In Construction Larivière Ltée v. Pomerleau Inc., 2019 QCCS 5410, Madam Justice Dominique Goulet held that the word French word “peut” (“may” in English), when read in context with the word “exiger” (“require” in English), justified qualifying the agreement to arbitrate as mandatory rather than a possibility. The French word “exiger” does not appear in the English equivalent of the same standard form contract. Goulet J. also held that the ten (10) day delay in which to initiate arbitration was a strict one. Though the undertaking was mandatory, the arbitral party willing to proceed was too late in doing so and she denied the application to refer the parties to arbitration.
By March 7, 2017, Pomerleau Inc. (“Pomerleau”) as general contractor contracted with Construction Larivière Ltée (“Larivière”) as sub-contractor signed a standard from construction contract to complete certain concrete formwork. The contract is footnoted as a reference to the CCA 1 2008 Stipulated Price Subcontract (“SPC”).
Pomerleau and Larivière disputed a change notice and its impact on Larivière. The latter argued that the change notice imposed additional labour costs on it as the time frame for completion of the work did not change.
Larivière sent an April 3, 2019 claim to Pomerleau for $369,217.24, followed by an April 30, 2019 detailed costs breakdown. On May 24, 2019, Pomerleau refused the claim prompting Larivière to send a June 13, 2019 notice of mediation. On July 2, 2019, Larivière issued a notice of arbitration. Pomerleau resisted arbitration, claiming:
1. the agreement to arbitrate was not a mandatory undertaking; and,
2. the Larivière had not respected the delays in the parties’ process for initiating dispute resolution.
On August 7, 2019, Larivière applied to the Superior Court for an order nominating an arbitrator.
The SPC at Part 8 sets out a stepped dispute resolution clause. In her reasons, Goulet J. excerpts the following paragraphs from the SPC: 8.2.1, 8.2.2, 8.2.3, 8.2.4, 8.2.5, 8.2.6 and 8.2.11. Her reasons provide the official French text of the SPC. For an equivalent in English, see pp 46-48 for full text of the CCA 1 2008 SPC included in the commented guide produced by the National Trade Contractors Coalition of Canada.
(1) not a mandatory undertaking to arbitrate
Pomerleau argued that use of the word “may” in para. 8.2.5 of the SPC rendered the undertaking to arbitrate optional, not mandatory. The word “may”, it argued, gave the possibility but not the obligation to arbitrate.
The SPC, signed by Pomerleau and Larivière, was drafted in French. Para. 8.2.5 read in part :
“Chaque partie peut, par avis écrit expédié à l’autre partie, au plus tard 10 jours ouvrables après qu’il ait mis fin, de la façon indiquée au paragraphe 8.2.4, aux négociations avec médiateur, exiger que le différend soit réglé de façon définitive par arbitrage … ” (underlining added)
Goulet J. readily agreed that, taken by itself, the word “peut”, or “may” in English, at first read reflects more a possibility than an obligation. She referred to the principles re-affirmed in 9283-7459 Québec inc. v. Anfossi Tassé d’Avirro inc., 2018 QCCS 2548, paras 8-10. See the earlier Arbitration Matters note on that decision “Québec court enforces parties’ requirement of post-dispute agreement to arbitrate”.
That said, Goulet J. also held that the use of the word “peut” (“may”) had to be read in its context. Goulet J. sought to clarify the use of “peut” (“may”) in the text by removing the phrase distancing the facultative word “peut” (“may”) from the verb “exiger” (“require”). By doing so, Goulet J. identified the meaning of the agreement to stipulate that a party “peut … exiger” (“may … require”). By reading the facultative word “peut” (“may”) in its context, Goulet J. held that the parties had agreed that a party could require the other to undertake resolution of their dispute by arbitration.
Goulet J. observed that the wording resembled the use of “may” considered mandatory in Bridgepoint International (Canada) Inc. v. Ericsson Canada Inc., 2001 CanLII 24728 (QC CS), paras 27-33. See also Kingsway Financial Services Inc. v. 118997 Canada Inc., 1999 CanLII 13530 (QC CA) para. 29 and Syndicat National du cinéma v. Gilles Ste-Marie & Associés, [1996] R.D.J. 564.
(2) – non respect of delays within which parties are to arbitrate
Goulet J. then acknowledged that the parties had further subjected their agreement to specific terms, one of which required that the notice of arbitration be given ten (10) days after termination of the mediation.
In resisting Larivière’s application to nominate an arbitrator, Pomerleau also argued that the ten (10) day period set by para. 8.2.11. within which to serve the notice of arbitration had not been respected.
