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In a recent decision, JACOS v. Toyo
Engineering, the Alberta Court of Queen's Bench ordered
that two related commercial arbitration proceedings could be
consolidated (combined) into one international arbitration without
the consent of all the involved parties. This was a surprising
development, since another decision from the Court of Queen's
Bench held, only six months earlier, that "the consent of
the parties is a pre-requisite to consolidation" of an
international arbitration.
Facts
The arbitrations merged in JACOS v. Toyo Engineering
both began over the same dispute, which concerned the expansion of
an oil sands project in Alberta. The project's Canadian owner
(JACOS) alleged numerous issues with the construction and
engineering of the expansion project, for which it blamed the
project's general contractor (Toyo). Toyo then commenced a
"domestic" arbitration, under the Alberta Arbitration
Act, naming JACOS as a party. JACOS responded by commencing a
separate "international" arbitration over the dispute,
under the Alberta International Commercial Arbitration
Act. This second arbitration named as parties both Toyo and
its Japanese parent company, which had guaranteed the contractual
obligations of Toyo. Both sides then applied to merge the
other’s arbitration into their own.
The court heard both applications at the same time. After
finding that it had the power to fold the domestic arbitration into
the international arbitration (but not vice versa), the
court ruled that the two arbitrations should be consolidated. The
court held that it could do so because, among other reasons:
1. the wording of the International Commercial Arbitration
Act in Alberta sets out that consolidation can be ordered by
the court "on application of the parties to 2 or more
arbitration proceedings", but does not specify that all
those parties must consent; and
2. while parties must all "consent to arbitrate"
generally (which both sides had done, by starting arbitrations),
that consent was different than the parties' willingness to
consolidate their arbitrations, which the court held was a
procedural issue.
Comment
This decision makes it clear that, for the time being, separate
arbitrations commenced in Alberta regarding the same or similar
subject matter and parties may now be consolidated even without the
unanimous consent of the parties, as long as one of the
arbitrations was commenced under the Alberta International
Commercial Arbitration Act. As with other consolidations under
that legislation, the court will join the arbitrations on terms it
considers "just".
For international arbitrations seated in British Columbia,
however, this issue will likely never arise, as the BC version of
the International Commercial Arbitration Act expressly
requires the consent of "all parties" to consolidate.
This wording mirrors that of the uniform International
Commercial Arbitration Act recommended for all provinces by
the Uniform Law Commission of Canada.
It remains to be seen whether the Alberta government will ever
adopt the uniform legislation to replace its international
arbitration statute; the Alberta Law Reform Institute is currently considering the issue.
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.
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