Ontario Archives - Arbitration Matters

August 29, 2023August 28, 2023

Ontario – Stay granted: tort claims were in “pith and substance” contractual – #768

In Spasiw et al v. Quality Green Inc. et al, 2023 ONSC 4422, the Court granted the defendants’ motion to stay the action in favour of arbitration in the context of a shareholders dispute. The plaintiffs’ claims of fraudulent misrepresentation and oppression were “closely connected with and related to” the parties’ share purchase agreement and shareholders agreement and in “pith and substance” contractual.. Accordingly, the claims fell within the broad scope of the arbitration clauses contained in the parties’ two agreements.

August 28, 2023August 28, 2023

Ontario –Arbitration Costs Payable Despite Application to Set Aside the Award – #767

In The Canada Soccer Association Incorporated v. Association de Soccer de Brossard, 2023 ONSC 4317, the Court held that the arbitrator’s cost decision was part of the arbitral final award, that a judgment enforcing the award extends to the decision on costs and that the winning party is entitled to the payment of its costs despite the losing party’s pending application to set aside the award, unless it obtains an interim order to the contrary. Rule 63.01 of the Ontario Rules of Civil Procedure, RRO 1990, Reg 194, which applies to appeals, does not apply – by analogy – to stay the costs order made as part of an award.

August 3, 2023August 1, 2023

Ontario – Title of proceedings may be amended in recognition and enforcement proceeding – #760

IC2 Fund v Wires, 2023 ONSC 3879 addresses: (1) whether it is appropriate for a party seeking to enforce an international arbitral award to correct the title of proceedings in an enforcement proceeding where both abbreviated and formal names were used interchangeably in the arbitration; (2) whether an applicant using an abbreviated name has standing; and (3) whether a party resisting enforcement can do so on the basis of an arbitrator’s alleged partiality after such allegations were addressed in the arbitration, which decision was not challenged. Here, the applicant (the respondent in the arbitration) brought an application to enforce an arbitral award (the “Award”) relating to its costs of the arbitration. In the title of proceedings in the notice of application, the applicant used an abbreviated corporate name. In the absence of confusion around the party’s identity, including because the respondent (the applicant in the arbitration) had used both the formal and abbreviated names, the court granted leave to amend the notice of application to reflect the full corporate name and resolved the standing issue on the same basis. The court also recognized the Award, rejecting the allegations of partiality of the arbitrator. The respondent had previously made allegations in the arbitration about the arbitrator’s lack of impartiality, which were rejected. The respondent did not challenge this decision.

August 1, 2023August 1, 2023

Ontario – Courts will also enforce agreements in favour of court proceedings – #758

In Eurofins Experchem Laboratories, Inc. v BevCanna Operating Corp., 2023 ONSC 4015, the Court dismissed an application by Defendant BevCanna Operating Corp (“BevCanna”) for a permanent stay of the action or alternatively, a permanent stay of any claims caught by the arbitration clause in the agreement between BevCanna and the Plaintiff, Eurofins Experchem Laboratories, Inc. (“Eurofins”). The Court found that Eurofins’s claim sought recovery of unpaid fees under the parties’ contract, even though it also included claims for breach of fiduciary duty and unjust enrichment. Claims for unpaid fees fell within an exception to the mandatory arbitration clause. It permitted (but did not require) claims for unpaid fees to be brought in the courts. In reaching this conclusion, the Court considered whether the essential character, or pith and substance of the dispute, was covered by the arbitration clause. This focus ensures that parties are held to their agreement and avoids attempts by clever counsel to plead their way around an arbitration clause.

