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Results: 4 Answers
International Arbitration
9.
The role of the court during an arbitration
9.1
Will the court in your jurisdiction stay proceedings and refer parties to arbitration if there is an arbitration agreement?
 
Canada
Canadian courts generally apply local law of the forum (domestic arbitration legislation) to determine stay applications. Stay provisions vary across provinces, but can be grouped into three categories: mandatory, discretionary and the Civil Code of Quebec. In stay applications, if a party to an arbitration agreement commences a proceeding in respect of a matter covered by the arbitration agreement, any party to the agreement can apply to the court in which the proceeding is commenced to stay the proceeding in favour of arbitration (Penn-Co Construction Canada (2003) Ltd v Constance Lake First Nation, 2008 ONCA 768, [2007] OJ No 3940).

Mandatory stay provisions require stays of proceedings in favour of arbitration where an arbitration agreement exists, subject to limited well-defined exceptions. For example, the statutes in Alberta, Manitoba, New Brunswick, Nova Scotia, Ontario and Saskatchewan provide that the court must stay the proceeding unless:

  • a party entered into the arbitration agreement while under a legal incapacity;
  • the arbitration agreement is invalid;
  • the subject matter of the dispute is not capable of being the subject of arbitration under provincial law;
  • the motion was brought with undue delay; or
  • the matter is a proper one for default or summary judgment (Arbitration Act, RSA 2000, c A-43, s 7; Arbitration Act, CCSM c A120, s 7; Arbitration Act, RSNB 2014, c 100, s 7(2); Arbitration Act, RSNS 1989, c 19, s 7; Arbitration Act, 1991, SO 1991, c 17, s 7; Arbitration Act, 1992, SS 1992, c A-24.1 s 8).

British Columbia’s stay provision requires that the court grant a stay of proceedings unless it determines that the arbitration agreement is void, inoperative or incapable of being performed (Arbitration Act, RSBC 1996, c 55, s 15).

The second category comprises discretionary stay provisions. The courts in Newfoundland and Labrador, Nova Scotia, Prince Edward Island, Northwest Territories and Yukon may stay proceedings at their discretion. A court may grant a stay if it finds that:

  • there is no sufficient reason why the matter should not be referred to arbitration in accordance with the parties’ submissions; and
  • the applicant was, at the time the proceedings started, and still is, ready and willing to do all things necessary for the proper conduct of the arbitration (Arbitration Act, RSNL 1990, c A-14, s 4; Arbitration Act, RSNS 1989, c 19, s 7; Arbitration Act, RSPEI; 1988, c A-16, s 7; Arbitration Act, RSNWT 1988, c A-5, s 10; Arbitration Act, RSY 2002, c 8, s 9).

In Quebec, only “[d]isputes over the status and capacity of persons, family members or other matters of public order” may not be determined by arbitration (Civil Code of Quebec, CCQ-1991, art 2639).

Though stay provisions are conceptualised to prevent multiple proceedings, courts in at least two provinces  Ontario and Alberta  have ruled that potential multiple proceedings do not constitute a valid reason to refuse referring a matter to arbitration (Novatrax International Inc v Hägele Landtechnik GmbH, 2016 ONCA 771, [2016] OJ No 5410 at para. 52, citing UCANU Manufacturing Corp v Calgary (City), [2015] AJ No 58 at para 7, 2015 ABCA 22 (Alta CA)). In Desputeaux v Éditions Chouette (1987) inc, in which some claimants were not party to an arbitration clause at issue, the Supreme Court of Canada offered three guiding factors for deciding applications for stays of proceeding:

  • whether the issues in the arbitration are substantially the same as the issues in the action;
  • whether the defendant has satisfied the court that the continuance of the action would work an injustice; and
  • whether the stay would cause an injustice to the plaintiff (2003 SCC 17, [2003] SCJ No 15).

Therefore, the effect of an arbitration agreement is not an automatic stay of proceedings and courts do not order the specific performance of arbitration agreements. Instead, a party can traditionally commence or continue litigation proceedings despite the existence of an arbitration agreement, unless another party applies for a stay (Bott v Sorley, [1998] BCJ No 2023 (SC)).

Some case law and commentary suggest that damages may be claimed for breach of contract against a party that pursues a claim in court despite the existence of an arbitration agreement (Doleman and Sons v Ossett Corp [1912] 3 KB 257 (CA) at pp268-270).

Despite the liberal interpretation of arbitration clauses by the courts, the mandatory use of arbitration must be explicitly provided for in a clause. This was clearly addressed in the matter of Zodiak (Zodiak International v Polish People's Republic [1983] 1 RCS 529) and has been reaffirmed many times since. When the clause provides that all disputes must be submitted to arbitration, it is clear that arbitration is mandatory. However, where a clause uses more permissive wording and provides that the parties “may” submit their dispute to arbitration, the courts will look at the entire clause rather than the precise words of the clause to determine whether the parties’ intention was to settle their disputes by arbitration.

