Arbitration and other forms of alternative dispute resolution
can provide greater procedural flexibility with lower costs and
less delay than traditional litigation. As a result, arbitration
clauses are an increasingly common feature of agreements in the
energy sector. A recent case from the Ontario Court of Appeal
serves as a reminder to take care when drafting arbitration
The Plan Group v. Bell Canada involved the interpretation
of an arbitration clause in a 1999 contract between the Plan Group
and Bell Canada relating to the delivery of electrical and cabling
services. In 2005, Plan delivered a notice demanding arbitration of
a dispute under the contract. Bell brought an application seeking
the court's interpretation of the arbitration agreement and
whether certain procedural requirements had to be met in order to
commence the arbitration.
The arbitration agreement provided that the arbitration would be
conducted under the then-current rules of the Arbitration and
Mediation Institute of Ontario Inc. Bell argued that because Plan
failed to file its notice of arbitration with the Institute, as
required under the Institute rules, the arbitration had not
properly been commenced. This issue was of particular significance
because the arbitration agreement also provided an irrevocable
waiver of disputes under the contract absent filing of a notice of
arbitration within 12 months. By the time the application was
heard, this limitation period had expired for the dispute in issue.
If the court found that Plan's notice of arbitration was
insufficient, then Plan would be barred from submitting the dispute
to arbitration or to the court. These issues were further
complicated by changes to the Institute rules that were applicable
even though they were made after the contract was entered into
because the arbitration agreement mandated use of the
The application judge held that the arbitration agreement mandated
that the arbitration be conducted under the Institute rules, but
did not require commencement in accordance with the rules. However,
the Court of Appeal disagreed and held instead that commencement of
the arbitration was indeed governed by the Institute rules and
therefore the notice of arbitration should have been filed with the
Institute in order to properly commence the arbitration. Since Plan
had not filed the notice with the Institute, no arbitration had
been commenced and the irrevocable waiver now prevents Plan from
commencing an arbitration.
Arbitration can be a convenient and cost effective manner of
dealing with disputes, but as this case highlights, it is prudent
to pay attention to the drafting of your arbitration clause and
take care when selecting the rules applicable to future
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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