July 20, 2023July 17, 2023

Ontario – When is an appeal of a stay decision barred? – #757

In Leon v Dealnet Capital Corporation, 2023 ONSC 3657, the Appellant, John Leon, appealed an order that stayed his action for breach of an employment contract in favour of arbitration, pursuant to section 7(1) of the Ontario Arbitration Act, 1991, S.O. 1991, c. 17 (“Arbitration Act”). Section 7(6) of the Arbitration Act provides that there is no appeal from stay decisions under section 7. However, the Appellant argued that section 7(6) did not apply in this case based on the recent decision of Goberdan v. Knights of Columbus, 2023 ONCA 327 (“Goberdan”) and the line of cases cited therein. Those cases stand for the proposition that if there is no arbitration agreement, the Arbitration Act does not apply and section 7(6) does not bar an appeal. In Goberdan, the motions judge concluded that there was no arbitration agreement because there had been no consideration for the contracts and therefore no contracts. As there was no arbitration agreement, the Court of Appeal found that the Arbitration Act including section 7(6) did not apply to bar the appeal. Here, it was argued that section 7(6) did not apply because the employment agreement, and therefore the arbitration clause, were void ab initio because the contract contracted out of the Employment Standards Act, 2000, S.O. 2000 c. 41 (“ESA”) contrary to the Ontario Court of Appeal decision in Heller v. Uber Technologies Inc., 2019 ONCA 1 (“Heller CA”). Heller CA held, among other things, that an arbitration clause in an agreement between a presumed employer and employee was invalid as it constituted an illegal contracting out of the ESA.

July 6, 2023June 29, 2023

Ontario – No contracting out of the Model Law – #752

In EDE Capital Inc. v Guan, 2023 ONSC 3273, Justice Vermette dismissed a set-aside application on the basis that the applicant had failed to make out a breach of procedural fairness or lack of jurisdiction. In doing so, Justice Vermette also held that the applicable legislation in this case was the Model Law, despite the fact that the parties’ arbitration agreement referred to the domestic arbitration act.

July 4, 2023July 4, 2023

Ontario – Arbitration procedurally unfair – arbitrator excluded material evidence despite no objection – #750

In Mattamy (Downsview) Limited v KSV Restructuring Inc. (Urbancorp), 2023 ONSC 3013, Justice Kimmel of the Ontario Superior Court of Justice (Commercial List) set aside an arbitral award for violating procedural fairness. She found the Arbitrator acted unfairly in declining to admit relevant evidence on a new issue he himself raised in the arbitration. This decision reminds us that an arbitral tribunal’s procedural discretion, though vast and powerful, is not absolute.

June 22, 2023June 19, 2023

Ontario – Doctrine of separability cannot apply where contract nonexistent – #749

In Ismail v. First York Holdings Inc., 2023 ONCA 332, the Court of Appeal for Ontario upheld an order denying the appellant’s motion to stay an action in favor of arbitration under s. 7 of the Arbitration Act. The motion judge had denied the order because the motion was based on an arbitration clause in an agreement that was never legally formed. This deprived the alleged arbitration clause of any legal force. This case illustrates one of the rare instances to which the doctrine of separability of the arbitration agreement cannot extend.

June 21, 2023June 23, 2023

Ontario – Courts must decide arbitral jurisdiction de novo – #748

In Russian Federation v. Luxtona Limited, 2023 ONCA 393, the Ontario Court of Appeal held that in an application to Ontario courts under the UNCITRAL Model Law on International Commercial Arbitration (the “Model Law”), being Schedule 2 to the International Commercial Arbitration Act, 2017, c. 2, Sched. 5, for the court to decide whether an arbitral tribunal had jurisdiction, the court must decide the jurisdictional question de novo. In other words, there is no deference owed to the arbitral tribunal on the question of that tribunal’s jurisdiction. The Court reached this conclusion after considering the strong international consensus to that effect, and reaffirmed the “uniformity principle”, which holds that it is “strongly desirable” for Ontario’s international arbitration regime to be interpreted coherently with that of other countries.

June 20, 2023June 20, 2023

Ontario – No re-litigation when issues have already been fully arbitrated – #747

In Doria v. Warner Bros. Entertainment Canada inc., 2023 ONCA 321, the Court dismissed the appeal of a decision striking Appellant’s Statement of Claim on the ground that it was an abuse of process because it sought to relitigate issues that had already been fully arbitrated. The Court of Appeal confirmed Justice Koehnen’s decision, even though the Statement of Claim sought damages from third parties to the arbitration. Reviewing the application of section 139 (1) of the Courts of Justice Act, R.S.O. 1990, c. C.43, the Court of Appeal confirmed that this section does not give the broad right to sue jointly liable parties separately. That provision states that where persons are jointly and severally liable in respect of the same cause of action, a judgment or release of one of them does not preclude judgment against any other in the same or a separate proceeding. In this case, the provision did not apply. The Appellant’s claim was fully heard, and the Appellant was compensated through the arbitration process and award. Section 139 does now allow for the re-litigation of issues against third parties because the claimant is not satisfied with the decision, whether the decision arose from arbitration or from a court.