Which forum is appropriate to determine jurisdiction of the underlying commercial dispute: the Ontario Superior Court of Justice or arbitration under the International Commercial Arbitration Act?
In Bombardier Inc. v Alstom Rail Sweden AB, 2026 ONCA 528 (CanLii), the Ontario Court of Appeal reviewed this question under s. 9 of the International Commercial Arbitration Act, which incorporates the UNCITRAL Model Law on International Commercial Arbitration into Ontario law.
The court upheld the competence-competence principle and the legal test for jurisdiction of arbitration set out by the Supreme Court of Canada in Peace River Hydro Partners v Petrowest Corp., 2022 SCC 41. The competence-competence principle holds that, normally, arbitrators should be permitted to rule first on their own jurisdiction.
However, a court may rule on an arbitrator’s jurisdiction for pure questions of law or where questions of mixed fact and law require only a “superficial” consideration of the evidentiary record. 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.
The practical takeaway
When faced with this question, the first step is to assess the possible jurisdiction of arbitration versus the court and, if justified, to contest jurisdiction before any step is taken to respond to the substance of a notice of arbitration or court proceeding. Any other step taken in response could be interpreted as committing to the jurisdiction of the arbitration or the court, which could bar contesting jurisdiction later on in the proceeding.
Given the often short timeline to respond to a notice of arbitration or court proceeding, practically, this means obtaining legal advice about jurisdiction as soon as possible and taking the right step at the outset.
The Peace River legal test applied in Bombardier v Alstom Rail Sweden (2026)
In the Peace River framework, an applicant for a stay of a court proceeding in favour of arbitration must show that these four technical prerequisites are met:
(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.
The applicant for a stay of court proceedings in favour of pursuing arbitration need only show that there is an “arguable case” that each of these 4 prerequisites are met. If there is an arguable case, then the court will defer and leave the arbitration to determine whether it has jurisdiction over the dispute. This does not mean that the issue of jurisdiction is decided at that stage – the court rather has left the question of who is to decide jurisdiction to be determined within the arbitration proceeding.
If the 4 technical prerequisites are met, the burden shifts to the party resisting the stay to show that a statutory exception to the mandatory stay of proceedings applies on a balance of probabilities, otherwise the court would normally refer challenges to an arbitrator’s jurisdiction to the arbitrator.
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