Ontario Medical Association v. Willis Canada Inc. et al.

[Indexed as: Ontario Medical Assn. v. Willis Canada Inc.]

Ontario Reports

Court of Appeal for Ontario,

Hoy A.C.J.O., Sharpe and Blair JJ.A.

December 11, 2013

118 O.R. (3d) 241 | 2013 ONCA 745

Case Summary

Arbitration — Jurisdiction — Defendant moving to stay civil action pursuant to s. 7 of Arbitration Act and to have dispute referred to arbitration — Motion judge granting stay under competence-competence principle and deferring issue of arbitrator's jurisdiction to deal with dispute to arbitrator — Defendant's appeal dismissed — Competence-competence principle applying to proceedings under Arbitration Act — Appeal from decision to grant stay pursuant to competence-competence principle barred under s. 7(6) of Arbitration Act — Arbitration Act, 1991, S.O. 1991, c. 17, s. 7.

The defendant A Inc. moved to stay a civil action pursuant to s. 7 of the Arbitration Act, 1991 and to have the dispute referred to arbitration. The plaintiff took the position that it was not bound by the arbitration clause in an agreement between A Inc. and the defendant W Inc. The motion judge granted a stay, applying the competence-competence principle (that is, the general rule that in any case involving an arbitration clause, a challenge to the arbitrator's jurisdiction must be resolved first by the arbitrator). He found that as there was an arguable case the plaintiff and its claim were governed by the arbitration clause, the proper order was to defer the issue of jurisdiction to the arbitrator. A Inc. appealed.

Held, the appeal should be dismissed.

The competence-competence principle applies to proceedings under the Arbitration Act, 1991. Section 7(6) of the Act bars an appeal from a decision granting a stay on the basis that the issue of the arbitrator's jurisdiction should be determined by the arbitrator under the competence-competence principle.

1338121 Ontario Inc. v. FDV Inc., [2011] O.J. No. 2807, 2011 ONSC 3816, 92 B.L.R. (4th) 1 (S.C.J.); Bell Canada v. The Plan Group (2009), 96 O.R. (3d) 81, [2009] O.J. No. 2829, 2009 ONCA 548, 252 O.A.C. 71, 81 C.L.R. (3d) 9, 62 B.L.R. (4th) 157, 179 A.C.W.S. (3d) 40; Dancap Productions Inc. v. Key Brand Entertainment Inc., [2009] O.J. No. 572, 2009 ONCA 135, 55 B.L.R. (4th) 1, 68 C.P.C. (6th) 34, 246 O.A.C. 226; Dell Computer Corp. v. Union des consommateurs, [2007] 2 S.C.R. 801, [2007] S.C.J. No. 34, 2007 SCC 34, 284 D.L.R. (4th) 577, 366 N.R. 1, J.E. 2007-1426, 34 B.L.R. (4th) 155, 44 C.P.C. (6th) 205, EYB 2007-121973, 158 A.C.W.S. (3d) 870; Huras v. Primerica Financial Services Ltd., 2000 16892 (ON CA), [2000] O.J. No. 3772, 137 O.A.C. 79, 100 A.C.W.S. (3d) 184 (C.A.); Mantini v. Smith Lyons LLP (2003), 2003 20875 (ON CA), 64 O.R. (3d) 505, [2003] O.J. No. 1831, 228 D.L.R. (4th) 214, 174 O.A.C. 138, 34 B.L.R. (3d) 1, 123 A.C.W.S. (3d) 219 (C.A.); Ontario First Nations Limited Partnership v. Ontario Lottery and Gaming Corp., [2013] O.J. No. 2800, 2013 ONSC 4166 (S.C.J.), consd

