Federal Archives - Arbitration Matters

August 31, 2023August 28, 2023

Federal – Independence/impartiality not essential criteria for arbitrator appointment? – #770

In Export Development Canada v. Suncor Energy Inc., 2023 FC 1050, the Federal Court heard an application for an order appointing an arbitrator pursuant to an arbitration clause in a political risk insurance policy (the “Policy”). The Court made several findings on the five issues before it. Two of those findings are highlighted here, with the others addressed below. First, subsidiaries of one of the parties claimed they were improperly included in the arbitration – as they were not parties to the arbitration agreement – and therefore claimed the Court had no jurisdiction to appoint an arbitrator in a manner that would bind them. The Court rejected this and refused to preliminarily determine that jurisdictional issue, which was a matter for the arbitrator pursuant to the competence-competence principle. Second, the Court determined what criteria should apply to the selection of the sole arbitrator. The Court held that the criteria of independence and impartiality, among others, are not “threshold criteria” and would not necessarily disqualify a proposed arbitrator if not met. Rather, they are part of what the Court considers in exercising its discretion.

July 18, 2023July 17, 2023

Federal – Stay test may vary – no Canadian standard arbitration stay provision – #755

In General Entertainment and Music Inc. v Gold Line Telemanagement Inc., 2023 FCA 148, a unanimous Federal Court of Appeal (Webb, Rennie, and Locke, JJA) upheld a stay of court proceedings in a copyright and trademark infringement action. As a result, complicated disputes about party identity will be resolved in the international arbitration, not by the court which heard the motion to stay. The decision underscores a key stay of proceedings principle: complex questions of fact or mixed fact and law relating to arbitral jurisdiction should first be referred to the arbitrator. This is so even in the absence of a standard statutory stay of proceedings provision, as occurred in this case. Stay considerations differ by jurisdiction and context, domestic or international, and it is not an invariable technical prerequisite that a party must apply for the stay before taking any step in the court proceedings.

December 19, 2022December 15, 2022

Ontario – High threshold to set aside international award for damages not met – #694

In Clayton v. Attorney General of Canada, 2022 ONSC 6583, Justice Akbarali rejected an attempt to set aside a damages award made by a three-member tribunal (the “Tribunal”) originally constituted under Chapter 11 of the North American Free Trade Agreement (“NAFTA”). The applicants argued that the Tribunal had exceeded its jurisdiction in respect of the legal standard to be applied, breached procedural fairness by refusing to admit certain expert evidence, and rendered an award that was contrary to public policy. Citing previous jurisprudence on the high thresholds to be met for each of these grounds to succeed – thresholds consistent with deference to arbitral tribunals, – Justice Akbarali found no errors had be committed. She dismissed the application.

April 27, 2022April 25, 2022

Federal – Pirating action stayed under New York Convention – #610

In General Entertainment and Music Inc. v. Gold Line Telemanagement Inc., 2022 FC 418, Justice Fothergill of the Federal Court allowed an appeal of the prothonatory’s order and stayed an action for breach of certain provisions of the Copyright Act, the Trademarks Act and the Radiocommunication Act in favour of arbitration seated in Bermuda. In doing so, he applied Article II.3 of the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the New York Convention) and the Supreme Court of Canada’s jurisprudence on staying court proceedings in favour of arbitration. The prothonatory erred in applying the law relating to a forum selection clause to an arbitration clause.

August 4, 2021May 4, 2022

Federal CA – Arbitrator/Adjudicator expressing “tentative views” in pre-adjudication mediation to foster settlement not indicative of bias – #515

In Fono v. Canada Mortgage and Housing Corporation, 2021 FCA 125, the Federal Court of Appeal heard a second-level appeal of a prothonotary’s decision to strike out parts of the appellant’s notice of application for judicial review and affidavit on the basis that they contained settlement privileged information, specifically, evaluative statements allegedly made by the labour adjudicator in a pre-hearing mediation, which the appellant argued demonstrated bias. The FCA found the Federal Court judge made no error in upholding the prothonotary’s decision, specifically noting that the impugned statements did not demonstrate bias merely because the labour adjudicator expressed tentative views on offers made and positions taken in the dispute with a view to fostering settlement.

