Justice Morawetz of the Ontario Superior Court (also a celebrity
among lawyers for being the Morawetz in the trio of Houlden,
Morawetz, & Sarra, authors of the Annotated Bankruptcy and
Insolvency Act) announced last week (on March 8) that the next
step in the long-running Nortel insolvency proceedings would be a
cross-border joint trial to carve up the rump of Nortel's
liquidated assets (approximately $9 billion). The trial will be
held in conjunction with the United States Bankruptcy Court for
Delaware. The procedural niceties are yet to be sorted out, but the
aim of this unprecedented decision is to avoid contradictory
findings in both jurisdictions and achieve an efficiency to reduce
litigation costs, given the long history of the Nortel
The joint trial mechanism was chosen in the face of another
option, favoured by the European participants in the Nortel
bankruptcy: arbitration. Arbitral panels regularly make decisions
which take into account multiple jurisdictions and sets of laws,
and the panel can involve lawyers or experts from more than one
country. Arbitration is usually seen as a highly effective tool for
dealing with international disputes efficiently. Most sets of
arbitration rules specifically contemplate a global scope. Yet,
arbitration was rejected, as the issues at stake in Nortel were too
high-profile and important for a private dispute-resolution
mechanism to be used, and, possibly, it was believed that no cost
savings would be realized.
The joint trial can be expected to occur before the end of the
year. It will be a history-making event, technologically, legally,
and procedurally, for the judicial system in Canada.
Meanwhile, in the United States, the question of the
enforceability of arbitration agreements is making an appearance in
the Supreme Court. On February 27, the Court heard oral arguments
in American Express v. Italian Colors Restaurant. The case
is filed as a class action against American Express related to the
credit card's acceptance fee policies. American Express is
attempting to force the plaintiff vendors to arbitrate the dispute,
relying on an arbitration clause in their agreement. The Second
Circuit Court of Appeals (which covers New York, Connecticut, and
Vermont) invalidated the arbitration clause, on the basis that it
effectively prevented the vendors from exercising their anti-trust
(competition law) statutory rights. The issue before the Court is
whether the Arbitration Act, a Federal law passed by the
United States Congress to facilitate arbitrations, sets aside those
There is precedent for this idea in the form of the United
States Supreme Court's 2011 decision in AT&T Mobility
LLC v. Concepcion, in which the arbitration act was held to
trump state laws that themselves invalidate arbitration clauses in
consumer agreements. If the Supreme Court applies
Concepcion and allows the appeal, arbitration in the
United States will be further enshrined as a valid alternative to
Court processes specifically designed to protect collective rights
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In Irwin v. Alberta Veterinary Medical Association, 2015 ABCA 396, the Alberta Court of Appeal found that the "ABVMA" failed to afford procedural fairness to a veterinarian undergoing an incapacity assessment.
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