The appellants sought a stay of proceedings in favour of arbitration under s. 15 of the Arbitration Act, R.S.B.C. 1996, c. 55, after the court-appointed receiver commenced a civil claim to collect amounts allegedly owed under contracts containing mandatory arbitration clauses.
The Supreme Court of Canada dismissed the appeal, holding that a court-appointed receiver may be a party to a debtor's pre-receivership arbitration agreement, but that an arbitration agreement may be found inoperative under s. 15(2) where enforcing it would compromise the orderly and efficient resolution of a court-ordered receivership under the Bankruptcy and Insolvency Act.
The majority applied a two-part framework: the technical prerequisites for a mandatory stay were met, but the arbitration agreements were inoperative because the multiple overlapping arbitral proceedings contemplated would compromise the objectives of the BIA.
The concurring judges agreed on the result but reasoned that the Receivership Order itself authorized the receiver to sue in court and thereby disclaim the arbitration agreements.
