Ontario – Court Modifies Injunction Test in Context of International Arbitrations – #873

In NorthStar Earth & Space Inc. v. Spire Global Subsidiary, Inc., 2024 ONSC 5060, the Court granted an interim injunction before the applicant had commenced an arbitration. The Court did so even though it acknowledged that the applicant would not have met the test under Ontario law for a mandatory injunction (the strong prima facie case standard). Instead, because of the urgency, the Court applied the injunction test that would otherwise have been applied by the arbitral tribunal under Article 17 of the UNCITRAL Model Law. Article 17 requires a lower threshold of showing the claim has a “reasonable possibility” of success. The Court therefore modified the test for granting an interim injunction in the context of an international arbitration.

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Québec – Any competent court can issue interim measures regardless of arbitral seat – #854

In GlobeAir Holding GmbH c. Pratt & Whitney Canada Corp., 2024 QCCS 2451, the Court referred a claim to arbitration and, despite confirming its jurisdiction to do so, refused to issue interim measures. The Plaintiffs had argued that the claim, based in statute rather than contractual obligations, fell outside the scope of the arbitration clause, but the Court drew on the broad language of the clause to find otherwise. Then, after confirming that the Court  had jurisdiction to issue interim measures even though the dispute was referred to arbitration seated in Ontario, it concluded that no prima facie case could be made to grant Plaintiffs’ request.

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Québec – No stay of arbitration without exceptional circumstances – #826

In McLaren Automotive Incorporated v. 9727272 Canada inc., 2024 QCCS 389, the Superior Court dismissed the application of McLaren Automotive Incorporated (“Applicant”) to stay the arbitration until the Superior Court had ruled on the merits of its applications: (1) to homologate the Arbitrator’s award concluding that he had no jurisdiction to act; and (2) to annul the arbitration appeal panel’s decision to overturn the arbitrator’s award on its own jurisdiction. The Judge reviewed the applicable criteria for a stay of the arbitration He concluded that exceptional circumstances are required to obtain a stay because of the respect that Courts must show toward arbitration agreements and the principle of limited interventions that the Court must follow in arbitrations. The Judge ruled that no such exceptional circumstances were demonstrated by the Applicant in the present case.  But the case is worth watching. The institutional rules under which the arbitration proceeded allowed for an appeal to a panel of arbitrators. The issue will be whether the appeal is permitted in Québec where, pursuant to section 648 CCP “an arbitration award may only be challenged by way of an application for annulment”.  There is no appeal right.

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B.C.  – Leave to appeal interim award premature until arbitration concludes – #825

Brown v Smithwick, 2024 BCCA 83 is about an application for leave to appeal an interim award brought pursuant to section 59 of the British Columbia Arbitration Act, SBC 2020 c 2 (“Arbitration Act”). The Applicant sought leave to appeal on the ground that the arbitrator had erred in law by concluding that a debt that the Applicant owed to the Respondent was a debt within section 178(1)(e) of the Bankruptcy and Insolvency Act, RSC 1985, c B03 (the “BIA”), as a debt that arises out of fraud, embezzlement, misappropriation or defalcation while acting in a fiduciary capacity. The reasons of the Court focused on the issue of whether the leave application was premature because the arbitration had not yet ended. The Court held that while it has the discretion to grant leave to appeal from an interim arbitral award, the circumstances of the case weighed against exercising that discretion, including: (1) early judicial intervention would interfere with the arbitration process that the parties had agreed to; (2) the Applicant had not demonstrated that it would be prejudiced by the adjournment; and (3) there could be multiple leave applications to the Court arising from the same arbitration. The Court adjourned the leave application pending the conclusion of the arbitration. 

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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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Ontario – Arbitral tribunal lacks power to order third-party discovery – #779

In Link 427 General Partnership v. His Majesty the King, 2023 ONSC 2433, the Court refused to enforce an arbitrator’s interim procedural order purporting to compel third-party discovery. This decision highlights the limits of an arbitral tribunal’s procedural authority over strangers to the arbitration agreement, the complexities of which I highlight in my Contributor’s Notes below.

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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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B.C. – Court upholds pre-judgment garnishing order despite arbitration clause – #712

In Care Tops International Limited v. PPN Limited Partnership, 2022 BCSC 2252, Master Robertson of the BC Supreme Court refused to set aside a pre-judgment garnishing order because the Plaintiff failed to draw the Court’s attention to a mandatory arbitration clause during the ex parte application granting that order. Master Robertson found that this omission was not material because it would have had no impact on the outcome; the arbitral proceedings had not yet commenced. As such, she did not have to determine if the Court, or an arbitral tribunal, was better placed to determine the interim relief.

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Québec – No enforcement of award against alter egos – #681

In a much-anticipated decision, the Québec Court of Appeal overturned Justice Pinsonneault’s first instance decision and quashed the seizure before judgment by garnishment taken against a subsidiary and non-party to an arbitration to answer for the debt of the parent pursuant to an arbitral award. Justice Pinsonneault’s decision was discussed in a previous case note concerning CC/Devas (Mauritius) Ltd. v. Republic of India, 2022 QCCS 7. In Air India, Ltd. v. CC/Devas (Mauritius) Ltd., 2022 QCCA 1264, the Court of Appeal unanimously granted the appeal of the parent, ruling that a foreign award cannot be enforced against a third party’s assets unless it is proven: (1) that the third party is the debtor’s alter ego; and (2) that the third party was used in order to conceal fraud, abuse of right or a violation of a public order rule by the debtor. The Court of Appeal ruled that the applicable criteria for the enforcement of a foreign award against the shareholder of a condemned party were the same as the applicable criteria to lift the corporate veil, as codified at section 317 CCQ. Here, those criteria were not met, and the court did not lift the corporate veil.

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Ontario – Failure to pay award does not justify security for costs – #653

In Amelin Resources, Inc. v. Victory Energy Operations LLC, 2022 ONSC 4514, Associate Justice C. Wiebe dismissed a motion for security for costs under Rule 56.01(1)(d) of the Ontario Rules of Civil Procedure, finding that Victory, the Defendant/Moving Party,  did not meet its onus of showing that there was “good reason to believe” that Amelin, the Plaintiff/Responding Party, had insufficient assets to pay the Victory’s costs in Ontario. Amelin’s failure to pay amounts granted to Victory under an arbitration award and U.S. Court order did not suffice.

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