Ontario Archives - Arbitration Matters

December 16, 2024December 13, 2024

Ontario – Order of competence-competence analysis on stay motion challenged – #880

In Lochan v Binance Holdings Limited, 2024 ONCA 784 (“Binance”), the Court considered the appeal of the Motion Judge’s finding that an arbitration clause in a crypto trading agreement was void because it was contrary to public policy and unconscionable. The arbitration clause was part of a standard form contract between the appellant and crypto users. It provided that the appellant could change any part of the arbitration agreement, including the forum and governing law, and that users agreed to any amendments. On appeal, the appellant argued that the Motion Judge had failed to first consider the competence-competence principle in his analysis. The Court dismissed the appeal, finding that the Motion Judge had followed the approach of the Supreme Court of Canada in Dell Computer Corp. v Union des consommateurs, 2007 SCC 34 (“Dell”) and Uber Technologies Inc. v Heller, 2020 SCC 16 (“Uber”) when he considered the competence-competence principle before he considered if an exception to that principle applied to allow the court to consider if the clause was unenforceable.

December 4, 2024December 3, 2024

Ontario – Court weighs in on standard of review post-Vavilov (and decides) – #879

In Burwell v. Wozniak, 2024 ONSC 1234, the Court grappled with the appropriate standard of review to apply to arbitral awards. The heart of the underlying dispute was whether the appellant Burwell’s promise of shares in his company was sufficient to establish an estoppel against him in favour of his former partner, Wozniak. This case is noteworthy because most cases since Vavilov have not weighed in on the issue and have simply said that, regardless of the standard of review, the appellant does not meet it.

December 2, 2024November 29, 2024

Ontario – Court Grants Extraordinary Remedy of Removing Arbitrator for Undue Delay – #878

In Maharajh v Mathura, 2024 ONSC 5737 (“Maharajh”), the Court granted an application to remove an Arbitrator for undue delay. The Arbitrator went silent for four months without explanation and then consented to the Applicant’s request that she resign. The Court was required to rule on the issue when the Respondent refused to consent. The delay was “undue” because the Applicant was prejudiced by it. This undermined the arbitration agreement. The parties could not cooperate, so their dispute returned to court.

November 20, 2024November 15, 2024

Ontario – Court endorses pre-hearing disclosure from non-parties to assist arbitration – #876

In Royal and Sunalliance Insurance v Ontario Provincial Police, 2024 ONSC 5505, the Court interpreted section 29(4) of Ontario’s Arbitration Act, 1991 (the “Act”) to allow courts to order non-party disclosure before an arbitration hearing. Section 29(4) states, “[o]n the application of a party or of the arbitral tribunal, the court may make orders and give directions with respect to the taking of evidence for an arbitration as if it were a court proceeding.” The Court’s order permits pre-hearing “discovery” of a non-party to the arbitration, as opposed to the taking of evidence at a hearing. The case sets out some considerations that may be relevant to future applications under this provision of the Act. This case highlights the need for parties seeking non-party disclosure in arbitration to carefully review the applicable legislation and frame requests for Court assistance accordingly.

November 18, 2024November 22, 2024

Ontario – Application to enforce award against non-party to arbitration stayed – #875

In Sociedad Concesionaria Metropolitana De Salud S.A. v Webuild S.P.A, 2024 ONSC 4491 the Court considered whether to grant an application to enforce an arbitral award against a non-party to the arbitration. The non-party had purchased assets of the unsuccessful party to the arbitration as part of a restructuring proceeding in Italy. The successful party to the arbitration and the non-party disagreed on whether the asset purchase included the transfer of the unsuccessful party’s obligations under the award to the non-party. The Court stayed the enforcement application pending a determination of that threshold issue by the Italian courts.

November 6, 2024November 8, 2024

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.

