Ontario Archives - Page 14 of 32 - Arbitration Matters

December 21, 2021May 4, 2022

John’s 2021 Top Pick: Ontario – China Yantai Friction Co. Ltd. v. Novalex Inc., 2021 ONSC 3571 and 7714 – #566

My top pick for 2021 stands for the proposition that a foreign award creditor will not be ordered to post security for costs simply by virtue of being a non-resident seeking to recognize and enforce an arbitral award. In China Yantai Friction Co. Ltd. v. Novalex Inc., 2021 ONSC 3571, a three-person panel of the Divisional Court of the Ontario Superior Court of Justice (the “Divisional Court”) granted leave to appeal two interlocutory orders, including the order requiring the foreign award creditor China Yantai Friction Co. Ltd. (“Friction”) to post security for costs in the amount of $76,376.71. This case is important because it provides support for Ontario as an “arbitration-friendly” jurisdiction, and, as the Divisional Court noted, “[13] … it speaks to the response of Canadian courts to international comity and our relationship to the courts of other countries.”

December 16, 2021May 4, 2022

Lisa’s 2021 Top Pick: Ontario – Russian Federation v Luxtona Limited (Part 1) – #564

A review of the 2021 case law shows that the appropriate standard of review of an arbitral award remains uncertain. Russian Federation v Luxtona Limited is interesting because it did not involve an appeal of an arbitral award or a set-aside application, in respect of which there are many court decisions. It considered the standard of review by a court where a tribunal has ruled “as a preliminary question” that it has jurisdiction pursuant to Article 16(3) of the Model Law. It provides that following such a determination by the tribunal, any party may apply to the court to “decide the matter”, which decision shall not be subject to appeal. Comparable provisions also appear in domestic legislation. The question is the role of the reviewing court asked to “decide the matter”. Confusion exists as to whether such a hearing is a “review” or hearing de novo and whether that determination has any bearing upon the standard of review of the arbitral tribunal’s preliminary jurisdiction determination.

December 7, 2021May 4, 2022

Ontario – A reminder of the “hands off” approach of courts in arbitration even with oppression claims and injunctions – #561

In TSCC No. 2364 v. TSCC No. 2442, 2021 ONSC 7689, Justice Myers affirmed the “hands off” approach courts take regarding disputes that are properly the subject of an arbitration clause. The applicant condominium corporation sought an order by way of an oppression remedy or an injunction precluding the respondent condominium corporation from drawing amounts from a bank account for shared management services. The parties had already been through a lengthy arbitration regarding various disputes between them pursuant to a shared facilities agreement. Justice Myers held that the proper forum for the new disputes was arbitration.

November 26, 2021May 4, 2022

Ontario – Motion to quash appeal dismissed in light of conflicting policy implications – #558

In considering whether to grant a motion to quash an appeal in Leon v. Dealnet, 2021 ONSC 7192, Justice Kristjanson of the Ontario Divisional Court was faced with two conflicting policy concerns: respect for and giving effect to arbitration agreements and protecting vulnerable workers by ensuring that the arbitration agreement did not constitute a contracting out of an employee’s statutory rights

November 25, 2021May 4, 2022

Ontario – Appeal of award dismissed after party refused to participate – #557

In Vanhof & Blokker Ltd. v Vanhoff & Blokker Acquisition Corp., 2021 ONSC 7211, the Respondents/Appellants on Appeal (“the Sellers”) sold the assets of their horticultural and garden supply business to the Applicants/Respondents on Appeal (“the Purchasers”) pursuant to an Asset Purchase Agreement dated December 29, 2014. The Sellers alleged that the Purchasers breached the terms of the Asset Purchase Agreement and they therefore refused to make payments under the Agreement, claiming that they were induced to enter into the Agreement by fraudulent and negligent misrepresentations made by the Purchasers. The Sellers refused to participate in an arbitration of the dispute and then appealed the final award. Justice Pollack dismissed the appeal, relying upon s. 27(3) of the Arbitration Act, 1991, S.O. 1991, c. 17, on the basis that the Sellers had been advised of the date for the arbitration and had filed material, but had failed to participate. They were obliged to raise their objections about the arbitrator’s jurisdiction before the arbitrator at the hearing, rather than by letter.

November 24, 2021May 4, 2022

Ontario – Historic arbitration decision is not probative evidence in interpretation of a Treaty – #556

In Restoule v. Canada (Attorney General), 2021 ONCA 779, the Ontario Court of Appeal discussed the evidentiary value of an arbitration record – from an arbitration between Canada, Ontario and Quebec over responsibility for annuity payments under a Treaty with First Nations signed forty years before the arbitration – in the context of present-day litigation between the Treaty beneficiaries and the Province of Ontario over increases in those annuities. Because of the lack of temporal proximity between the historic arbitration and Treaty formation, and the fact that the evidence at that arbitration was entirely given by potential payors under the Treaty, the arbitration record needed to be viewed with caution. It was not helpful post-Treaty evidence in interpreting the intentions of the parties at the time of Treaty formation.