“8.2.11 Should no Project Mediator have been appointed by the parties to the Prime Contract, and if no mediator is agreed to between the parties within 5 days of a mediator being required under 8.2.3, the provisions of paragraphs 8.2.3 and 8.2.4 shall be inapplicable and the notice required under 8.2.5 shall be given within 10 Working Days after the receipt of the Contractor’s Notice in Writing of reply under paragraph 8.2.1.”
Larivière and Pomerleau did not contest that a mediator had been named, that para. 8.2.11 applied, that Pomerleau had rejected Larivière’s claim and that Larivière had received that notice of rejection on May 23, 2019. The July 2, 2019 notice of arbitration was therefore outside the delay.
Larivière submitted that the ten (10) day delay was not strict or de rigueur. Goulet J. disagreed. Goulet J. determined that the clear wording adopted by the parties provided the consequences if a party failed to respect the delays. Goulet J. read para. 8.2.6 as clearly providing that, once past the ten (10) day delay, the parties to the SPC were no longer bound by the agreement to arbitrate.
As a result, Goulet J. dismissed Larivière’s application to name an arbitrator but without costs.
urbitral note – First, the lead argument relied on by Goulet J. to determine that arbitration was mandatory rested on the wording of para. 8.2.5 in which the word “may” appeared.
The wording of the SPC in French does not track the wording of the SPC in English. The additional word “exiger” (“require”) relied on by Goulet J. to decide Pomerleau’s argument on 8.2.5 does not appear in the English version of the SPC. The absence of the word “exiger” (“require”) raises the question whether Goulet J. would have come to the same result if the version of the SPC presented to her in evidence was in English. Here is an extract of that wording from the English version:
“8.2.5 By giving a Notice in Writing to the other party, not later than 10 Working Days after the date of termination of the mediated negotiations under paragraph 8.2.4, either party may refer the dispute to be finally resolved by arbitration … ”
The contract considered by Goulet J. involved a standard form contract. As such, her ruling and reasons may have further impact, beyond the dispute involving Larivière and Pomerleau. Her ruling may be limited to only those situations in which the parties agreed to sign the SDC in French.
The inclusion of the word “exiger” (“require”) appeared to impose a particular result for the Québec Superior Court but, in another jurisdiction, with different wording, may have lead the same judge to decide otherwise.
Setting aside the specific provisions of any rights to appeal or not available under future iterations of the Rules of Arbitration of Construction Disputes as provided in CCDC 40 in effect of the time of bid closing, as issued by the Canadian Construction Documents Committee, (see a sample version posted here), the distinction in wording between French and English versions of the SDC may produce different results.
For a recent judicial consideration of those arbitral rules, see the earlier Arbitration Matters note “Ontario – claimant unable to arbitrate its dispute unless consolidated with non-existent arbitration”.
Second, in contrast, the wording applicable to Pomerleau’s second argument – namely that the ten (10) day delay under 8.2.11 is strict or de rigueur – did not rely on wording particular to the either the French or English versions of the SPC. Goulet J.’s reasons should have persuasive impact outside Québec for similar objections.
Third, on a related note, even with a standard form contract, arbitral parties are well-advised to note how different lex arbitri leads to different results as well. Under Québec’s lex arbitri, set out at articles 620 and following of the Code of Civil Procedure, CQLR c C-25.01 (“C.C.P.”), along with articles 1-7 C.C.P., no appeal lies from a final arbitral award. That final and binding result mirrors the finality intended by Alberta’s International Commercial Arbitration Act, RSA 2000, c I-5, B.C.’s International Commercial Arbitration Act, RSBC 1996, c 233 or Ontario’s International Commercial Arbitration Act, 2017, SO 2017, c 2, Sch 5.
In contrast, those same, latter jurisdictions, along with certain provincial common law jurisdictions in Canada, permit appeals on consent or with leave on questions of law qualifying under the arbitral legislation. See Arbitration Act, RSA 2000, c A-43, Arbitration Act, RSBC 1996, c 55 or Arbitration Act, 1991, SO 1991, c 17. Many courts consider applications for leave to appeal based on an applicant’s argument that the parties’ contract qualifies as a standard one. See, for example, KBR Industrial Canada Co v Air Liquide Global E&C Solutions Canada LP, 2018 ABQB 257and the recent Arbitration Matters note “Alberta court applies legislative rule “unique” to Alberta to refuse leave to appeal extricable question of law in multimillion dollar dispute”.