Ontario Archives - Page 7 of 32 - Arbitration Matters

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.

June 19, 2023June 20, 2023

Ontario – Appeal allowed where arbitration agreement “invalid”; Arbitration Act not engaged – #746

In Goberdhan v Knights of Columbus, 2023 ONCA 327 , the Ontario Court of Appeal dismissed an appeal of an order dismissing the Defendant’s/Appellant’s motion for a stay of proceedings in favour of arbitration. The motion judge found that the contracts containing the arbitration agreements were invalid for lack of consideration. He therefore refused the stay pursuant to s. 7(2)2 of the Ontario Arbitration Act, 1991 SO 1991, c 17. The Plaintiff/Respondent argued that no appeal was permitted under s. 7(6), which prohibits an appeal of a stay decision. The Court of Appeal disagreed and found that because the contracts and the arbitration clauses were invalid, the Arbitration Act,1991, was not engaged and there was no prohibition on appeal. The appeal was dismissed on its merits.

June 6, 2023June 20, 2023

Ontario – Competing “jurisdiction” clauses result in application for stay being dismissed – #743

In RH20 North America Inc. et al v. Bergmann et al, 2023 ONSC 2378, the moving defendants brought both a motion under Rule 21 striking out certain of the plaintiff’s claims as disclosing no reasonable cause of action, and an application for a stay for want of jurisdiction on the basis of arbitration clauses in their underlying contracts with the plaintiffs. They met with divided success. While granting relief on the Rule 21 motion, Justice Valente dismissed the stay application on a variety of grounds, including that there were competing arbitration and jurisdiction clauses and that there was an attornment to the court’s jurisdiction as a result of bringing the Rule 21 motion.

June 5, 2023June 5, 2023

Ontario – No hearing de novo in case of challenge to procedural fairness – #742

In All Communications Networks of Canada v. Planet Energy Corp., 2023 ONCA 319, the Court dismissed the appeal of a judgment upholding an arbitral award in favour of Respondent All Communications Networks of Canada (“ACN”) in the amount of $29,259,787 and made an order enforcing the award. In first instance, Planet Energy Corp. (“Planet”) sought to set aside the arbitral award based on the failure of due process, arguing: (1) that it was not given the opportunity to present its case; and (2) that the Arbitrator’s ruling violated public policy. Before the Court of Appeal, Appellant Planet raised the additional argument that the first instance judge failed to apply the right standard of review. Planet argued that a de novo hearing was required to examine properly the arguments raised against the arbitral award. The Court of Appeal dismissed Planet’s arguments and confirmed that a party seeking to set aside an arbitral award based on a failure of due process must prove that the Arbitrator’s conduct is serious enough to dismiss the application to enforce the award under the law of the enforcing State (here, Ontario). The Court of Appeal also confirmed that a party seeking to set aside an award based on a violation of public policy shall demonstrate that the award offends Ontario’s principles of justice and fairness in a fundamental way.

May 24, 2023May 24, 2023

Ontario – Peace River “arguable case” standard applies to ICAA stay motion – #739

Husky Food Importers & Distributors Ltd v JH Whittaker & Sons Limited and Star Marketing Ltd, 2023 ONCA 260 addresses the standard of proof that a party seeking a stay of proceedings under s. 9 of the International Commercial Arbitration Act, 2017, S.O. 2017, c. 2, Sch. 5 (“ICAA”) must meet in order to establish the existence of an arbitration agreement that grounds the stay of proceedings. The Court of Appeal found that Peace River Hydro Partners v Petrowest Corp, 2022 SCC 41 supersedes the stay analysis articulated in Haas v. Gunasekaram, 2016 ONCA 744.

May 23, 2023May 26, 2023

Ontario – International award not enforced because of improper notice – #738

In Tianjin Dinghui Hongjun Equity Investment Partnership v. Du, 2023 ONSC 1808, Justice Kimmel refused to recognize and enforce a $120 million arbitral award in a Shenzhen Court of International Arbitration (“SCIA”) arbitration seated in Shenzhen, China against two individual respondents, Mr. and Mrs. Du, who were resident in both Canada and China. She found that the Dus had not been given proper notice of the arbitration within the meaning of Article 36(1)(a)(ii) of 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. By extension, the Dus were also unable to present their case.

May 11, 2023May 8, 2023

Ontario – No appeal where parties agree dispute “finally settled” by arbitration – #737

In Baffinland Iron Mines LP v. Tower-EBC G.P./S.E.N.C., 2023 ONCA 245, Baffinland Iron Mines LP (“BIM”) appealed a decision of Justice Laurence A. Pattillo dismissing its application for leave to appeal an arbitral award. Justice Pattillo had dismissed the application on the basis that the relevant arbitration agreements precluded appeals. BIM then sought to appeal that decision. Tower-EBC G.P./S.E.N.C (“TEBC”) moved to quash the appeal on the basis that there is no right to appeal from a denial of leave to appeal. The Court of Appeal dismissed the application to quash, holding that BIM’s appeal fell within a “narrow category of cases” that are an exception to the rule that there is no right to appeal from a denial of leave to appeal. Those are ones where it is alleged, as here, that the application judge mistakenly declined jurisdiction to consider the leave issues. The appeal itself, however, was also dismissed. The Court of Appeal found that the application judge’s interpretation of the arbitration agreements was correct. The Court concluded, among other things, that in the dispute resolution clause the phrase “finally settled” (used in relation to an arbitration) meant the same as the phrase “final and binding” (used in relation to decisions of a Dispute Arbitration Board, the “DAB”). Both resulted in there being no further recourse from the arbitral award by way of appeal.

May 8, 2023May 8, 2023

Ontario – Multiple arbitral appointments give rise to reasonable apprehension of bias – #734

In Aroma Franchise Company Inc. et al. v Aroma Espresso Bar Canada Inc. et al., 2023 ONSC 1827, Justice Steele set aside two international awards (on the merits and as to costs and interest) arising out of a franchise dispute on the basis of a reasonable apprehension of bias on the part of the Arbitrator for failure to disclose that during the arbitration he had been appointed by counsel for one of the parties to serve as sole arbitrator on another matter even though it did not involve a franchise dispute and was in a different industry.

April 27, 2023April 24, 2023

Ontario –Arbitrator erred by allowing surrounding circumstances to overwhelm written agreement – #733

In Burwell v. Wozniak, 2023 ONSC 1685, Justice Jensen of found that the Arbitrator erred in law by allowing a promise in an email to overwhelm the words of a subsequent formal trust agreement. The Court varied the Arbitrator’s decision about the formation of a trust, holding that the Arbitrator’s reliance on surrounding circumstances while downplaying the words of the subsequently formalized agreement, gave rise to an extricable error of law.