Alberta – Statutory Framework of Arbitral Appeals Clarified – Leave or No Leave? – #862

In Sivitilli v PesoRama Inc, 2024 ABCA 249, a single justice of the Alberta Court of Appeal set out and clarified the statutory framework for appeals to the Court of Appeal arising from challenges to arbitrations made on the basis that: (1) the arbitration agreement is invalid (s. 47 of the Arbitration Act); or (2) that court intervention is needed to prevent unfair or unequal treatment of a party to an arbitration agreement (s. 6(c)).  The appeal route to the Court of Appeal for challenges brought pursuant to s. 47 of the Arbitration Act, RSA 2000, c A-43, which includes allegations that the arbitration agreement is invalid, expressly requires leave of the Court of Appeal.  The appeal route for challenges to arbitrations made pursuant to s. 6, such as allegations that court intervention is needed to prevent unfair or unequal treatment of a party, are not addressed in the Arbitration Act, and therefore decisions of the first instance court are subject to a general right of appeal under the Alberta Rules of Court.  No permission is required to appeal a decision under s. 6

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Alberta – Arbitrator not functus for issuing consent award after party denied settlement – #844

In Caroll v Caroll, 2024 ABKB 227, the Court found that the Arbitrator was not functus officio for issuing a Consent Award after a settlement was reached in a med-arb process.  One party denied the settlement but argued that, in any event, the Arbitrator’s jurisdiction was over after the settlement agreement and it was improper to “crystallize” the agreement into the Award. The Court dismissed this argument and found that there was a settlement. And the process was not unfair. The Arbitrator did not “conflate” the mediation and arbitration phases of the proceeding by terminating the proceeding after the settlement agreement rather than proceeding to arbitration once one party denied the settlement.

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Alberta – A potential expansion of the exceptions to the competence-competence principle? – #823

In Orica Canada Inc v ARVOS GmbH, 2024 ABKB 97, the Court applied, and possibly expanded, the exception to the competence-competence principle that allows a Court to resolve a jurisdictional claim if there is a real prospect that referring the issue to arbitration would mean that it is never resolved. The Court also determined that, in an action between two parties without an arbitration agreement, where the defendant raises claims against a third party subject to an arbitration agreement, those third party claims cannot be included in the action and must be determined by arbitration, even if they are related to the issues between the plaintiff and defendant in the main action. However, any third party claims that are not subject to the arbitration agreement can proceed in the action.

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Alberta – “Admissions” made by party in arbitration did not bind it in action – #795

In Paramount Resources Ltd. v Chubb Insurance Company of Canada, 2023 ABKB 627, Paramount, an oil and gas company, sued its insurers as a result of their denial of coverage with respect to an incident involving environmental contamination following a leak in a pipeline carrying natural gas condensate. The insurers asserted that the leak was “detected” outside the period required for coverage under the policy. This action proceeded in parallel with an arbitration between Paramount and its co-owner and operator of the pipeline, over whether Paramount was required to share in the remediation costs. Paramount settled the arbitration, paying less than the amount claimed by the operator. In the action, Paramount sought damages from the insurers in an amount equal to the settlement payment. The insurers defended, in part, on the basis that Paramount had made admissions in the arbitration which were fatal to its action against the insurers. The court rejected those arguments. First, Paramount was entitled to make alternative arguments in the arbitration. Second, there was a risk of inconsistent results in the two proceedings, including on whether there was coverage under the policies, which was important context. Third, Paramount was fully transparent in its strategy and the insurers did not rely upon Paramount’s “admissions”. Finally, Paramount’s “admissions of fact” as to when the leak was “detected” in the arbitration were issues of mixed fact and law in the action because they turned on the interpretation of the words “detected” and “discover” under the policy. The court found that the settlement was reasonable and awarded Paramount damages equal to the settlement amount for the insurers’ breach of contract.

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Alberta – Non-signatory principal bound by its agent’s arbitration agreement – #789

In LAPP Corporation v. Alberta, 2023 ABKB 566, the Court overruled the arbitrator’s decision in which he found that he had no jurisdiction over the Government of Alberta. In a de novo hearing pursuant to s. 17(9) of the Alberta Arbitration Act, R.S.O. 2000, c. A-43, the Court concluded that Alberta was bound by the arbitration agreement included in an Investment Management Agreement (IMA) between three Alberta public pension plans (Funds) and Alberta Investment Management Corporation (AIMCo). AIMCo is a fully state-owned investment management services provider created by the Alberta Investment Management Corporation Act. The Act specifically provides in  Section 3(1) that AIMCo “is for all purposes an agent of the Crown in right of Alberta and may exercise its power and perform its duties and functions only as an agent of the Crown in right of Alberta.” Considering the broad and all-inclusive scope of the provision, the Court found that, while acting within its powers, AIMCo was always acting as Alberta’s agent and never on its own behalf. Alberta, as disclosed principal, was bound by an agreement made by its agent, even though it was not a party to the arbitration agreement.