May 11, 2021May 11, 2021

Federal – arbitral party’s post-recognition intentions not a ground to refuse recognition – #475

In Treaty Land Entitlement Committee Inc. v. Canada (Indigenous and Northern Affairs), 2021 FC 329, Mr. Justice Sébastien Grammond dismissed Canada’s submissions that he refuse registration of an award because (i) applicant had not explained how it intended to enforce the award and (ii) enforcement measures would not be available against the Crown. Grammond J. rejected them as “contrary to the philosophy underpinning” the Commercial Arbitration Act, RSC 1985, c 17 (2nd suppl) (“Code”), stating that recognition of an arbitral award may be obtained “as of right”. Grammond J. noted that “the reasons for which a court may refuse to homologate or annul an arbitration award are exhaustively set out” in article 36 of the Code and non-disclosure of applicant’s intentions with respect to enforcement is not one of those grounds. As for post-recognition enforcement issues, Grammond J. commented that “I need not speculate about the immunities Canada could raise if the applicants attempted to enforce the award”.

November 29, 2020January 7, 2021

Federal – court declines to intervene regarding counsel’s alleged conflict of interest in investor-state arbitration – #398

In Geophysical Service Incorporated v. Canada (Attorney General), 2020 FC 984, Madam Justice Martine St-Louis declined to intervene in a decision by Canada’s legal representative refusing to remove a member from the legal team representing Canada in an investor-state arbitration. St-Louis J. held that (i) the staffing decision did not qualify as a public decision made by an entity subject to judicial review under the Federal Courts Act, RSC 1985, c F-7 and (ii) Applicants had not demonstrated the arbitral tribunal’s lack of jurisdiction to deal with the issue. Applicants raised concerns regarding an individual newly assigned to the legal team representing Canada in the arbitration. Applicants alleged a conflict based on that individual’s recent, prior employment relationship with the third-party funder with which Applicants had signed an agreement regarding its investor-state claim against Canada. Though St-Louis J. declined to intervene, in obiter she considered “there is little unambiguous evidence that [the individual] received information that would cause a conflict of interests”.

November 15, 2020May 4, 2021

Federal – successful offer in all-or-nothing final offer arbitration can include agreement to arbitrate – #392

In Canadian National Railway Company v. Gibraltar Mines Ltd., 2020 FC 1034, Mr. Justice Michael D. Manson held that, in final offer arbitration, the absence of reasons in a decision qualified the decision as reasonable and correct. Though one party objected to the other’s final offer including an agreement to arbitrate, Manson J. held that the arbitrator had to accept either offer “in its entirety” based on which offer the arbitrator considered more reasonable. Final offer arbitration’s “all-or-nothing” approach prevents an arbitrator from extracting reasonable terms from one offer for inclusion in the other and the Canada Transportation Act, SC 1996, c 10 prohibited the arbitrator from explaining the choice made.

October 13, 2020April 24, 2021

Federal – appointing authority’s breach of appointment provisions raise no reasonable apprehension of bias – #382

In Grey v. Whitefish Lake First Nation, 2020 FC 949, Madam Justice Cecily Y. Strickland dismissed challenges to an arbitrator’s decision, applying correctness as the standard of review for questions of procedural fairness, including those which encompass issues of bias. Despite the appointing authority’s breach of the “clear and unambiguous” regulations for appointing the arbitrator, the breach was not raised on appeal and did not affect the procedural fairness of the arbitration. The arbitrator’s previous appointment did not give rise to a reasonable apprehension of bias.

January 18, 2020January 3, 2021

Federal – final offer arbitration characterized as “an intentionally high risk form of arbitration” – #260

Madam Justice Ann Marie McDonald in Canadian National Railway Company v. Gibraltar Mines Ltd, 2019 FC 1650 demonstrated that the “unique nature” of final offer arbitration distinguished it from “ordinary commercial arbitration” and informed expectations of procedural fairness. The dissatisfied party objected to the administering institution’s decision to dismiss a preliminary application but provide reasons only after the arbitration concluded. McDonald J. held that the decision was not part of the FOA process under challenge and did not affect the fairness of the process. McDonald J. also issued a permanent order declaring certain documents, created for the arbitration, to remain confidential.