Other cases referred to

2162683 Ontario Inc. v. Flexsmart Inc., [2010] O.J. No. 5409, 2010 ONSC 6493, 7 C.P.C. (7th) 347 (S.C.J.); A.G. Clark Holdings Ltd. v. HOOPP Realty Inc., [2013] A.J. No. 223, 2013 ABCA 101, 82 Alta. L.R. (5th) 286, 544 A.R. 114, 361 D.L.R. (4th) 101, 226 A.C.W.S. (3d) 17; [page242] Brown v. Murphy (2002), 2002 41652 (ON CA), 59 O.R. (3d) 404, [2002] O.J. No. 1545, 212 D.L.R. (4th) 35, 159 O.A.C. 75, 20 C.P.C. (5th) 52, 113 A.C.W.S. (3d) 379 (C.A.); Dalimpex Ltd. v. Janicki (2003), 2003 34234 (ON CA), 64 O.R. (3d) 737, [2003] O.J. No. 2094, 228 D.L.R. (4th) 179, 172 O.A.C. 312, 35 B.L.R. (3d) 41, 35 C.P.C. (5th) 55, 123 A.C.W.S. (3d) 217 (C.A.); Lamb v. AlanRidge Homes Ltd., [2009] A.J. No. 1117, 2009 ABCA 343, 312 D.L.R. (4th) 719, 76 C.P.C. (6th) 248, 84 C.L.R. (3d) 1, 464 A.R. 46; Opron Maritimes Construction Ltd. v. Irving Oil Ltd., [2011] N.B.J. No. 238, 2011 NBCA 60, 386 N.B.R. (2d) 1, 336 D.L.R. (4th) 129, 89 B.L.R. (4th) 1, 4 C.L.R. (4th) 90, 204 A.C.W.S. (3d) 706; Radewych v. Brookfield Homes (Ontario) Ltd., [2007] O.J. No. 4012, 2007 ONCA 721, 161 A.C.W.S. (3d) 185; SLMSoft.com Inc. v. First Ontario Credit Union Ltd., 2003 64355 (ON CA), [2003] O.J. No. 912, 172 O.A.C. 201, 121 A.C.W.S. (3d) 412 (C.A.), affg [2002] O.J. No. 3984, [2002] O.T.C. 757, 117 A.C.W.S. (3d) 194 (S.C.J.)

Statutes referred to

Arbitration Act, 1991, S.O. 1991, c. 17, ss. 7, (1), (2), (6), 17(1), (8), 46 [as am.], (1) [as am.], para. 3

Code of Civil Procedure, CQLR, c. C-25

International Commercial Arbitration Act, R.S.O. 1990, c. I.9 [as am.]

Treaties and conventions referred to

Model Law on International Commercial Arbitration, arts. 8(1), 16(1)

APPEAL from the order of Newbould J., [2013] O.J. No. 1728, 2013 ONSC 2253 (S.C.J.) staying an action.

Peter H. Griffin and Brendan F. Morrison, for appellant.

Elizabeth Pillon and Vanessa Voakes, for respondent.

The judgment of the court was delivered by

[1] SHARPE J.A.: — This appeal involves the stay of an action to permit an arbitrator to determine whether the claim is subject to an arbitration clause. The threshold issue is whether an appeal lies to this court from a decision of a judge of the Superior Court staying an action under the "competence-competence" principle, thereby deferring the issue of whether or not the dispute is arbitrable to the arbitrator.

Facts

The parties

[2] The appellant, Ontario Medical Association ("OMA"), is an umbrella body that represents the interests of the Ontario medical profession. The respondent Aviva Canada Inc. ("Aviva") provides personal and commercial insurance. The respondent Willis Canada Inc. ("Willis") is an insurance broker. [page243]

The contractual documents

[3] Willis and Aviva entered a written agreement in June 2004, the "broker/agent agreement", pursuant to which Willis acts as broker and Aviva provides insurance coverage to OMA members. That agreement contains the following arbitration clause:

3. Arbitration.

Where the parties disagree, any dispute between them arising out of this Agreement, but not specifically dealt with under the terms of this Agreement, shall be submitted to arbitration pursuant to the provisions of any applicable arbitration law, and the expense of such arbitration shall be borne equally by the Broker/Agent [Willis] and the Company [Aviva].

[4] Pursuant to a Schedule to that agreement, Aviva agrees to pay the OMA an "Over-Ride (Sponsor Fee)" of 2 per cent on the OMA portfolio. The Schedule further provides that "the parties (inclusive of the Ontario Medical Association)" are to meet to negotiate the formulation of a schedule to provide for increases to the fee based on actuarially calculated profit and loss ratios.

[5] The OMA is not a signatory to the broker/agent agreement but the OMA is a party to an agreement called "Addendum to Broker/Agent Agreement". The preamble to that agreement provides as follows:

THIS ADDENDUM is executed pursuant to and is attached to and forms part of the Broker/Agent Agreement for The Ontario Medical Association portfolio dated June, 2004 (the "Broker/ Agent Agreement"). The Ontario Medical Association ("OMA") joins this Addendum for purposes of Clause 3 below exclusively.