For more information about this answer please contact: Mark Gelowitz from Osler, Hoskin & Harcourt LLP
9.2
Does the court in your jurisdiction have any powers in relation to an arbitration seated in your jurisdiction and/or seated outside your jurisdiction? What are these powers? Under what conditions are these powers exercised?
 
Canada
Courts in Canada have some power to intervene in international or domestic arbitrations seated in Canada, but it is relatively rare for them to do so. Canadian courts respect the right of parties to engage in arbitration and will prevent inappropriate delay tactics which may be brought before them by parties attempting to frustrate an arbitration proceeding.

Specifically, domestic arbitration legislation throughout Canadian provinces states, in varying language, that courts may not intervene except for certain enumerated exceptions:

  • to assist in the conduct of arbitrations;
  • to ensure that arbitrations are conducted in accordance with arbitration agreements;
  • to prevent unequal or unfair treatment of parties; and
  • to enforce awards (For example, Arbitration Act, 1991, SO 1991, c 17, s 6; Arbitration Act, CCSM c A120, s 6; Arbitration Act, 1992, SS 1992, c A-24.1, s 7; Arbitration Act, RSA 2000, c A-43, s 6; and Arbitration Act, RSNS 1989, c 19, s 8).

A court may also intervene to determine a question of law which arises during or before the arbitration, on application of the tribunal or party, with the consent of the tribunal and other parties (Arbitration Act, 1991, SO 1991, c 17, s 8(2); Arbitration Act, CCSM c A120, s 8(2); Arbitration Act, RSNB 2014, c 100, s 8(2); Arbitration Act, RSNS 1989, c 19, s 10(2); Arbitration Act, 1992, SS 1992, c A-24.1, s 9(2); Arbitration Act, RSBC 1996, c 55, s 34(1)).

Judicial review of international arbitration is normally impossible because arbitral tribunals are private bodies established by contract (Bansal v Stringam, 2009 ABCA 87 at para 16).

Parties seeking anti-suit injunctions in Canadian courts against foreign arbitrations may be unsuccessful, as this practice has been criticised as being contrary to limitations on judicial intervention, the doctrine of competence-competence and parties’ contractual right to arbitrate (Ontario Medical Assn v Willis Canada Inc, 2013 ONCA 745 at paras 19-37).

However, some case law suggests that Canadian courts can issue anti-suit injunctions to restrain parties from proceeding with litigation in foreign courts. The Federal Court of Appeal in Magic Sportswear Corp v OT Africa Line Ltd suggested that Canadian courts will give effect to exclusive forum clauses in favour of the Canadian courts, in alignment with English case law on the issue; by extension, Canadian courts will presumably also follow the English practice of applying the same principles to anti-suit injunctions (2006 FCA 284 at para 75, although see para. 88. For connection between anti-suit injunctions and exclusive forum clauses, see Welex, AG v Rosa Maritime Ltd [2003] 2 Lloyd’s Rep 509 (CA) at paras 47-48 citing Donohue v Armco Inc, [2002] 1 Lloyd’s Rep 425 (HL) at para 24). Recently, the Supreme Court of Canada observed that exclusive forum clauses operate to “oust an authority’s jurisdiction” and “ensure the intention of the parties is respected in order to achieve legal certainty” (GreCon Dimter Inc v JR Normand Inc (2005), 2005 CarswellQue 5110, 255 DLR (4th) 257 (SCC), at para 45).

For more information about this answer please contact: Mark Gelowitz from Osler, Hoskin & Harcourt LLP
9.3
Can the parties exclude the court's powers by agreement?
 
Canada
Parties’ ability to exclude rights of appeal in an arbitration agreement varies depending on the legislation of the province where the arbitration is seated. For example, it is possible to do so in Ontario and Saskatchewan; while in British Columbia, parties may make a binding waiver of their appeal rights only once the arbitration procedure has started, in writing (Arbitration Act, 1992, SS 1992, c A-24.1, s 4 and Arbitration Act, 1991, SO 1991, c 17, s 3; Arbitration Act, RSBC 1996, c 55, ss 31, 33).

For such exclusion provisions to be effective, they must be clearly evidenced in the arbitration agreement and the parties’ intention to waive a substantive right (right of appeal or right of other court intervention) must be clearly established. Once established, the parties’ intentions are paramount (National Ballet of Canada v Glasco, [2000] 49 OR (3d) 230 at para 35, referring to Labourers’ International Union of North America, Local 183 v Carpenters and Allied Workers, Local 27 (1997), 24 OR (3d) 472 at p479).

In Quebec, Article 7 of the CCP provides that participation in a private dispute prevention and resolution process other than arbitration does not entail a waiver of the right to act before the courts. However, the parties may undertake not to exercise that right in connection with the dispute in the course of the process, unless it proves necessary for the preservation of their rights.

They may also agree to waive prescription already acquired and the benefit of time elapsed for prescription purposes, or agree in a signed document to suspend prescription for the duration of the process. Prescription cannot, however, be suspended in advance for more than six months.

For more information about this answer please contact: Mark Gelowitz from Osler, Hoskin & Harcourt LLP