Québec Archives - Arbitration Matters

November 22, 2024November 20, 2024

Québec – Peace River not considered where referral to arbitration sought under LACC/CCAA – #877

In 9327-6269 Québec inc. and Banque de Montréal, 2024 QCCS 3399, the Court dismissed the Creditor Applicants’ demand to lift the stay of proceedings under the Loi sur les arrangements avec les créanciers des compagnies (LACC)/ Companies’ Creditors Arrangement Act (CCAA) so that they could file proceedings against one of the Debtors (Laboratoires C.O.P. inc.) in a New York-seated arbitration, where they sought to be declared owners of potential tax credits and refunds to which they alleged they were entitled as part of the selling price under a Sale Purchase Agreement between the Applicants and the Debtors’ shareholders. The Sale Purchase Agreement contained an arbitration clause. The Applicants argued that under New York law the Sale Purchase Agreement created a constructive trust in their favour, as a result of which the tax credits and refunds received or to be received by the Debtor were never included in the Debtor’s assets. Therefore, the Applicants argued that they should not be subject to the CCAA. The Court dismissed the Applicants’ motion. Even if the Applicants obtained a favourable ruling from the arbitration tribunal, it would be ineffective because the constructive trust concept is not recognized under Québec law and it would be detrimental to other creditors of the Debtor. In any event, the arbitral award would not modify the distribution order of the Debtors’ assets to their creditors under the CCAA because, when a conflict of law arises, the CCAA’s application is governed by the lex fori, in this case Québec. Foreign law should not alter the outcome of the CCAA’s implementation due to its rehabilitative purpose. Therefore, lifting the stay would not help the Applicants and would only cause the CCAA procedure to be delayed.

October 25, 2024October 18, 2024

Québec – Award that violates municipal by-law does not offend public policy – #871

In Bélanger c Beauchamp, 2024 QCCS 3118, the Court homologated several awards rendered in the context of a dispute between two co-owners of an undivided property concerning the location and size of their parking spaces. The Defendant contested the homologation of one of the awards based on public policy grounds, alleging that the award violated a municipal by-law. The Court ruled that any violation of the municipal by-law that would result from the award did not amount to a public policy violation that justified refusing homologation, because it would not be a violation that offends the fundamental values underlying Québec public policy. The Court also decided that an award rejecting one of the parties’ applications for recusal of the arbitrator did not constitute an award within the meaning of the Québec Code of Civil Procedure (“CCP”), and so could not be homologated. This latter issue is not addressed in this case note.

September 25, 2024September 27, 2024

Québec – Parties May Agree Upon an Arbitral Appeal Mechanism – #864

In McLaren Automotive Incorporated c. 9727272 Canada Inc (unreported, rendered on August 2, 2024 in File no. 540-17-015649-328), the Superior Court of Quebec confirmed that parties may agree upon an arbitral appeal mechanism, despite article 648 of the Code of Civil Procedure (“CCP”), which states the only recourse against a final award is homologation or annulment. In this case, an arbitration appeal panel appointed by the parties overturned the decision of the arbitrator, in which he denied having jurisdiction over the dispute. The Claimant then applied to the Superior Court of Quebec, requesting the homologation of the arbitrator’s decision and the annulment of the appeal panel’s decision. In this first decision addressing the validity of an arbitral appeal process, the Court confirmed the validity and jurisdiction of the appeal panel and concluded that the existence and the decision of the appeal panel was valid, considering both the relevant articles of the CCP and the UNCITRAL Model Law on International Commercial Arbitration (the “Model Law”).

September 9, 2024September 9, 2024

Québec – First consideration of test for stay application for annulment application – #860

In ADRAQ (CSD) Laurentides c. Hamelin, 2024 QCCS 2324, the Court dismissed a motion brought pursuant to section 648 CCP to stay an application for annulment of an award to give the arbitrator the opportunity to correct it to eliminate the grounds for annulment. This is the first case to consider section 648 CCP. The Court developed the list of factors to be considered on such a motion. It also ruled that it has broad discretion in deciding a motion for a stay under section 648. In light of the preceding, the Court ruled that the judge deciding the merits of the application for annulment should decide the stay motion. That judge would have a better understanding of the case to determine whether a stay is appropriate considering the allegations, including alleged bias against the arbitrator, which the Court found were serious, and the respondent’s denial of the very existence of any grounds for annulment, leaving no place at this stage, for the arbitrator to correct his award. Therefore, the Court dismissed the respondent’s demand to stay the application for annulment.

August 30, 2024August 30, 2024

Québec – Multiple arbitrator challenges res judicata and abuse of process – #859

In B Smart Technology Inc. v Norstan Communications Inc., 2024 QCCS 2416 (“B Smart”), the Court considered an application by Norstan Communications Inc. (“Norstan”) to dismiss originating applications of B Smart, in which B Smart sought an order to replace the arbitrator who was appointed to resolve their dispute. B Smart alleged that the arbitrator was biased and that his appointment was improper. What was important to the Court’s analysis was that B Smart had brought an earlier application before the Court to challenge this same arbitrator’s appointment. That judge held that the arbitrator was impartial and that his appointment was proper. Given those findings, the Court found that res judicata applied as a full answer to B Smart’s allegations and the application was dismissed. The Court also found that B Smart’s multiple attempts to challenge the arbitrator were an abuse of process.

August 28, 2024September 3, 2024

Québec – Court finds separate arbitration agreement, despite arbitration clause in contract – #857

In Roxboro Excavation Inc. v. Delsan-AIM Environmental Services Inc., 2024 QCCS 2331 the Court declined to hear a dispute between the Applicant, Roxboro Excavation Inc. (“Roxboro”), and the Defendant, Les Services environnementales Delsan-A.I.M. Inc. (“Delsan”), on the grounds that it lacked jurisdiction because the parties had agreed to submit the matter to arbitration. Even though the subject contract included an arbitration clause, the Court did not interpret the clause or otherwise consider whether that clause required the parties to arbitrate the disputes. The Court instead focussed its analysis and decision on a separate agreement the parties had negotiated to resolve their disputes by arbitration and not in court.

August 14, 2024August 12, 2024

Québec – Any competent court can issue interim measures regardless of arbitral seat – #854

In GlobeAir Holding GmbH c. Pratt & Whitney Canada Corp., 2024 QCCS 2451, the Court referred a claim to arbitration and, despite confirming its jurisdiction to do so, refused to issue interim measures. The Plaintiffs had argued that the claim, based in statute rather than contractual obligations, fell outside the scope of the arbitration clause, but the Court drew on the broad language of the clause to find otherwise. Then, after confirming that the Court had jurisdiction to issue interim measures even though the dispute was referred to arbitration seated in Ontario, it concluded that no prima facie case could be made to grant Plaintiffs’ request.

August 2, 2024July 25, 2024

Québec – Petrowest factors applied: arbitration agreement held inoperative in CCAA proceedings – #852

In Arrangement relatif à Endoceutics inc., 2024 QCCS 1482 (CanLII) (“Endoceutics”), the Court, in obiter dicta, cited the stay of proceedings criteria set out in Peace River Hydro Partners v. Petrowest Corp., 2022 SCC 41 (CanLII) (“Petrowest”) and held that it – rather than an arbitral tribunal – could rule on one party’s performance of its obligations under a contract governed by an arbitration agreement in the context of the analysis required by section 32(6) of the Companies’ Creditors Arrangement Act, R.S.C., 1985, c. C-36 (the “CCAA”). Section 32 allows a debtor company to disclaim or resiliate any agreement to which the company is a party on the day on which proceedings under the CCAA commence (subject to certain conditions).

July 3, 2024August 28, 2024

Québec – Arbitrator Need Not Recuse Himself for “Conflict” Created by Party – #845

In Groupe Marsan inc. c. Centre Canadien d’Arbitrage Commercial (CCAC), 2024 QCCS 1838, the Court dismissed the application of Groupe Marsan (“Marsan”), which sought review of a decision by the Arbitrator, who refused to recuse himself (the “Arbitrator’s Decision”). Concurrent with the ongoing arbitrations, the Arbitrator was also acting as counsel in a parallel proceeding before the Court involving different parties, in which Marsan’s counsel in the arbitrations acted for the opposing party. According to Marsan, this situation raised a reasonable apprehension of bias and the Arbitrator’s refusal to recuse himself violated procedural fairness. The Court found that the Arbitrator rightly concluded that the situation of concurrent representation was created by Marsan’s counsel and that the Arbitrator’s Decision met the standard of procedural fairness.

May 10, 2024May 3, 2024

Québec – Attempt to circumvent ICC Tribunal order amounts to fraud (in Canada) – #834

In Eurobank Ergasias S.A. v. Bombardier inc., 2024 SCC 11, the Court held that a call on a bank guarantee in contravention of an order of an arbitral tribunal in a pending ICC arbitration amounted to fraud under Canadian law, such that the bank that issued a related counter-guarantee was required to refuse payment.