November 4, 2024November 8, 2024

Ontario – Common counsel insufficient for multiple arbitral appointments to raise bias – #872

In Dhaliwal v Richter International Ltd., 2024 ONSC 5103, the Court dismissed an application to remove an arbitrator for reasonable apprehension of bias. This was a multiple appointments case. The application arose from the non-disclosure of a concurrent mandate, in which counsel for the Respondents also was counsel in another arbitration before the same arbitrator. The Applicants’ challenge for bias was not brought in a timely manner, as required by s. 13(3) of the Arbitration Act, 1991, SO 1991, c 17. In any event, overlapping counsel alone was not a sufficient ground for claiming bias, and no contextual circumstances necessitated disclosure of the concurrent mandate. Also, the arbitrator’s rejection of the Applicants’ evidence of what had been disclosed about the concurrent mandate did not give rise to actual bias.

September 27, 2024September 27, 2024

Ontario – Alleged error in applying the law not a jurisdiction issue – #865

In Clayton v. Canada (Attorney General), 2024 ONCA 581, the Court dismissed an appeal from an order dismissing an application to set aside an arbitral award made under Chapter 11 of NAFTA (“the Award”). The appellants sought to set aside the award on the grounds that the tribunal exceeded its jurisdiction and that the award violated public policy. The Court rejected both arguments. In the underlying arbitration, which was bifurcated into liability and damages hearings, the tribunal found that the respondent had breached the relevant NAFTA provisions, but that the appellants did not establish that the breach caused the damages sought. The appellants applied to the Ontario Superior Court to set aside the Award, arguing that the tribunal exceeded its jurisdiction by not properly applying the law, and that the Award violated public policy because it was “so unreasonable as to be unenforceable”. The Superior Court dismissed the application. The Court of Appeal dismissed the appeal. Challenges to arbitral awards on jurisdictional grounds are restricted to “true jurisdictional questions”, and there is a very high burden to set aside an award for public policy reasons.

September 23, 2024September 20, 2024

Ontario – Arbitrator jurisdiction – dispute arose from Consent Order after earlier arbitration – #863

In The Joseph Lebovic Charitable Foundation, The Dr. Wolf Lebovic Charitable Foundation, the Estate of Joseph Lebovic and Wolf Lebovic v Jewish Foundation of Greater Toronto and Joseph and Wolf Lebovic Jewish Community Campus, 2024 ONSC 4400, the Court upheld the arbitrator’s order that he had jurisdiction over the parties’ dispute that arose after a Consent Order made in an earlier arbitration. The parties’ first dispute fell within the scope of the arbitration clause in their agreement. They settled that dispute and the arbitrator issued a Consent Order that contained a term that referred, “any disputes regarding the matters referred to in this Order” back to him for resolution. A second arbitration did not proceed. The same arbitrator was appointed to decide the issues in dispute in a third arbitration. The respondents in the arbitration (“Lebovic”) argued that the arbitrator did not have jurisdiction because the issues raised were grounded in the Consent Order and not in the agreement that contained the arbitration clause. The arbitrator decided that he had jurisdiction, in part, because: (1) resolving this third dispute would necessarily involve factual consideration of the contract terms, and obligations and conduct of the parties under both the parties’ agreement and the Consent Order; and (2) the issues raised by Lebovic were all grounded in rights and obligations which were initiated by the terms of their agreement. Lebovic maintained their objection and applied to the Court under section 17(8) of the Ontario Arbitration Act, 1991, SO 1991, c. 17, “to decide the matter”. The focus of this case note is the arbitrator’s decision, because the application was decided on the basis of waiver.

August 12, 2024August 9, 2024

Ontario – Partial Summary Judgment Test Applied on Recognition of Foreign Award Motion – #853

In Shanghai Investment Co. Ltd. V. Lu et al., 2024 ONSC 2762 the Chambers Judge concluded that to grant a motion asking that a foreign award be “domesticated” (that is, recognized and made enforceable as a judgment of the Ontario Court), the motion must also meet the additional requirements for partial summary judgment. In this case, the recognition of the foreign award was pleaded as a threshold issue and formed part of a larger enforcement action. As a result, if the motion for recognition were granted, it would bifurcate the action. Although the Ontario Court of Appeal in cases like Butera v. Chown, Cairns LLP, 2017 ONCA 783 (“Butera”) has held that partial summary judgment should rarely be granted as it usually not efficient nor cost effective, the Chambers Judge determined that it was appropriate in this case. Among other factors she noted was that the recognition portion of the action was distinct from the rest and there was no risk of inconsistent findings.