Canada: Alberta Court Warns: Parties Ignore Arbitration Agreements At Their Peril

Lafarge Canada Inc. v Edmonton (City)
Last Updated: April 27 2015
Article by Peter K. Doody

Most Read Contributor in Canada, September 2016

A recent decision of an Alberta court in Lafarge Canada Inc. v Edmonton (City) confirms that a party choosing to commence an action in the face of a valid agreement to arbitrate runs the risk of being left without a remedy. In Lafarge, the court struck Lafarge's claims because the limitation period expired before Lafarge had commenced its claims in the proper forum – arbitration rather than litigation. The court confirmed that commencing litigation when arbitration is the proper forum does not stop the limitation period clock from running, noting that parties must abide by their agreement to arbitrate. The court also said that it was too late to commence arbitration now that the limitation period had expired; it was unmoved by Lafarge's plea that it would be left without a remedy despite its allegation that the defendant had unduly delayed bringing the motion to strike the action. The court held that the expiry of the limitation period was determinative because its jurisdiction to stay or not the action expired with the limitation period; but even if it had such jurisdiction, it would still have struck out the action.


The City of Edmonton ("the City") contracted with Lafarge Canada Inc. ("Lafarge") in May 2007 to supply storm sewer pipe. The contract required Lafarge to deliver pipe on 22 June and 20 July 2007, and specified that if the deliveries were late, the City could set off against the purchase price any damages or costs it had suffered due to the delay. The parties agreed to arbitrate any disputes under the contract. Both deliveries were late. On 24 July 2007, the City advised Lafarge that it would hold Lafarge responsible for its costs due to the late deliveries. Lafarge disputed the City's right to do so. In May 2009, the parties entered into a standstill agreement in which they agreed that neither would assert a limitation period defence to any proceedings commenced within three months from the termination of the agreement. Lafarge terminated the standstill agreement on 2 February 2011 and commenced a court action on 14 February 2011, seeking $889,511, the balance of the contract price held back by the City.

The City submitted a jurisdictional defense to the court on the basis that the parties had agreed to submit any dispute to arbitration. The City's lawyer wrote Lafarge's lawyer, stating that he thought arbitration may be mandatory and suggesting Lafarge commence arbitration within the three-month period. Lafarge did not do so. Instead, it continued with the litigation and, in July 2011, served its affidavit of records in the lawsuit.

The case went to the Alberta courts on three occasions.


First, in June 2012, the City applied to the Court of Queen's Bench for orders striking out the Statement of Claim, staying the action on the basis of the arbitration clause, and declaring that the arbitration of the dispute was barred by the expiry of the limitation period. The court dismissed the City's application, holding that the Statement of Claim was a "commencing document" to start the arbitration and that, since it was issued within the time referred to in the standstill agreement, the arbitration had been "commenced in a timely way".1

On appeal, the Alberta Court of Appeal reversed the lower court's decision holding that an action is a distinctly different process from an arbitration. The court said that the legislature has clearly indicated a policy choice by which a court is required to stay an action commenced in the face of an arbitration clause subject to certain exceptions and discretion – such as in the case of "undue delay". While the notice to commence an arbitration is not required to have any particular form, it must be "clear and unequivocal" in showing an intention to arbitrate rather than litigate a dispute. A Statement of Claim communicates the opposite intention. Consequently, no arbitration had been commenced.2

The result of the court's decision was that Lafarge's only potential recourse was to convince the court to exercise its discretionary power under Alberta's Arbitration Act3 to refuse to stay the proceeding because the City's application to stay had been brought with "undue delay", or that the City had "attorned" to the court's jurisdiction. The Court of Appeal refused to deal with these issues because the record was inadequate and the case returned to the Court of Queen's Bench.


For the case's third trip to court, the City brought a motion to strike the action or, in the alternative, stay it. The court held that it could not consider whether to decline to stay the action because of the City's delay because its jurisdiction to do so under the Arbitration Act expired with the limitation period, i.e., had arbitration still been a possibility, the court would have undertaken a consideration of whether the City had been guilty of undue delay.4 The court reasoned as follows:

... when the parties agree to a mandatory arbitration clause in their contracts, they must submit their claim to arbitration or risk having their litigation claim struck... [O]nce the applicable limitation claim for arbitration is over... the Court's supervisory role is also over. ...[T]he issue of undue delay becomes irrelevant – even if it means that the party having commenced a court action is denied an avenue for recourse.

While this position may seem to be rigid, there is an important underlying policy consideration: to enforce contracts between parties who have agreed to arbitrate. This imposes an onus on the parties to proceed with arbitration if they agreed to do so in their contract. [Emphasis added.]


The court proceeded to consider whether the City had unduly delayed bringing the motion to strike in case an appeal court were to disagree with the above finding. Based on the facts of the case and existing case law on undue delay in the context of stay applications under the Arbitration Act, the court held that the City had not unduly delayed its motion by waiting 16 months after service of the Statement of Claim. The court was comforted by the fact that the City had asserted a jurisdictional defense at the outset of the proceedings and had not participated in the litigation in any meaningful way.

The court concluded that the expiry of the limitation period before the application to stay had been brought did not result in "unfair prejudice" to Lafarge even though it meant that it had no remedy. The court pointed out that the expiry of a limitation period always denies recourse to a claimant. Where the claimant had agreed to arbitrate rather than litigate, the expiry of a limitation period was not sufficient to amount to "undue delay" and justify a court refusing to stay a court action.

As mentioned above, the court held that the City had not waived its right to arbitration. Although, in Canada and elsewhere, it is possible for a party to attorn to a court's jurisdiction and thereby lose its right to arbitrate, simply filing a pleading does not do so in all Canadian provinces, so long as an objection to the court's jurisdiction is raised in a timely manner.

In the result, the court struck the action and granted a declaration that Lafarge was statute barred from commencing its claim.


The Alberta courts' conclusions underline a clear message that parties will be held to their agreement to resolve disputes by arbitration. A claimant who chooses to commence a court action in the face of an arbitration clause does so at its peril. In the Lafarge case, the defendant was permitted to wait until after the applicable limitation period expired before asking the court to strike the claim. Parties to arbitration agreements and their counsel should be cognizant of the relevant limitation periods and local rules on when jurisdictional objections must be raised in order to avoid the potential risk of being left without a remedy.


1 Lafarge Canada Inc. v Edmonton (City), 2012 ABQB 634

2 Lafarge Canada Inc. v Edmonton (City), 2013 ABCA 376

3 RSA 2000, c. A-43

4 Lafarge Canada Inc. v Edmonton (City), 2015 ABQB 56

About BLG

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.