Québec – Arbitration clauses bind parties only, even if parallel proceedings – #780

In Clinique Ovo inc. v. Elite IVF, 2023 QCCA 1097, the Court determined that an arbitration clause barred some, but not all third-party claims. The factual matrix underlying this decision is convoluted: two agreements; similar but not identical arbitration clauses; and multiple actors. The background facts are sensational: an alleged fraudulent in vitro impregnation involving parties in Geneva and Cyprus; a birth in Monaco; disputed support payments required from a bewildered father; and, inevitably, litigation with third-party claims raising issues of arbitration clause interface with the court proceedings. Against this backdrop, the Court of Appeal decision is grounded in a key and decisive first principle: arbitration clauses bind parties to the agreement, not strangers. 

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Québec – “Uniformity principle” drives appointment of French amicus curiae to harmonize Québec law – #774

This case note reports on a trilogy of case management decisions that arose in the context of an application by the Claimant under art. 632 of the Code of Civil Procedure, RLRQ, c C-25.01 (“CCP”) challenging a tribunal’s jurisdiction to determine claims brought by the Respondent, which the Claimant alleged were new claims made after numerous rounds of written submissions – and thus outside the tribunal’s jurisdiction –  in a commercial arbitration relating to a lease agreement (the “Arbitration”). The key issues decided were: (1) a court conducts a hearing de novo when deciding an objection to a tribunal’s ruling on its own jurisdiction (Hypertec Real Estate Inc c Equinix Canada Ltd, 2023 QCCS 2103); (2) Claimant’s application for an interim stay of arbitral proceedings during the pendency of its jurisdictional challenge was denied (Hypertec Real Estate Inc c Equinix Canada Ltd, 2023 QCCS 2098); and (3) the Court appointed a French amicus curiae with expertise in international law to assist it during the jurisdictional hearing, invoking the Court’s duty to abide by the uniformity principle in interpreting Québec legislation based on the Model Law (Hypertec Real Estate Inc c Equinix Canada Ltd, 2023 QCCS 3061).

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Québec – Arbitration counsel not disqualified, despite opposing party paying underlying transaction fees – #771

In Glen Eagle Resources Inc. c. GEM Global Yield, 2023 QCCS 3144, the Court determined that a law firm was not disqualified from acting as counsel in annulment and enforcement proceedings when it acted for one party, but  a portion of the legal fees were paid by the opposing party in the transaction giving rise to arbitration. But it raises a potential red flag for counsel.

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Québec – Arbitrator wrong to extend arbitration agreement to include third-party employees – #769

The Superior Court of Québec in Mullen c. Nakisa inc., 2023 QCCS 2678 held that employees not party to an arbitration agreement should not be added as parties to an ongoing arbitration. There is no support for the proposition that all third parties that are in some way related to the signatory parties of an arbitration agreement should be bound by it. This decision on the merits follows the stay granted by the Superior Court in October 2021 (Mullen c. Nakisa inc., 2021 QCCS 4388), covered in Case Note Québec – Stay of arbitrator’s decision to add third parties, force them to meet timetable, and refusal to hear them without payment – #553.

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Québec – No evidence permitted in support of annulment application – #765

In Glen Eagle Resources Inc. v. Gem Yield Bahamas Ltd, 2023 QCCA 686, the Court of Appeal dismissed Appellant’s application for leave to appeal the Superior Court’s decision dismissing Appellant’s request to adduce evidence in support of its application for annulment of an arbitral award. The lower court dismissed Appellant’s request to have a witness testify in support of its argument that the contract containing the arbitration clause was void. Appellant argued that the nullity of the contract would lead to the conclusion that the arbitrator had no jurisdiction. Respondent, which applied for homologation of the award, argued that the lower court had no jurisdiction to hear evidence on the merits of the arbitration on an application to annul the award and that, in any event, the arbitration clause was a separate contract, not affected by the nullity of the contract in which it was included. Following the Superior Court’s decision, the hearing before it was suspended until the Court of Appeal’s decision on the matter.

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Québec – Arbitrator has jurisdiction to decide derivative action without court authorization – #753

In Tidan inc. c. Trria Design inc., 2023 QCCS 1746, the Superior Court of Québec dismissed an application by the Respondent to an arbitration, Tidan inc., under article 632 of the Québec Code of Civil Procedure, C-25.01 (CCP) to find that the arbitrator had erred in concluding that he had jurisdiction to hear all the claims submitted to arbitration by the Claimant, Trria Design inc. The Respondent argued that some of the claims were unarbitrable as they were derivative claims, which must be authorized by the Superior Court pursuant to Article 445 of the Québec Business Corporations Act (BCA). The Court found that the parties’ arbitration agreement was broadly drafted and gave the arbitrator the jurisdiction over, “any dispute which might arise as to the interpretation or the application of this agreement”, which included oppression remedy and derivative claims.

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Québec – Interpretation of two shareholder agreements requires more than a superficial analysis – #725

In Gifran inc. c. 9225-2071 Québec inc., 2023 QCCA 311, the Québec Court of Appeal (the “Court”) recalled the principles governing an exception to the compétence-compétence principle and ordered a stay in favor of arbitration, overturning the Superior Court Judge’s decision. The Court commented on the scope of the exception relating to questions of mixed fact and law that require only superficial consideration of the evidence in the record, in the context of a shareholder dispute. It noted that the Superior Court Judge had not provided reasons as to why the exception applied in this case and found that the exception did not in fact apply, because an in-depth analysis of the respective scopes of two separate shareholder agreements (one with an arbitration clause and one without) was required. The Court also held that the mere presence of related third parties in the dispute was not sufficient to deny the stay application.

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Québec – Class Actions: rules for referral to arbitration should be followed – #717

In Vidéotron c. 9238-0831 Québec inc. (Caféier-Boustifo), 2023 QCCA 110, the Court of Appeal dismissed Vidéotron’s appeal and confirmed Justice Lussier’s first instance judgement dismissing Vidéotron’s request to limit the definition of the plaintiff group in a class action to only those customers whose contracts do not contain an arbitration clause. After the application for authorization was filed but before it was decided, Vidéotron amended its contracts with all new customers so that they contained an arbitration clause. Almost three years later, it sought to change the definition of the plaintiff group so that it included only those customers with contracts that pre-dated the amendment to include an arbitration clause.  Justice Lussier found that Vidéotron was out of time. The Court of Appeal confirmed that section 622 CCP and its 45-day limit for an application for referral to arbitration are applicable to class action proceedings as well as to any other proceedings. Even if this limit is not de rigueur, the party asking for referral to arbitration has the burden of proof to justify any added delay. The Court of Appeal also reaffirmed that, based on an arbitration clause, the motion to request a modification to a plaintiff group in a class action is equivalent to a jurisdiction challenge. The Court of Appeal confirmed Justice Lussier’s ruling that Vidéotron did not meet its burden of proof to justify its delay to file its application to change the definition of the plaintiff class.

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Québec – Court rejects foreign state immunity to award enforcement – #710

In CC/Devas (Mauritius) Ltd v. Republic of India, 2022 QCCS 4785, Justice Pinsonnault rejected the Republic of India’s effort to invoke state immunity in response to an application seeking the recognition and enforcement of two investment treaty awards. He found that the Plaintiffs had met their burden to prove that (1) the commercial activities exception applied, and (2) India had waived state immunity to enforcement proceedings.

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