In Randhawa v. Randhawa, 2021 ONSC 3643, Justice Koehnen considered whether the arbitrator appointed by the parties had jurisdiction when he issued an award appointing an inspector to conduct an investigation. The applicant (Paul) and the respondent (Rana) were brothers, who were involved in a dispute about the separation of their interests in various businesses which they once ran together. Paul commenced an oppression remedy application in March 2018, which was resolved by Minutes of Settlement dated October 1, 2018. The Minutes of Settlement called for the dissolution or sale of the businesses and provided that any disputes arising from the implementation of the Minutes of Settlement were to be resolved by way of arbitration. Disputes arose and the arbitrator issued an award under the Ontario Business Corporations Act , R.S.O. 1990, c. B. 16, appointing an inspector to conduct an investigation. During the arbitration, Paul brought a court application for the appointment of a receiver over a portion of the brothers’ businesses. Although Rana agreed to the receiver’s appointment, he contested the receiver’s right to conduct an investigation that involved third parties. He also contested the arbitrator’s jurisdiction when he awarded the appointment of an investigator under the OBCA at all and because the investigation included the affairs of a third party. Justice Koehnen granted Paul’s application. He found that there was no previous case and nothing in the parties’ arbitration clause that prohibited an arbitrator from awarding a statutory remedy, including the appointment of an inspector. The arbitrator acknowledged that his jurisdiction was limited to the parties to the arbitration agreement and that any investigation of a third party would require the assistance of the court, which Justice Koehnen ordered. In addition, the parties had agreed to the appointment of a receiver and there was ample evidence of the need to investigate the affairs of the third party as they affected the issues in the dispute between the brothers.
Continue reading “Ontario –Arbitrator has jurisdiction to appoint inspector under the Ontario Business Corporations Act if terms of parties’ arbitration agreement allows, but court assistance needed if third parties affected – #510”B.C. – Challenge of arbitrator’s interpretation of restrictive covenant in shareholders agreement, relying upon employment contract analysis, not appealable “extricable error of law” – #509
In AES Engineering Ltd. v. Khan, 2021 BCSC 1384, Justice Lamb found that the arbitrator’s determination that a restrictive covenant in a shareholders agreement was unenforceable for ambiguity did not raise an extricable error of law that would provide grounds for an appeal of the final award. The applicant argued that the arbitrator had committed errors of “legal methodology” in interpreting the restrictive covenant, including by applying the principles from the “lens” of an employment contract case. Justice Lamb ruled: “There is nothing to suggest that the arbitrator’s interpretation of the contract in this case is a question of law as opposed to the usual question of mixed law and fact. It is clear from the Award that the arbitrator’s finding of ambiguity turned on the specific wording of the restrictive covenant. There was no evidence before me to suggest that this form of restrictive covenant is a standard form clause such that there might be precedential value to the proper interpretation of the clause which might turn this issue into a question of law that would be appealable under s. 31(1) [of the former B.C. Arbitration Act. R.S.B.C 1996, c. 55]. Further, there is no indication on the face of the Award that the arbitrator considered an incorrect principle in finding the clause was ambiguous: he considered the “ordinary grammatical meaning of the words” and found the clause to be ambiguous. In short, the interpretation of the restrictive covenant in this case is a question of mixed law and fact.”
Continue reading “B.C. – Challenge of arbitrator’s interpretation of restrictive covenant in shareholders agreement, relying upon employment contract analysis, not appealable “extricable error of law” – #509”