Canada: Courts vs. Private Arbitration: Arbitrators Can Decide Who Has Jurisdiction


The relationship between the Courts and private arbitration is complicated. The growing popularity of arbitration means that establishing judicial principles regarding the interplay of these two forms of dispute resolution is more important than ever. In Husky Oil Operations Limited v Husky Oil Canada Inc, 2017 ABQB 489 ("Husky Oil"), the Court of Queen's Bench heard an application seeking the stay of an arbitration when parallel litigation and arbitration proceedings were taking place. Ultimately, Madam Justice K. Horner dismissed the application and referred the applicant's arguments against proceeding with the arbitration to the arbitrator.

The decision in Husky Oil affirms the Court's policy of non-intervention where parties have chosen to resolve their disputes by arbitration. It demonstrates an arbitration-friendly approach to determining whether jurisdictional challenges to an arbitration should be referred to the arbitrator.


In 2010, Husky Oil Operations Limited ("Husky") entered into a contract with Saipem Canada Inc. ("Saipem") in which Saipem agreed to provide engineering, procurement and construction services to build certain facilities at Husky's Sunrise Energy Project (the "Contract"). The Contract included provisions which prescribed a bifurcated dispute resolution process. In particular, the dispute resolution provisions provided that disputes concerning a narrow set of matters would be submitted to arbitration and that disputes outside that scope would be litigated before the Alberta Courts (the "Arbitration Agreement").

Husky purported to terminate the Contract in March of 2015. Shortly thereafter, Husky filed an action against Saipem in the Alberta Court of Queen's Bench seeking damages in excess of $1.325 billion for construction delays and increased costs (the "Husky Action"). Subsequently, Saipem filed a separate action in the Alberta Court against Husky and its partners in the Sunrise Energy Project seeking damages in excess of $800 million for construction delays and increased costs (the "Saipem Action").

Several months after filing the Husky Action, Husky commenced arbitration proceedings against Saipem seeking a $45 million credit for changes to the scope of work under the Contract (the "Arbitration").

Eventually Saipem brought an application to stay the Arbitration. Saipem supported this application by relying on the Court's powers under the Arbitration Act, RSA 2000, c A-43 (the "Act") and the Court's residual powers under the Judicature Act, RSA 2000, c J-2. In response to Saipem's application, Husky made a cross-application for a partial stay of the Saipem Action. Husky supported its cross-application by arguing that some of the issues in the Saipem Action overlapped with some of the issues in the Arbitration.

The Alberta Court determined that the offsetting applications gave rise to six issues, several of which involved Saipem challenging the jurisdiction of the Arbitration. The Alberta Court listed these six issues as follows:

  1. Has the Arbitration Agreement become invalid because Husky repudiated the Contract?
  2. Has Husky waived its right to arbitration by attorning to the jurisdiction of the Court of Queen's Bench?
  3. Are the claims contemplated in the Arbitration within the scope of the Arbitration Agreement?
  4. Are the claims contemplated in the Arbitration limitation-barred?
  5. Would the Arbitration result in unfair and unequal treatment of Saipem such that the Arbitration should be stayed?
  6. Should a stay of all or part of the Saipem Action be granted?

The Decision

The Court ultimately dismissed both Saipem's application to stay the Arbitration and Husky's cross-application to partially stay the Saipem Action.

Prior to addressing the specific issues raised by the applications, the Court reviewed the respective jurisprudence cited by Husky and Saipem regarding a court's obligation to refer to the arbitrator a jurisdictional challenge to an arbitration. Husky argued that a court's starting point is not to intervene where the parties have selected arbitration to resolve their disputes. Moreover, Husky argued that a court is obligated to refer to the arbitrator a jurisdictional challenge to an arbitration unless the challenge is based solely on a question of law. In response, Saipem argued that a Court may resolve a jurisdictional challenge to an arbitration where the challenge is either based solely on a question of law or involves a question of mixed fact and law which can be resolved on the basis of the evidentiary record. The Court held that a court has the discretion not to refer to the arbitrator a jurisdictional challenge to an arbitration where the jurisdictional challenge is based solely on a question of law or can be resolved on the basis of the evidentiary record.

The Court then turned to address whether the Arbitration Agreement survived Husky's alleged repudiation of the Contract. The Court found that this issue involved a jurisdictional challenge to the Arbitration which involved an issue of mixed fact and law that could not be resolved on the basis of the limited evidentiary record before her, therefore, referring the matter to the Arbitrator.

The second issue addressed was whether Husky waived its right to arbitration by attorning to the jurisdiction of the Alberta Court of Queen's Bench by submitting the same issues involved in the Arbitration to the Court by filing the Husky Action. Ultimately, the Court again referred the issue to the Arbitrator for determination.

The third issue was whether the dispute over the changes to the Contract's scope of work fell into the narrow list of topics that the Arbitration Agreement directed to arbitration. Ultimately, the Court held that this issue involved a jurisdictional challenge to the arbitration which should be resolved by the arbitrator on first instance.

The fourth issue was whether the claims Husky made in the Arbitration were limitation-barred. Saipem's argument regarding this issue was that Alberta case law states that the determination of a limitation period is a threshold issue that must be decided by the Court. Despite Saipem's argument, the Court held that an arbitrator has jurisdiction to consider limitations issues and that, at least in the factual context of Husky Oil, it was appropriate to refer the limitations issue to the Arbitration.

The final issue was whether allowing the Arbitration to proceed would result in unfair or unequal treatment of Saipem necessitating a stay of the Arbitration. This issue arose due to Saipem's reliance on subsection 6(c) of the Act, which permits a court to intervene in an Arbitration in order to prevent the "[m]anifestly unfair or unequal treatment of a party to an arbitration agreement." Saipem argued that allowing the Arbitration to proceed would render it unfairly or unequally treated in two ways. First, Saipem argued that the Arbitration considered the same issues as the Husky Action and that allowing the Arbitration to proceed risked creating a multiplicity of proceedings. Second, Saipem argued that Husky's partners in the Sunrise Energy Project were not parties to the Arbitration and that this created a danger of inconsistent findings. Despite Saipem's arguments, the Court found that Saipem failed to demonstrate any manifestly unfair or unequal treatment necessary for the Court to stay the Arbitration. On this point, the Court stated: "[t]here is nothing inherently unfair in allowing parallel arbitration and litigation proceedings where that is what was agreed to by the parties to the contract." Ultimately, the issue regarding risks of a multiplicity of proceedings and inconsistent findings were again referred to the Arbitrator.


The judgment in Husky Oil increases certainty for parties who include arbitration clauses in their agreements by emphasizing the Court's policy of not interfering in arbitrations. The Court's reasoning suggests that the Court will not interfere with an arbitration where arbitration is the dispute resolution mechanism the parties have selected. This is a positive development for the jurisprudence concerning court intervention in arbitration, and ensures that when parties agree to submit their disputes to arbitration, arbitration is where those disputes will be resolved. The Court repeatedly declined the invitation to resolve jurisdictional challenges to an arbitration, instead referring each of those jurisdictional challenges to the arbitrator. This approach ensures that a court will not allow a party to override the arbitration clause in a contract by launching veiled attacks against the jurisdiction of the arbitration, holding the parties to their bargain made in their arbitration agreement.

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 Topics
Related Articles
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
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

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 or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq 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 of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions