notes on new arbitration cases in Canada
In 2024, for the first time, two appeal courts considered the “brick wall” exception to competence-competence set out in Uber Technologies Inc. v. Heller, 2020 SCC 16 (“Uber”).
Continue reading “Julie’s 2024 Hot Topic – Exceptions to Competence-Competence Litigated in Appellate Courts in 2024 – #883”
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.
Continue reading “Québec – Peace River not considered where referral to arbitration sought under LACC/CCAA – #877”
In Wiederhold v Aspen Technology, Inc., 2024 BCSC 1731, the Court declined to grant a stay application under s. 7 of the Arbitration Act, SBC 2020, c. 2 [Act], on the basis that the arbitration clause was unenforceable for lack of consideration, contrary to public policy, and unconscionable. It applied the “brick wall framework” described in Spark Event Rentals Ltd. v Google LLC, 2024 BCCA 148 at paragraphs 19 ss.
Continue reading “B.C. – Stay motion test and the “brick wall framework” – #874”
Crosby Molasses Company Limited v. Scot Stuttgart (Ship), 2024 FC 1358 highlights a little-known provision in Canadian maritime law that is being interpreted in a way that ignores arbitration law principles and overrides arbitration clauses in the context of international maritime carriage of goods. The provision, section 46(1) of the Marine Liability Act, SC 2001, c 6 (“Marine Liability Act”) states that, “if a contract for the carriage of goods by water provides for the adjudication or arbitration of claims… in a place other than Canada, a claimant may institute judicial or arbitral proceedings in a court or arbitral tribunal in Canada...”
Continue reading “Federal Court – Section 46(1) of Marine Liability Act gives claimant option to avoid arbitration – #870”
In Bains and 10031670 Manitoba Ltd. v. Tworek et al, 2024 MBKB 111, the Court dismissed a motion to stay two court proceedings in favour of arbitration. In doing so, the Court ran afoul of some settled principles in Canadian (and international) arbitration law. These include interpreting the scope of the arbitration agreements, the test for a stay of proceedings in favour of arbitration, the separability presumption and concerns over inefficiency and multiplicity of proceedings where the dispute concerns both signatories and non-signatories to the arbitration agreement.
Continue reading “Manitoba – Court denies stay in favour of arbitration for several (suspect) reasons – #868”
Montaigne Group Ltd. v St. Alcuin College for the Liberal Arts Society, 2024 BCSC 1465 concerns the issue of whether the Court should grant a stay of domestic proceedings in favour of arbitration after the defendant who sought the stay, St. Alcuin, first brought a motion before the court to strike the claims. Because this involved seeking substantive relief from the Court, it held that the defendant had attorned to the Court’s jurisdiction and waived its right to arbitration and also taken steps that rendered the arbitration clause inoperative. Therefore, the stay of proceedings was denied under section 7(2) of the Arbitration Act, S.B.C. 2020, c. 2.
Continue reading “B.C. – Stay of action fails where party first brought motion to strike – #866”
In Sivitilli v PesoRama Inc, 2024 ABCA 249, a single justice of the Alberta Court of Appeal set out and clarified the statutory framework for appeals to the Court of Appeal arising from challenges to arbitrations made on the basis that: (1) the arbitration agreement is invalid (s. 47 of the Arbitration Act); or (2) that court intervention is needed to prevent unfair or unequal treatment of a party to an arbitration agreement (s. 6(c)). The appeal route to the Court of Appeal for challenges brought pursuant to s. 47 of the Arbitration Act, RSA 2000, c A-43, which includes allegations that the arbitration agreement is invalid, expressly requires leave of the Court of Appeal. The appeal route for challenges to arbitrations made pursuant to s. 6, such as allegations that court intervention is needed to prevent unfair or unequal treatment of a party, are not addressed in the Arbitration Act, and therefore decisions of the first instance court are subject to a general right of appeal under the Alberta Rules of Court. No permission is required to appeal a decision under s. 6.
Continue reading “Alberta – Statutory Framework of Arbitral Appeals Clarified – Leave or No Leave? – #862”
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.
Continue reading “Québec – First consideration of test for stay application for annulment application – #860”
In Colbourne Chrysler Dodge Ram Ltd., v. MacDonald et al. v Colbourne, MacDougall, and Denny, 2024 NSSC 204, the Court stayed an action in favour of arbitration. Of interest to readers of this blog, the stay was made “subject to the parties moving forward in an efficient and expeditious manner” with the arbitration. The Court also ordered the arbitrator – notwithstanding that none had been appointed – to “in the first instance, determine any jurisdiction issues and/or defences which may be raised in connection with the claims made against [certain parties which were not signatories to the arbitration agreement].”
Continue reading “Nova Scotia – Court orders stay in favour of arbitration – but with conditions – #858”
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.
Continue reading “Québec – Court finds separate arbitration agreement, despite arbitration clause in contract – #857”