Ontario Archives - Arbitration Matters

July 22, 2024July 25, 2024

Ontario – Motion to strike civil claims in court waives arbitration rights – #847

In RH20 North America Inc. v. Bergmann, 2024 ONCA 445, the Court upheld the dismissal of a motion to stay court proceedings. Before a motions judge, several defendants succeeded in striking a number of civil claims on the basis that they disclosed no reasonable cause of action. But seeking such relief in court was treated as waiver of an agreement to arbitrate disputes. As a result, instead of international arbitration in London, breach of contract and conspiracy claims will now be determined by the Ontario courts.

June 19, 2024June 25, 2024

Ontario – Arbitrator’s relationship with party’s lender not sufficient for bias – #842

In Ballantry Construction Management Inc. v GR (CAN) Investment Co. Ltd., 2024 ONSC 2129 (“Ballantry”), the applicant, Ballantry Construction Management Inc. (“Applicant”), brought a motion for (among other things) an interlocutory injunction to restrain the Respondent from transferring or encumbering its assets pending the hearing of: (1) the Applicant’s application to enforce two arbitral awards; and (2) the Respondent’s application to set aside the awards on the grounds of a reasonable apprehension of bias on the part of the Arbitrator. On the second issue, the Court concluded that while a “business relationship” between a party and the Arbitrator may create a reasonable apprehension of bias, here, the fact that the Arbitrator was a director and shareholder of the parent of a company that had provided a loan to the Respondent did not support a finding of bias. This case considers how close a relationship between an arbitrator and a party is “too close” if a party seeks to set aside an award based on alleged arbitrator bias.

June 7, 2024June 7, 2024

Ontario – Court dismisses action for issue estoppel based on prior arbitration – #840

In Ford v. GMP Securities LP, 2024 ONSC 271, the Court partially dismissed an action for issue estoppel, relying on a 2022 arbitral award that had been rendered as a result of a dispute between a group of shareholders (of which the plaintiff was a part) and an entity that the defendants (investment dealer and senior investment banker) had represented in a reverse take-over process. The defendants were found to be privies of the parties to the previous arbitration, even though they were not parties themselves. The only claims remaining in the Ontario action were the ones that had not been raised or decided in the previous arbitration.

June 5, 2024May 30, 2024

Ontario – International award enforced despite respondent’s non-participation – #839

Medivolve Inc. v. JSC Chukotka Mining and Geological Company, 2024 ONSC 2200, the Court refused Medivolve’s application to set aside an international arbitration award issued by a Moscow-seated tribunal, instead granting Chukotka’s application to recognize and enforce the award. Medivolve failed to appear at the arbitration and claimed that it had not been given proper notice or an opportunity to be heard. The Court found that Medivolve had proper notice of the arbitration within the meaning of Art. 36(1)(a)(ii) of the UNCITRAL Model Law on International Commercial Arbitration (the “Model Law”). It had received actual notice, by email, of the pendency and status of the arbitration well before the award was rendered even though it changed offices (without notifying the opposing party).

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.

May 22, 2024May 24, 2024

Ontario – Arbitrators cannot ignore the law or defy the Court – #836

In Eyelet Investment Corp. v. Song, 2024 ONSC 2340, the Divisional Court’s decision starts with: “Domestic arbitrations in Ontario must be decided in accordance with the law. Arbitrators are accorded broad deference for matters within their jurisdiction and in defining the scope of their jurisdiction. But they are not free to ignore the law or to decide cases in accordance with their whims”. In Eyelet, the Court set aside the damages award from an arbitration concerning repudiated real estate transactions. The Court identified multiple instances where the arbitrator defied directions from the Supreme Court to determine the claims and remedies on remittal. Rather than following the law, the arbitrator addressed damages in accordance with his sense of fairness. The Court directed the damages and cost determinations to a new arbitrator.

May 21, 2024May 28, 2024

Ontario – Parties share responsibility to keep arbitration moving – #835

In Bank-Strox Renovation Inc. v. Lugano View Limited, (“Bank-Strox”) the Court dismissed the defendant’s motion to dismiss a construction lien action for delay where the had parties agreed to have their dispute resolved by arbitration. As a reminder of the sharp distinction between litigation and arbitration, the Court held that a respondent in an arbitration has the same, or in some circumstances a greater, contractual obligation to keep the arbitration moving as the claimant. Simply sitting back and doing nothing is not a basis to later seek dismissal of the claim for delay. That might work in a court case but it won’t where the parties have agreed to move their dispute to arbitration.

May 6, 2024May 3, 2024

Ontario – Award unreasonable where tribunal failed to follow binding law on frustration – #832

In Taseko Mines Limited v. Franco-Nevada Corporation, 2023 ONSC 2055, the Ontario Superior Court of Justice (Commercial List) granted an appeal from an arbitral award due to, among other things, the arbitrator’s failure to apply binding precedent on frustration of contract. Although the Court applied a deferential reasonableness standard, it concluded the arbitrator’s departure from binding jurisprudence rendered the award unreasonable.

April 22, 2024April 19, 2024

Ontario –“Fraud” does not include “constructive fraud” for set-aside application deadline – #829

Campbell v Toronto Standard Condominium Corporation No. 2600, 2024 ONCA 218, considered the meaning of “fraud” under section 46(1)9 of the Ontario Arbitration Act, 1991, SO 1991, c, 17. It provides that a court may set aside an award on the ground that, “the award was obtained by fraud.” The first issue before the Court was whether “fraud” includes “constructive fraud.” The main issue, however, was the interpretation to be given to sections 47(1) and (2), which provide that an application to set aside an award shall be commenced within 30 days after the applicant has received the award – except if the applicant alleges corruption or “fraud”. The Court found that “fraud” does not include “constructive fraud, which means that the Respondents were out of time to bring their set-aside application. It found that a broadening of the definition of fraud is not consistent with the statutory objectives to narrow the grounds for court interference in arbitrations. The Court expressed the view that the allegation of constructive fraud was made for the purpose of circumventing the statutory time limit for bringing a set-aside application. (This case is also useful for its summary of basic arbitration law principles. If you need a quick update or refresher of these, see my Editor’s Notes below for a “cheat sheet”.)

April 10, 2024April 5, 2024

Ontario – Abuse of process precludes re-litigating arbitrator bias allegation – #827

La Française IC 2 v. Wires, 2024 ONCA 171 involved an appeal from a judgment recognizing and enforcing an arbitration award obtained by the Respondent. The Appellant/Claimant in the arbitration, entered into a funding agreement. The arbitration arose when the Appellant/Claimant commenced proceedings seeking recovery of fees under the funding agreement. The central issue before the Court was whether the doctrine of abuse of process prevented the Appellant/Claimant from arguing on the application to enforce the judgment that the arbitrator was biased, when that issue had already been dismissed by the arbitral institution that heard and decided the challenge.