Non-parties/non-signatories Archives

February 27, 2023February 23, 2023

B.C. – Recent shift towards competence-competence in arbitration clause interpretation? – #714

In 3-Sigma Consulting Inc. v Ostara Nutrient Recovery Technologies Inc, 2023 BCSC 100. Justice Matthews granted a stay of proceedings, finding that the, “arguable case standard provides room for a judge to dismiss a stay application when there is no nexus between the claims and the matters reserved for arbitration, while referring to the arbitrator any legitimate question of the scope of the arbitration jurisdiction” relying upon Clayworth v. Octaform Systems Inc., 2020 BCCA 117 at para. 30. Here there was such a nexus, so the matter was referred to the arbitrator to decide jurisdiction.

January 4, 2023March 13, 2023

Marie-Claude’s 2022 Hot Topic: Binding non-signatories – A new trend arising in Québec? – #697

The last year has seen several judgments which bind third parties to arbitration, specifically in Québec. The basic principles remain unchanged: the rule is still that a contract has effect only between the contracting parties (sec. 1440 CCQ). However, there is a trend, which seemed clear starting in 2021 and continues into 2022, to bring non-signatories into arbitration in certain circumstances, as set out in Québec’s recent judgments. Many reasons explain these decisions: let’s explore why this new trend is arising in Québec.

November 10, 2022November 3, 2022

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.

November 9, 2022November 4, 2022

Québec – Court dismisses application challenging arbitral tribunal’s joinder of non-signatory – #680

In Newtech Waste Solutions inc. c. Asselin, 2022 QCCS 3537, Justice Bellavance dismissed an application challenging an arbitral tribunal’s jurisdictional decision to join a non-signatory corporation to an arbitration. Justice Bellavance validated the tribunal’s application of jurisprudence on joinder of non-signatories to arbitrations seated in Québec. Although the non-signatory was a stranger to the arbitration agreement, the arbitral tribunal found, and Justice Bellavance agreed, that it was appropriate to join it based on a prima facie showing that the corporation was one of the parties’ alter ego.

November 7, 2022March 8, 2023

Québec – Fragmentation of shareholders dispute stayed pending appeal on jurisdiction – #678

In Istanboulian v Kalajian, 2022 QCCA 1259, Justice Cournoyer granted leave to appeal from a judgment of the Québec Superior Court, which had referred part of a claim to arbitration. He found that the judgment under appeal caused irremediable injury to the Applicants by possibly preventing them from being heard in the appropriate forum and that it was in the interest of justice to immediately get to the bottom of the jurisdictional issue.

October 13, 2022October 17, 2022

Québec – Solidary liability allegation no bar to referral to arbitration for one defendant – #671

In Nantel v Gonzalez (not reported), Justice Buchholz stayed an action as against one defendant of a group and referred its dispute with the Plaintiffs to arbitration, even though the Plaintiffs alleged solidary (joint) liability as against all Defendants.

September 27, 2022September 26, 2022

Québec – Interests of justice require closely linked disputes to be arbitrated – #664

In Tessier v 2428-8516 Québec inc., 2002 QCCS 3159, Justice Dufresne granted an application for a declinatory exception in respect of an originating application, and referred two disputes involving ownership of two closely connected companies to arbitration where the shareholders of only one of the two companies involved in the disputes were subject to an arbitration agreement. Justice Dufresne found that the disputes were linked. He relied upon the interests of justice and the principle of proportionality and found that [informal translation]“rather than depriving the shareholders of the first [company] of the effects of the arbitration clause, the shareholders of the second [company] should be ordered to be subject to it.”

September 15, 2022September 9, 2022

Ontario – Action abuse of process – even against new defendant – where issues already arbitrated – #661

In Doria v Warner Bros. Entertainment Canada Inc. et al., 2022 ONSC 4454, Justice Koehnen granted the Defendants’ motion to strike the Plaintiff’s Statement of Claim pursuant to Rule 21.1(3)(d) of the Ontario Rules of Civil Procedure, R.R.O. 1990, Reg. 194 on the ground that it was an abuse of process because it sought to relitigate issues that were previously decided by an arbitrator. The Plaintiff argued that s. 139 of the Ontario Courts of Justice Act. R.S.O. 1990, c. C.43, allowed him to bring a subsequent proceeding for the same or similar relief against a person who was jointly liable and who was not bound by a previous judgment. Justice Koehnen found that s. 139 did not apply these circumstances, where the Plaintiff had a full opportunity to have his entire claim adjudicated in the arbitration, was awarded judgment, and had fully collected on the judgment. The Plaintiff’s complaint was that the arbitrator did not grant him his full damages. The fact that the Defendants were not parties to the arbitration and therefore not bound by the award was irrelevant.

July 18, 2022July 18, 2022

Québec – Light touch to determining arbitration clause application (except to the non-signatory, maybe!) – #638

In Cannatechnologie inc. c. Matica Enterprises Inc., 2022 QCCA 758, the Québec Court of Appeal (Justices Bélanger, Rancourt and Moore) affirmed the principle that a court should limit itself to a prima facie assessment of whether or not a dispute comes within the scope of an arbitration clause. If it does, a court proceeding regarding the dispute should be stayed so that the arbitrator can rule on his or her own jurisdiction.

July 5, 2022July 5, 2022

Ontario – Motion to “compel” participation in arbitration dismissed, despite arbitration clause – #635

In Black & McDonald v. Eiffage Innovative Canada Inc., 2022 ONSC 1855, Justice Dow was faced with two motions: (1) the defendants’ motion to stay the Ontario action on the basis of forum non conveniens; and (2) the plaintiff’s motion to “compel” the defendants to participate in arbitration as a result of an arbitration clause contained in the relevant contract. Justice Dow granted the stay on the ground that British Columbia was the proper forum, but declined to “compel” the defendants to participate in arbitration. He found that whether the arbitrator had jurisdiction over the dispute was to be determined by the arbitrator at first instance and that any failure on the part of the defendants to participate in an arbitration would have consequences for them in that proceeding.