The appellants appealed a motion judge's refusal to stay an Ontario action in favour of arbitration and forum selection clauses contained in an Additional Rights Agreement.
The dispute arose over the termination of the respondents' management rights following the sale of certain theatre assets.
The Court of Appeal allowed the appeal, applying the competence-competence principle.
The Court held that where it is arguable that a dispute falls within the terms of an arbitration agreement, the court should grant a stay and leave the determination of the arbitrator's jurisdiction to the arbitrator.
The action was stayed pending the resolution of the arbitration proceedings in California.