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Arbitration - Jurisdiction (2). Clost v. Rennie
In Clost v. Rennie (Ont CA, 2024) the Ontario Court of Appeal considered a motion by a successful appeal respondent to quash the appeal for lack of jurisdiction [under Arbitration Act s.17(8)]:[2] In our view, this case is governed by the principles set out in Iris Technologies Inc. v. Rogers Communications Canada Inc., 2022 ONCA 634. In that case, this court quashed a motion for leave to appeal from the decision of a Superior Court judge allowing a review under s. 17(8) of an Arbitrator’s decision on a preliminary issue of jurisdiction, explaining, at para. 7: “The Arbitration Act, 1991 is clear that there is no further right of appeal from the decision of a Superior Court judge hearing a review of an Arbitrator’s decision on a preliminary question.”
[3] That is the case here. The parties’ dispute includes the validity of a lease agreement that purportedly granted the responding parties a tenancy and a right of first refusal over cottage land. The lease contained an arbitration clause. The moving party raised a preliminary issue as to the Arbitrator’s jurisdiction to hear the matter because he claimed that the lease was invalid, alleging that he never signed it and his signature was forged. The Arbitrator characterized his decision as a ruling on a preliminary jurisdictional motion under s. 17(1) of the Arbitration Act, 1991, and determined that he had jurisdiction to decide whether the moving party was bound to arbitrate the right of first refusal dispute but not the merits of the dispute. The moving party’s application under s. 17(8) to the Superior Court of Justice was successful. The application judge overturned the Arbitrator’s decision and found that the lease agreement was invalid.
[4] Under s. 17(9) of the Arbitration Act, there is no further right of appeal from the Superior Court judge’s decision. As a result, this court has no jurisdiction to hear the appeal or motion for leave to appeal and both are quashed. . General Entertainment and Music Inc. v. Gold Line Telemanagement Inc.
In General Entertainment and Music Inc. v. Gold Line Telemanagement Inc. (Fed CA, 2023) the Federal Court of Appeal considered arbitration law, here where the issue arises of 'court versus arbitration':[25] Since this is a request for a stay in favour of arbitration, the decisions of the Supreme Court that address this issue are relevant. In particular, in Uber, the majority of the Supreme Court stated:[34] The doctrine established in Dell is neatly summarized in its companion case, Rogers Wireless Inc. v. Muroff, 2007 SCC 35 (CanLII), [2007] 2 S.C.R. 921, at para. 11:The majority of the Court held that, when an arbitration clause exists, any challenges to the jurisdiction of the arbitrator must first be referred to the arbitrator. Courts should derogate from this general rule and decide the question first only where the challenge to the arbitrator’s jurisdiction concerns a question of law alone. Where a question concerning jurisdiction of an arbitrator requires the admission and examination of factual proof, normally courts must refer such questions to arbitration. For questions of mixed law and fact, courts must also favour referral to arbitration, and the only exception occurs where answering questions of fact entails a superficial examination of the documentary proof in the record and where the court is convinced that the challenge is not a delaying tactic or will not prejudice the recourse to arbitration. [26] Questions of fact or mixed fact and law related to the jurisdiction of the arbitrator to decide the relevant issues must first be referred to the arbitrator. This would include, in this matter, whether the Licencing Agreement was terminated and whether GEM is bound by this agreement. As noted by the Associate Judge, “[t]he relationship between the parties and the various contractual arrangements are certainly complicated”.
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[30] In the recent decision of the Supreme Court in Peace River Hydro Partners v. Petrowest Corp., 2022 SCC 41, (Peace River) the majority of the Supreme Court set out the framework for stays in favour of arbitration:[76] There are two general components to the stay provisions in provincial arbitration legislation across the country. As the framework is similar across jurisdictions, it will be useful to provide a general overview before turning to the interpretation of s. 15 of the Arbitration Act itself. The two components are as follows:(a) the technical prerequisites for a mandatory stay of court proceedings; and
(b) the statutory exceptions to a mandatory stay of court proceedings. [77] Though interrelated, these two components ought to remain analytically distinct. This distinction is necessary because the burden of proof shifts between the first component and the second.
[78] Under the first component, the applicant for a stay in favour of arbitration must establish the technical prerequisites on the applicable standard of proof (McEwan and Herbst, at § 3:43; Hosting Metro Inc. v. Poornam Info Vision Pvt, Ltd., 2016 BCSC 2371, at paras. 29‑30 (CanLII)).
[79] If the applicant discharges this burden, then under the second component, the party seeking to avoid arbitration must show that one of the statutory exceptions applies, such that a stay should be refused (McEwan and Herbst, at § 3:43; Casey, at ch. 3.4). Otherwise, the court must grant a stay and cede jurisdiction to the arbitral tribunal.
[80] I will briefly elaborate on each component and its respective standard of proof.
(1) Technical Prerequisites
[81] The first component is concerned with whether the applicant for a stay has established that the arbitration agreement at issue engages the mandatory stay provision in the applicable provincial arbitration statute.
[82] Considerations at this stage may differ depending on the jurisdiction and the nature of the arbitration (i.e., whether it relates to domestic or international arbitration). Broadly speaking, however, this threshold inquiry requires the court to determine whether the party seeking to rely on the arbitration agreement has established the technical prerequisites for a stay in favour of arbitration.
[83] There are typically four technical prerequisites relevant at this stage:(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 in favour of arbitration does so before taking any “step” in the court proceedings. If all the technical prerequisites are met, the mandatory stay provision is engaged and the court should move on to the second component of the analysis.
[84] It is important to note that the standard of proof applicable at the first stage is lower than the usual civil standard. To satisfy the first component, the applicant must only establish an “arguable case” that the technical prerequisites are met (McEwan and Herbst, at § 3:47; Sum Trade Corp. v. Agricom International Inc., 2018 BCCA 379, 18 B.C.L.R. (6th) 322, at paras. 26 and 32, citing Gulf Canada Resources Ltd. v. Arochem International Ltd. (1992), 1992 CanLII 4033 (BC CA), 66 B.C.L.R. (2d) 113 (C.A.), at paras. 39‑40). The court further discusses the issues, largely in an international treaty context at paras 31-43.
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