Quebec – No abuse of process where parallel arbitration and court proceedings – #815

In Gaston Gagné inc. c. Gagné, 2023 QCCS 4552, the Court confirmed that arbitration clauses should receive a broad and liberal interpretation, dismissed an application to annul a final arbitral award, homologated the award, and dismissed a claim in damages based on an alleged abuse of process by the party opposing homologation. Even though one party decided to bring court proceedings on the same issue he put before the arbitrator, there was no abuse of process because his court proceeding did not impede the arbitration.

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Josh Reflects (2023): Multi-tier dispute resolution clauses: jurisdiction and limitations issues – #805

Canadian appellate courts have seldom made significant rulings on multi-tier dispute (sometimes called “step” or “cascading”) resolution clauses, so it is difficult to discern clear trends. A recent decision of the Hong Kong Final Court of Appeal (“HKFCA”) is of interest. It considered what forum has jurisdiction to determine whether prior steps in a multi-tier dispute resolution clause have been satisfied. 

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Ontario – Court dismisses motion to quash notice of arbitration – #798

In Katerinaville Developments Ltd., v. Garthwood Homes Ltd.et al., 2023 ONSC 6267, the Court held that the Arbitration Act, 1991, S.O. 1991, c. 17 (the “Act”), does not allow a plaintiff to quash a notice of arbitration in favour of a court proceeding, deferring to the arbitral tribunal for any determination of the unconscionability of an arbitration clause. Additionally, the Court emphasized that duplication of proceedings in Court and arbitration does not necessarily render the arbitration unfair. 

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Newfoundland and Labrador – Set-aside application denied where  award meets Vavilov reasonableness test – #793

In Zenda Mount Pearl Square Enterprises Limited Partnership v MP TEI Realty Limited Partnership, 2023 NLSC 142, the Applicant/Respondent in the arbitration applied to set aside an arbitral award arising from a dispute involving the contractual entitlement to refinancing proceeds that the Applicant/Respondent received as a result of a rogue transfer of funds. Section 14 of the Newfoundland and Labrador Arbitration Act, RSNL 1990, c A-14 (the “Arbitration Act”) gives the Court the authority to set aside an arbitral award if it finds that there was Arbitrator misconduct or the award was improperly procured. The Court held that the burden is on the applicant to show that the award is improper as a matter of fact, law, or mixed fact and law, and that the award falls outside out any potential reasonable outcome. The Court’s analysis and reasons looked at whether the decision of the Arbitrator was reasonable, applying Layman v Layman Estate, 2016 NLCA 13 (“Layman”). Focusing, in part, on the Arbitrator’s application of the principles of contract interpretation set out in Creston Moly Corp. v Sattva Capital Corp., 2014 SCC 53 (“Sattva”), the Court concluded that the Arbitrator’s decision to divide the proceeds equally between the parties was reasonable based on the terms of the parties’ agreements. The Court dismissed the set-aside application on the basis that the decision of the Arbitrator, in respect of all of the grounds reviewed by the Court, was reasonable. This case has application to the review (including on set-asides) of arbitration decisions on the basis of reasonableness and the contractual interpretation of commercial agreements. 

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Ontario – Arbitrator to rule on own jurisdiction and addition of party – #791

In Toronto Standard v Distillery SE, 2023 ONSC 5340, the Court upheld the parties’ agreement to appoint a specific arbitrator, and also determined that issues relating to the arbitrator’s jurisdiction and mandate, and the addition of a party, should be decided by the arbitrator and not the Court. 

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Manitoba – Awards set aside after arbitrator re-wrote parties’ bargain – #790

In Buffalo Point First Nation and Buffalo Point Development Corp Ltd v Buffalo Point Cottage Owners Association, Inc, 2023 MBKB 141, the Court confirmed its earlier decision on the motion for leave to appeal, in which it held that the correctness standard of appeal in Canada (Minister of Citizenship and Immigration) v Vavilov, 2019 SCC 65 (“Vavilov”) applies to review of private arbitration awards appealed under provincial arbitration legislation. The Court held that the arbitrator had erred because he exceeded the jurisdiction granted to him under the parties’ agreement. First, the arbitrator exceeded the jurisdiction to “implement” or “clarify” a Consent Award which the parties had entered into following an earlier dispute. Second, the arbitrator’s award constituted a significant rewrite of the bargain (…) by introducing new concepts alien to the negotiated bargain”. 

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Ontario – Court defines arbitral record where arbitration not recorded – #787

In Reed v. Cooper-Gordon Ltd. et al, 2023 ONSC 5261, the Court granted in part the plaintiff’s motion for leave to appeal an employment and shareholder related arbitral award on a question of law under s. 45 of the Arbitration Act, 1991. The plaintiff’s claims were originally raised by way of action, then proceeded by arbitration. The plaintiff/claimant in the arbitration claimed, among other things, that the arbitrator had wrongly determined the notice period for pay in lieu of notice, overlooked certain claims for unpaid bonuses and RRSP contributions, and incorrectly valued his shares in the underlying arbitration relating to his exit from the defendant. The Court held that the arbitrator’s error in computing the notice period and his lack of reasons relating to certain claims justified granting leave to appeal. The Court denied leave on the remaining issues. Because the parties had not recorded the arbitration, the record was limited to pleadings filed in the Superior Court of Justice that defined the issues for arbitration, the parties’ arbitration agreement, the Arbitration Award and Costs Award, the shareholders’ agreement and the parties’ Partial Minutes of Settlement on a particular issue.

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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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Ontario –  A pathological med-arb clause – #781

Stothers v Kazeks, 2023 ONSC 5021 is a perfect example of the confusion about the med-arb process that I covered in my last case note: Med-arb process was “fundamentally flawed” – #775. If you want to skip to the language of the pathological so-called med-arb clause without the factual background in this case, just scroll down to just above the Editor’s Notes section.

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Québec – Arbitration clauses bind parties only, even if parallel proceedings – #780

In Clinique Ovo inc. v. Elite IVF, 2023 QCCA 1097, the Court determined that an arbitration clause barred some, but not all third-party claims. The factual matrix underlying this decision is convoluted: two agreements; similar but not identical arbitration clauses; and multiple actors. The background facts are sensational: an alleged fraudulent in vitro impregnation involving parties in Geneva and Cyprus; a birth in Monaco; disputed support payments required from a bewildered father; and, inevitably, litigation with third-party claims raising issues of arbitration clause interface with the court proceedings. Against this backdrop, the Court of Appeal decision is grounded in a key and decisive first principle: arbitration clauses bind parties to the agreement, not strangers. 

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