Simon's Megalomaniacal Legal Resources

Arbitration - International Commercial Arbitration Act (Ontario) (3)

. Bombardier Inc. v. Alstom Rail Sweden AB

In Bombardier Inc. v. Alstom Rail Sweden AB (Ont CA, 2026) the Ontario Court of Appeal dismissed an appeal, here brought against an order to stay an Ontario action "in favour of arbitration currently before the ICC" (the International Chamber of Commerce) - here considering the leading Peace River Hydro Partners v. Petrowest Corp. (SCC, 2022) case on this issue.

Here the court considers this issue under ICAA arbitration law, and (at paras 43-44) the 'standing' [my term] of a non-party to such arbitration:

[3] BI appeals. The main issue in the appeal is whether the motion judge erred in finding it “arguable” that Alstom Sweden, which is not a named party to the agreement to arbitrate through the ICC, can nevertheless avail itself of that agreement.

....

f. The Reasons of the Motion Judge

[23] The motion judge granted a stay of the Ontario Action in favour of arbitration. He determined that Alstom Sweden had established an arguable case that the four “technical prerequisites” set out by the Supreme Court of Canada in Peace River Hydro Partners v. Petrowest Corp., 2022 SCC 41, [2022] 3 S.C.R. 265 were met and that BI had not established any statutory exception to justify refusing a stay. Accordingly, on the basis of the competence-competence principle, the ICC should be permitted to rule first on its jurisdiction.

[24] The motion judge noted that only two of the four prerequisites were at issue, namely the existence of an arbitration agreement and whether the parties agreed to submit the subject matter of the Ontario Action to arbitration. In reaching his conclusion, the motion judge found that although Alstom Sweden was not a named party to the 2020 Blizzard SPA, it was arguably an “Affiliate”, as defined in sch. 13 of the 2020 Blizzard SPA, and entitled to benefit from the arbitration clause within it. He found it “more than arguable” that the 2020 Blizzard SPA governs the “surviving relationship” between BI and Alstom Sweden, with the right to adjust for prior tax losses incorporated into the 2020 Blizzard SPA. Finally, based on his conclusions above, the motion judge found that it was “almost obvious” that the Ontario Action was “in respect of a matter that the parties agreed to submit to arbitration, on an ‘arguable case’ standard.”

[25] The motion judge’s decision specifically provides that if the ICC declines jurisdiction, the Ontario Action can be “reactivated”.

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a. The Competence-Competence Principle and the Peace River Framework

[27] The competence-competence principle is a foundational principle of international commercial arbitration law which holds that normally, arbitrators should be permitted to rule first on their own jurisdiction: Peace River, at para. 39. This principle is both enshrined in domestic common law and under s. 9 of the International Commercial Arbitration Act, 2017, S.O. 2017, c. 2, Sch. 5 (“ICAA”). The competence-competence principle encourages the efficient resolution of disputes, giving precedence to the arbitration process.

[28] The principle is not absolute, however. Judicial resolution of challenges to an arbitrator’s jurisdiction may be appropriate on pure questions of law or where questions of mixed fact and law require only a superficial consideration of the evidentiary record: Peace River, at para. 42; Uber Technologies v. Heller, 2020 SCC 16, [2020] 2 S.C.R. 118, at paras. 31-36; Husky Food Importers & Distributors Ltd. v. J.H. Whittaker & Sons Limited, 2023 ONCA 260, 480 D.L.R. (4th) 517, at para. 19. A superficial review is “one where the necessary conclusions can be drawn from facts that are either evident on the face of the record or undisputed by the parties”: Husky Foods, at fn. 2, citing Uber, at para. 36.

[29] Alstom Sweden brought its stay motion under s. 9 of the ICAA, which incorporates the UNCITRAL Model Law on International Commercial Arbitration, U.N. Doc. A/40/17 (1985) (the “Model Law”) into Ontario law.

[30] Section 9 of the ICAA provides:

Where, pursuant to article II(3) of the [New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards] or article 8 of the Model Law, a court refers parties to arbitration, the proceedings of the court are stayed with respect to the matters to which the arbitration relates.

[31] Article 8(1) of the Model Law, in turn, provides:

A court before which an action is brought in a matter which is the subject of an arbitration agreement shall, if a party so requests not later than when submitting his first statement on the substance of the dispute, refer the parties to arbitration unless it finds that the agreement is null, inoperative, or incapable of being performed. [Emphasis added.]

