In the recent decision Husky Food Importers & Distributors Ltd. v. JH Whittaker & Sons Limited, 2023 ONCA 260, the Ontario Court of Appeal (“ONCA”) reviewed the law of international commercial arbitration, and in particular opined on the issue of the standard of proof that a party needs to meet in order for the court to grant a stay of a court proceeding pursuant to section 9 of the International Commercial Arbitration Act, 2017 (the “Act”), in favour or arbitration.
Section 9 of the Act states as follows:
Where, pursuant to article II (3) of the Convention or article 8 of the Model Law, a court refers the parties to arbitration, the proceedings of the court are stayed with respect to the matters to which the arbitration relates.
The appellant submitted that the proper analytical framework for assessing a request to stay an action under the Act was set out in the ONCA’s prior decision in Haas v. Gunasekaram, 2016 ONCA 744 (“Haas”), a case in which the lawyers here at Gilbertson Davis LLP were counsel for the Plaintiff/Respondent. In that case, the ONCA set out the following questions to be asked: (1) Is there an arbitration agreement? (2) What is the subject matter of the dispute? (3) What is the scope of the arbitration agreement? (4) Does the dispute arguably fall within the scope of the arbitration agreement? (5) Are there grounds on which the court should refuse to stay the action?
The ONCA notes that the framework set out in Haas had been superseded by the framework adopted by the Supreme Court of Canada in Peace River Hydro Partners v. Petrowest Corp., 2022 SCC 41 (“Peace River”). The ONCA describes that in Peace River the Supreme Court identified two general components common to stay provisions: (1) technical prerequisites for a mandatory stay of court proceedings, and (2) the statutory exceptions to a mandatory stay of court proceedings. In order to be successful in obtaining a stay, the moving party must establish the technical prerequisites in the applicable provincial legislation “on the applicable standard of proof” (further discussed below). Then it is up to the responding party to show that one of the statutory exceptions applies so that the stay is refused.
Provincial arbitration legislation typically contains four relevant technical prerequisites: (1) an arbitration agreement exists (2) court proceedings have been commenced by a party to the arbitration agreement (3) the court proceedings are in respect of a matter that the parties agreed to submit to arbitration and (4) the party applying for a stay in favour of arbitration does so before taking any step in the court proceedings. If these four technical prerequisites are met, then the court moves on to the second component of analysis and the onus shifts to the responding party to demonstrate a statutory exception.
The ONCA confirmed that when it comes to the moving party’s onus to demonstrate each of the technical prerequisites, the standard of proof is lower than the typical civil standard (of a balance of probabilities). The moving party only needs to establish an “arguable case” that the technical prerequisites have been met. Conversely, the responding party must show on a balance of probabilities that a statutory exception applies.
At Gilbertson Davis LLP, our lawyers and arbitrators can assist you, your business, company, partnership or corporation in your dispute, whether you require a lawyer to represent you or an arbitrator to offer his/her services in an arbitration. Gilbertson Davis LLP lawyers have experience in proceedings involving Commercial Litigation, Commercial Arbitration, Civil Litigation, Business Torts, Business Litigation, Arbitration and Mediation matters and can assist you in resolving your legal issues in a timely and cost-effective manner. Our mission is to provide creative, sensible, cost-effective, long-term resolutions to clients. Please contact Gilbertson Davis LLP to schedule a consultation.
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