October 26, 2021May 4, 2022

Ontario – Court of Appeal does not address whether Vavilov changed the standard of review – #546

In Ontario First Nations (2008) Limited Partnership v. Ontario Lottery and Gaming Corporation, 2021 ONCA 592, Justice Jamal (as he then was), writing for the Court of Appeal, found that it was unnecessary to address whether Vavilov changed the standard of review analysis in Sattva and Teal Cedar in an appeal from a commercial arbitration decision. Justice Jamal held that the parties’ disagreement as to how the applicable principles of contractual interpretation should be applied to the contractual facts is, absent an extricable error of law, an exercise of contractual interpretation by a first-instance decision maker on a matter of mixed fact and law that attracts appellant deference. Further, the Court should refrain from deciding issues of law that are unnecessary to the resolution of an appeal.

October 15, 2021May 4, 2022

Ontario – Challenge to arbitrator’s integrity to be determined using bias test – #543

In Farmer v Farmer, 2021 ONSC 5913, the appellant wife appealed three arbitral awards arising out of a five-day family arbitration pursuant to s. 45(6)(a) of the Ontario Arbitration Act, 1991, SO 1991, c. 17. The wife’s grounds for appeal included that the arbitrator’s reasons were deficient and that the arbitrator’s “Clarification/Explanation Award” rendered after the parties complained that he had omitted certain issues in his first award, was an “after-the-fact” justification for the first award. The arbitrator admitted that he had had difficulty with his dictaphone when he had drafted the first award so that certain portions of it were inadvertently omitted, but said in the “Clarification/Explanation Award” that all issues had been considered. Justice Finlayson found that the “presumption of integrity” which applies to judges also applies to arbitrators and that the wife had to meet a test “similar to” the “reasonable apprehension of bias test” to rebut that presumption. She did not do so and this ground of appeal was dismissed. Justice Finlayson also concluded that the arbitrator’s reasons were insufficient, and substituted his own decision on one issue.

October 14, 2021May 4, 2022

Ontario – Court denies stay of order authorizing CCAA sale process despite ongoing arbitration – #542

In Urbancorp Toronto Management Inc. (Re) 2021 ONCA 613, Justice Miller refused to grant a stay pending appeal of an order in a CCAA proceeding authorizing the sale of an interest in a property development. The moving party unsuccessfully argued that the sale should be postponed until the conclusion of an ongoing parallel arbitration, the outcome of which would materially impact the value of the interest. If the sale process was not postponed, the moving party argued, the ongoing arbitration would chill the sale process and it would be impossible to know if a higher sale price could be achieved. Justice Miller held that he could not substitute his own evaluation of the efficacy of the sale process over that of the lower court judge, who had dismissed as speculative the argument that the sale process would suffer a chilling effect.

October 7, 2021May 4, 2022

Ontario – Award enforcement application met with merits arguments in leave to appeal/set aside cross-application #539

In Fogler, Rubinoff LLP v Houle, 2021 ONSC 5626, Justice Vermette heard two applications following an arbitration concerning the assessment of two accounts rendered by applicant, Fogler, Rubinoff LLP, to its clients, respondents Conrad and Sheila Houle. The arbitrator issued an award requiring the respondents to pay. After they did not do so, Foglers brought an enforcement application pursuant to s. 50 of the Ontario Arbitration Act, 1991, S.O. 1991, c. 17. Upon such application, the court “shall” grant judgment so long as the requirements of s. 50(3) are not met – the appeal/set aside deadline has not yet elapsed, there is a pending appeal/set aside application, or the award has been set aside or the arbitration is the subject of an award of a declaration of invalidity. In other words, the merits of the award are not relevant. The respondents did not initially appeal the award, but then brought a cross-application – challenging both jurisdiction and the merits – seeking to set aside the award pursuant to s. 46(1)3 of the Arbitration Act or, in the alternative, leave to appeal the award under s. 45(1). Justice Vermette found that the set aside application was really a request to review the substance of the award on the basis that the arbitrator’s decision was unreasonable or incorrect. She also dismissed the motion for leave to appeal on the ground that it did not raise a question of law. Whether the facts met the required legal test was a matter of mixed fact and law. Therefore, given the dismissal of the respondent’s cross-application, she granted the Foglers enforcement application.