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Alberta –Stay of Arbitration Granted Where Potential For “Forensic Prejudice” – #785

In Dow Chemical Canada ULC v Nova Chemicals Corporation, 2023 ABCA 217, the Appellant Dow Chemical Canada ULC (“Dow”) obtained leave to appeal a decision of a lower court, which declined to make a declaration of invalidity of the arbitration or grant an injunction prohibiting the continuation of the arbitration pursuant to section Section 47 of the Arbitration Act, RSA 2000, c A-43. In Dow Chemical Canada ULC v Nova Chemicals Corporation, 2023 ABCA 262, a single judge of the Alberta Court of Appeal ordered a limited stay of the ongoing arbitration until a panel of the Court could decide the appeal. In that context, the judge found that “forensic prejudice” was sufficient to obtain the limited stay of arbitration. This referred not to prejudice to the applicant, but to the possibility that if Dow were correct that the arbitration were invalid, it might “embarrass the justice system” to allow the arbitration to proceed when it should not have.

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Alberta – Third party beneficiary of contract bound by arbitration clause – #784

In Husky Oil Operations Limited v Technip Stone & Webster Process Technology Inc, 2023 ABKB 545, the issue before the Court was whether a third party beneficiary of a contract was bound by the contract’s arbitration clause in a dispute concerning the contractual warranties. The Court answered the question in the affirmative. While the plaintiff was not a party to the contract containing the arbitration clause, it was given rights to enforce certain warranties. Since the plaintiff chose to enforce its third party rights under the contract, it was bound by the contract’s arbitration clause. The plaintiff was required to arbitrate its warranty claims, which were time-barred, as the limitation period had expired. However, the plaintiff’s negligence claims were not arbitrable as they did not arise out of the contract and those claims, which were brought by way of action, were not affected by the expiry of the limitation period to arbitrate.

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Alberta – Misapplication of separability principle in contract dispute – #762

Gutama Estate v Vital Property Services Inc., 2023 ABKB 436, is NOT an arbitration case and the contract at issue contained no arbitration clause. But bear with me! The case involved the alleged repudiation/termination of a shareholders agreement and the consequences to the rights and obligations of the parties as a result. The question: if the contract was repudiated/terminated, were all the parties’ rights unwound? The Court quoted from Heyman v. Darwins Ltd. (uniset.ca), the leading U.K. decision that established the common law principle of separability of the arbitration clause. The Court described Heyman v Darwins as a case that addresses the operation of an arbitration clause where the contract has come to an end: in circumstances in which the contract-terminating event did not go to the very existence of the contract, “it did not matter how the contract came to be terminated: the contract (including its arbitration clause) had existed, and the arbitration clause continued to operate….” The Court then extrapolated that concept and applied it more broadly: “[i]n other words, pre-existing and engaged contractual rights continued to operate despite the later termination (by whatever means) of the contract”. Applying that reasoning to this case where the shareholders agreement was alleged to have been repudiated or terminated by its own terms, the Court said that any such termination did not,  “eclipse the agreement completely ie render it meaningless for all purposes and at all times… [i]nstead, crystalized rights and obligations would continue.”  In other words, “the parties would be discharged from future obligations, but remain bound by rights and obligations that have accrued through partial performance”. Thus the Court imported part of a uniquely arbitration law principle with a specific public policy purpose, separability, into general contract law.

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Alberta – No discretion under Rules to correct procedurally flawed appeal of award – #759

In Kwadrans v Kwadrans, 2023 ABCA 203, the Alberta Court of Appeal considered the appeal of a chambers judge’s order that struck the appeal of an arbitration award in a family law dispute. The chambers judge held that the appellant, by filing a Notice to Attend Family Docket Court instead of an originating application, did not properly commence his appeal of the arbitral award within 30 days as required by the Alberta Arbitration Act, RSA 2000, c A-43 (“Arbitration Act”). The chambers judge issued an order striking the appeal. The Court of Appeal upheld the chambers judge’s finding and dismissed the appeal. Kwadrans makes clear that although the Arbitration Act is silent about how an appeal is to be commenced, rule 3.2(5) of the Alberta Rules of Court, Alta Reg 124/2010 (“Rules of Court”) fills that gap and requires that an appeal be made by originating application. Further, based on the authority of the Alberta Court of Appeal in Kwadrans and Allen v Renouf, 2019 ABCA 250, the Court does not have discretion to cure a procedural deficiency if the effect would be to extend a limitation period under the Arbitration Act. Kwadrans addresses issues that may arise as a result of the interplay between the Rules of Court and the Arbitration Act generally and has application to appeals of commercial arbitral awards.

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Alberta – Restrictive interpretation of exceptions to stay applications – #754

In 2329716 Alberta Ltd. v Jagroop Randhawa, 2023 ABKB 297, the Court of King’s Bench stayed interim and injunctive relief applications pending a resolution of the parties’ dispute in arbitration. The Court found that the Respondent’s application for interim and injunctive relief related to arbitrable matters covered by the arbitration clause in the parties’ agreement, and that the summary judgment exception in ss. 7(2)(e) of the Alberta Arbitration Act did not apply because: (a) there had been no application for summary judgement; and (b) the Applicant did not attorn to the Court’s jurisdiction by seeking declaratory orders (in a previous proceeding that had been dismissed on procedural grounds) and injunctive relief (at the stay application hearing).

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