Lauren Rachella Butti

Following an appeal from an arbitral award concerning mining concessions and a contractual right of first offer, the court addressed costs of the appeal.

The earlier decision allowed the appeal in part, confirming that the right of first offer was triggered but overturning the arbitrator’s findings regarding partnership, fiduciary duties, and the remedy ordered.

Both parties claimed substantial success and sought partial indemnity costs.

The court held that success on the appeal was divided, as each side prevailed on significant issues.

In the circumstances, the appropriate disposition was for each party to bear its own costs.

Appeal from an arbitral award under s. 45(1) of the Arbitration Act, 1991 concerning a joint venture relating to mining concessions in Peru.

The arbitrator held that the appellants breached a contractual right of first offer and a trust relationship by granting a cesión minera (assignment of concession rights) to a third party without offering the opportunity to the respondents.

The court upheld the arbitrator’s finding that entering into the cesión minera triggered the right of first offer and constituted a breach of the contractual trust arrangement.

However, the court found the arbitrator erred in law by concluding that the parties’ relationship constituted a partnership giving rise to broader fiduciary duties and by crafting a remedy tied to the broader share purchase agreement rather than the cesión minera itself.

The appeal was therefore allowed in part and the matter remitted to the arbitrator to determine appropriate terms for offering the cesión minera to the respondents.

The successful defendant sought substantial indemnity costs following summary judgment motions and the dismissal of the plaintiffs’ claims, arguing the allegations were akin to accusations of fraud and were unsubstantiated.

The plaintiffs argued that substantial indemnity costs are reserved for rare and exceptional cases involving reprehensible litigation conduct.

The court held that although the defendant succeeded on the motions, the plaintiffs’ conduct was not reprehensible and their cross‑motion was not unreasonable.

Applying s. 131 of the Courts of Justice Act and Rule 57.01 of the Rules of Civil Procedure, the court determined that partial indemnity costs were appropriate.

The defendant was awarded $150,000 in costs for the motions and the action.