republic,  1 SCR 529, 1983 CanLII 24 (SCC) and to Forecam Golf Ltd. v. Elliott, 2010 QCCS 5283, Daigle J. determined that the arbitration agreement was a ‘perfect’ (complete) one and was the ‘law between the parties’.
Daigle J. also flagged articles 2638 and 2642 of the Civil Code of Québec, CQLR c CCQ-1991 (“C.C.Q.”). The reference to article 2642 C.C.Q. was necessary as a reminder that, despite Plaintiff’s request to declare the nullity of the lease, the agreement to arbitrate was itself a standalone contract whose validity was independent of the underlying contract. Plaintiff’s successful application to declare it null would not then per se render the arbitration agreement null too.
“Article 2638 C.C.Q. An arbitration agreement is a contract by which the parties undertake to submit a present or future dispute to the decision of one or more arbitrators, to the exclusion of the courts.”
“Article 2642 C.C.Q. An arbitration agreement contained in a contract is considered to be an agreement separate from the other clauses of the contract and where the arbitrators find the contract to be null, the arbitration agreement is not for that reason rendered null.”
Daigle J. reviewed the conclusions sought by Plaintiff, reproducing them at para. 17, and concluded that the disputes were clearly within the terms of the arbitration agreement. Daigle J. held that, aside from the conclusions seeking the expulsion of Defendant, the relief sought was within the jurisdiction of the arbitrator. She emphasized that the autonomy of the parties to engage in arbitration had been recognized in Desputeaux v. Éditions Chouette (1987) inc.,  1 SCR 178, 2003 SCC 17.
Daigle J. also followed how Desputeaux v. Éditions Chouette (1987) Inc. had been applied in Placements GNP inc. v. Kuen, 2007 QCCS 4855. That case emphasized that it would be contrary to the will of the parties if the court did not refer them to arbitration even if some claims appeared to exceed the arbitral jurisdiction. Rather, the preferred approach/sequence would be first to give the arbitrator the opportunity to determine the jurisdictional issues and, following same, then allow the parties apply to the Superior Court to review that determination or decide the issue itself. The court in that case resisted the reverse approach of submitting all issues to the court on the ‘pretext’ that some exceed the arbitral jurisdiction. The court explained its preferred sequence as stemming from its understanding of the teachings in Dell Computer Corp. v. Union des consommateurs,  2 SCR 801, 2007 SCC 34.
Based on the agreement of the parties and applicable law, Daigle J. granted Defendants’ application and declared that their disputes be referred to arbitration according to the terms of the lease.
In doing so, she referred to arbitration determination of (i) Defendant obligations as lessee and (ii) guarantors’ obligations. It is unclear from her reasons and the dispositive: (i) whether she suspended or dismissed the court litigation; or, (ii) whether the arbitrator would first decide jurisdiction and then, if jurisdiction existed for one or both sets of claims, the merits of the claims made by Plaintiff.