Jurisdiction Issues Archives - Arbitration Matters

July 22, 2024July 25, 2024

Federal – Competence- competence: a rule of chronological priority – #849

In Attorney General of Canada v. Aéroports de Montréal, 2023 FC 1562, the Court decided the issue of a tribunal’s jurisdiction under section 16(3) of the UNCITRAL Model Law, which is incorporated into the Commercial Arbitration Act, R.S.C., 1985, c. 17 as the “Commercial Arbitration Code” (the “CAC”). The tribunal had made a preliminary ruling that it had jurisdiction over the commercial dispute between the parties. The Court upheld the tribunal’s finding. The issue involved a determination of whether the arbitration clause in one of three related contracts applied. This case reiterates the following key arbitration principles: the power of an arbitral tribunal to rule on its own jurisdiction does not limit the powers of the Court to weigh and make its own findings of fact, on the basis of the evidence, and to consider and rule de novo on that jurisdiction; the Court must take the pleaded facts by a plaintiff as true on a jurisdiction motion; and if both interpretations of an arbitration agreement proposed by the parties are possible, priority must be given to the interpretation that favours the jurisdiction of the arbitral tribunal.

July 5, 2024July 2, 2024

B.C. – Danger of Bifurcated Proceedings – #846

In G & T Martini Holdings Ltd. v. Desert Properties Inc., 2024 BCSC 828, the Court dismissed a petition under s. 58(1)(c) of the Arbitration Act, S.B.C. 2020, c. 2 (“Arbitration Act”) to set aside an arbitral award after a bifurcated arbitration. The Petitioner claimed that the Arbitrator had changed the rationale of the earlier liability award and was precluded from calculating damages in the manner it did at the damages stage after the Arbitrator’s earlier award on liability. The Court found that the Arbitrator did not improperly change his decision on liability in the damages award, but instead merely elucidated upon his rationale for the decision he made in the liability award.

May 24, 2024May 24, 2024

Ontario – Court can hear set aside despite NY forum selection clause – #837

In Tehama Group Inc v Pythian Services Inc, 2024 ONSC 1819, the Court declined to stay an application to set aside an arbitration award. The stay application was based on a forum selection clause in favour of the courts of New York. In denying the stay, the Ontario court applied an exception in that forum selection clause regarding certain types of disputes under the parties’ agreement that were to be referred to arbitration. The key issue in the case concerned establishing the “place” of the arbitration, which had not been expressly set out by the parties or determined by the arbitrator. Applying the International Commercial Arbitration Act, RSO 1990, c I.9 (“ICAA”) and UNCITRAL Model Law on International Commercial Arbitration (“Model Law“) the Court determined that Toronto, Ontario, was the place of arbitration and that the Ontario Superior Court of Justice was therefore the only competent forum to decide the set-aside application.

April 12, 2024April 5, 2024

B.C. – Stay in favour of non-party to arbitration agreement in multi-party construction dispute – #828

In Vancouver Pile Driving Ltd. v. JGC Constructors BC Ltd., 2024 BCSC 344, the Court granted two applications to stay litigation arising out of a large multi-party construction dispute in favour of arbitration. The first Applicant was a contractor which had a subcontract with the Plaintiff that provided for mandatory arbitration, unless the dispute involved the owner or other project participants. The second Applicant was the owner, a non-party to the subcontract, which argued that if the litigation was stayed against the contractor, it should be stayed against the owner as well. The Court applied section 8 of the International Commercial Arbitration Act, R.S.B.C. 1996, c. 233 (“ICAA”) to stay the proceedings against the first Applicant. The Court also stayed the action against the second Applicant owner pursuant to section 10 of the Law and Equity Act, R.S.B.C. 1996, c. 253 to prevent a multiplicity of proceedings.

April 8, 2024April 5, 2024

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.

March 25, 2024March 22, 2024

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.

March 11, 2024March 8, 2024

Ontario – Arbitrator’s stand-alone jurisdiction decision a preliminary “ruling” open to de novo review – #820

In Clost v Rennie, 2023 ONSC 6998, the Court ruled that an arbitration agreement was invalid after a de novo hearing to “decide the matter” of the arbitrator’s jurisdiction under section 17(8) of the Ontario Arbitration Act, 1991, SO 1991, c. 17 (the “Act”). The Applicant (also referred to in the decision and herein as “Norm”) contended that the arbitration agreement was invalid because it was contained in a lease agreement which he alleged was fraudulent because his signature was forged. The parties first submitted the jurisdictional issue to a sole arbitrator, who found the arbitration agreement to be valid. The Court accepted that a de novo hearing under s. 17(8) of the Act was required, finding that the Arbitrator had rendered a “ruling” on a preliminary question of jurisdiction rather than an “award”, even though the sole question he was asked to determine was jurisdiction. There was an extensive evidentiary record before the arbitrator relative to the jurisdictional issue. This raised for debate the difference between an “award” and a “ruling” on a preliminary question which can be decided by the Court on a hearing de novo. The Court completed its own review of the extensive evidentiary record and ultimately concluded that the lease (and therefore the arbitration agreement) was fraudulent and invalid and the arbitrator had no jurisdiction

February 28, 2024February 23, 2024

B.C. – Reasons for granting anti-suit injunction to prevent arbitration different than litigation – #818

In Axion Ventures Inc. v Bonner, 2024 BCSC 45 (“Axion”), the Court addressed a British Columbia application for anti-suit injunctions to prevent the respondents from proceeding with a Washington State lawsuit and an arbitration seated in Thailand. Axion is a skirmish in the ongoing war over the ownership and control of Axion Ventures Inc. and Axion Interactive (the two applicants in this case) and their assets and those of their subsidiary and related entities in other jurisdictions around the world. The applicants were both plaintiffs and defendants in litigation already underway in BC. For reasons described below the Court ultimately adjourned the anti-suit injunction applications. However, it recognized a distinction between anti-suit injunctions sought in respect of foreign court actions and those sought in respect of commercial arbitrations; namely, that the latter do not engage principles of comity. And of particular interest to BC counsel, the Court suggested there is no absolute rule in BC that an anti-suit can only be sought after a stay application is brought in the foreign proceeding.

January 30, 2024January 26, 2024

Québec – No revocation of a homologated award without the prior revocation of the judgment – #812

In Investissements Immobiliers MB inc. v. SMP Direct inc., 2023 QCCS 4526, the Superior Court dismissed the application of Investissements Immobiliers MB inc (“Plaintiff”) to partially revoke a judgment homologating an arbitration award. In her decision, the Judge ruled that the Plaintiff had delayed acting without justifying the delay and that the application for revocation of the homologating judgment had no reasonable chance of success. The background is complicated. The application followed multiple proceedings between the court and the Arbitrator. The Plaintiff (Claimant in the Arbitration) applied to the court to annul the arbitration award on the basis that the Arbitrator had exceeded his jurisdiction. Then, before that application was decided, the Plaintiff returned to the Arbitrator for revocation of the award based on the fact that there was subsequent information that he had not considered that would affect the result. The Arbitrator refused to hear Plaintiff’s demand before the Court ruled on the Plaintiff’s annulment application. The Court homologated the award. Plaintiff’s application for leave to appeal was dismissed. The Arbitrator then dismissed the application for revocation. He found that the Court must revoke the homologating judgment first, which made the issues ruled in the arbitration award revocation issue because the homologating judgment give the award the force of res judicata. The Plaintiff’s later return to the court to revoke the homologating judgment was too late – five months later. The lesson? An arbitrator has no jurisdiction to revoke an award that has been homologated in a court judgment.

January 4, 2024April 30, 2024

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.