[32] The Supreme Court’s decision in Peace River establishes the framework for requests to stay an action where the existence of an applicable arbitration agreement is advanced. This court has held that, while Peace River was crafted in the context of domestic legislation, it applies equally to stays sought under s. 9 of the ICCA: Husky Food, at para. 26.

[33] Under the Peace River framework, the applicant for the stay must show that four “technical prerequisites” are met, as follows:

(a) An arbitration agreement exists;

(b) Court proceedings have been commenced by a ‘party’ to the arbitration agreement;

(c) The court proceedings are in respect of a matter that the parties agreed to submit to arbitration; and

(d) The party applying for a stay does so before taking any ‘step’ in the court proceedings.

[34] The applicant for the stay need only show that there is an “arguable case” that each of the prerequisites is met: Peace River, at para. 84; Husky Food, at para. 28. A finding that there is an arguable case that the prerequisites are met does not presuppose the determination by the arbitral tribunal on either jurisdiction or the substantive dispute. Rather, the underlying assumption is that if the court grants a stay and does not decide an issue in the action, then the arbitrator will decide it: Uber, at para. 38; Husky Food, at para. 17.

[35] If the four technical prerequisites are met, the onus shifts to the party resisting the stay to show that a statutory exception to a mandatory stay of proceedings applies on a balance of probabilities: Peace River, at paras. 76-79, 87-89, and 172; Husky Food, at paras. 23-25, and 29. It is “well established” in Canadian law, that absent those legislated exceptions, a court should normally refer challenges to an arbitrator’s jurisdiction to the arbitrator: Peace River, at para. 41; Husky Food, at para. 19.

....

[42] Dalimpex Ltd. v. Janicky (2003), 2003 CanLII 34234 (ON CA), 64 O.R. (3d) 737 (Ont. C.A.) is helpful in understanding the scope of any inquiry when a stay is sought in favour of arbitration. This court held that, at this stage in the proceedings, the court makes no final determinations regarding the arbitration agreement nor with respect to the parties thereto, citing Hinkson J.A. in Gulf Canada Resources Ltd. v. Arochem International Ltd. (1992), 1992 CanLII 4033 (BC CA), 66 B.C.L.R. (2d) 113 (B.C. C.A.) as follows:

.... it is not for the court on an application for a stay of proceedings to reach any final determination as to the scope of the arbitration agreement or whether a party to the legal proceedings is a party to the arbitration agreement because those are matters within the jurisdiction of the tribunal.

....

Where it is arguable that a dispute falls within the terms of the arbitration agreement or where it is arguable that a party to the legal proceedings is a party to the arbitration agreement, then, in my view, the stay should be granted and those matters left to be determined by the arbitral tribunal.

[43] The motion judge specifically addressed BI’s argument that there was no arbitration agreement to justify a stay because Alstom Sweden was not a party to the 2020 Blizzard SPA and could not rely on its arbitration clause. He considered the definition of “Affiliate” in the 2020 Blizzard SPA, the many references to “Affiliates” throughout the document, and found it arguable, on the text of the 2020 Blizzard SPA, that this could include Alstom Sweden. Peace River provides that a non-signatory to an arbitration agreement may become bound as a party by operation of law: and that “party” under the ICAC includes “a person claiming through or under a party”: at paras. 104-05. While not expressly stated, it is apparent that the motion judge found it arguable that Alstom Sweden is claiming “through or under” Alstom, a named party to the 2020 Blizzard SPA.

[44] While the motion judge ought also to have articulated his analysis of the arbitration clause set out in the 2020 Blizzard SPA, he was clearly alive to and addressed BI’s argument that Alstom Sweden, as a non-party to the 2020 Blizzard SPA, could not avail of its arbitration clause. He expressly stated that the fact that Alstom Sweden was not a named party “would not be determinative”. While the arbitration clause in the 2020 Blizzard SPA states that the “parties” agree that all disputes arising out of or in connection with the 2020 Blizzard SPA are to be arbitrated, the definition of “Parties” in the agreement is tautological (“Parties” means “the parties to this agreement”) and does not assist. It was open to the motion judge to find, based on his review of the 2020 Blizzard SPA, that Alstom Sweden was an “Affiliate” within the meaning of the 2020 Blizzard SPA such that it was “arguable” that it could benefit from the arbitration clause.