[6] Clause 3 provides that the OMA joins the addendum as the beneficiary of Aviva's obligation to pay the "Over-Ride (Sponsor Fee)" under the Schedule and further provides that Aviva will pay OMA a "Variable Sponsor Fee" according to a formula set out in the clause, as well as a "Policy in Force Sponsor Bonus".

The OMA's action

[7] The OMA commenced this action against Willis and Aviva, alleging default in payment of the fees contemplated by the Schedule and the addendum.

Aviva's stay motion

[8] Aviva moved to stay the action pursuant to the Arbitration Act, 1991, S.O. 1991, c. 17, s. 7 and to have the dispute referred to arbitration. [page244]

[9] The OMA's position is that it is not a party to the broker/agent agreement and therefore is not bound by the arbitration clause in that agreement. The addendum clearly states that the OMA joins for the purposes of cl. 3 exclusively. The OMA submits that this language excludes the arbitration clause in the broker/agent agreement and that it is only by virtue of the addendum that the OMA has any recourse against Willis and Aviva for the various fees to which it is entitled.

[10] Aviva contends that in its statement of claim, the OMA has pleaded its claim as arising under the broker/agent agreement. Aviva also argues that when the broker/agent agreement and the addendum are fairly read as a whole, the OMA is a party to the broker/agent agreement and its claim is governed by the arbitration clause.

[11] Willis takes a different position. It has accepted the jurisdiction of the Superior Court by filing a statement of defence in the action asserting that the OMA is not a party to the broker/agent agreement.

Decision of the motion judge: [Ontario Medical Association v. Willis Canada Inc., 2013 ONSC 2253](https://www.minicounsel.ca/scj/2013/2253)

[12] The motion judge granted a stay, applying the competence-competence principle and citing Dalimpex Ltd. v. Janicki (2003), 2003 34234 (ON CA), 64 O.R. (3d) 737, [2003] O.J. No. 2094 (C.A.), at para. 21; and Dancap Productions Inc. v. Key Brand Entertainment Inc., [2009] O.J. No. 572, 2009 ONCA 135, 55 B.L.R. (4th) 1, at paras. 32-33. He found that as there was an arguable case that the OMA and its claim were governed by the arbitration clause, the proper order was to defer the issue of jurisdiction to the arbitrator. He made it clear that he was making no determination that the OMA was a party to the arbitration agreement and was leaving that issue to be decided by the arbitrator.

Legislation

[13] The provision in the Arbitration Act, 1991, governing stays is s. 7:

7(1) If a party to an arbitration agreement commences a proceeding in respect of a matter to be submitted to arbitration under the agreement, the court in which the proceeding is commenced shall, on the motion of another party to the arbitration agreement, stay the proceeding.

Exceptions

(2) However, the court may refuse to stay the proceeding in any of the following cases: [page245]

1. A party entered into the arbitration agreement while under a legal incapacity.

2. The arbitration agreement is invalid.

3. The subject-matter of the dispute is not capable of being the subject of arbitration under Ontario law.

4. The motion was brought with undue delay.

5. The matter is a proper one for default or summary judgment.

Arbitration may continue

(3) An arbitration of the dispute may be commenced and continued while the motion is before the court.

Effect of refusal to stay

(4) If the court refuses to stay the proceeding,

(a) no arbitration of the dispute shall be commenced; and

(b) an arbitration that has been commenced shall not be continued, and anything done in connection with the arbitration before the court made its decision is without effect.

Agreement covering part of dispute

(5) The court may stay the proceeding with respect to the matters dealt with in the arbitration agreement and allow it to continue with respect to other matters if it finds that,

(a) the agreement deals with only some of the matters in respect of which the proceeding was commenced; and

(b) it is reasonable to separate the matters dealt with in the agreement from the other matters.

No appeal

(6) There is no appeal from the court's decision.

[14] The other provisions of the Arbitration Act, 1991 relevant to this appeal are s. 17(1), which gives arbitrators the power to rule on their own jurisdiction, and s. 17(8), which allows for curial review where the arbitrator rules on jurisdiction as a preliminary matter:

17(1) An arbitral tribunal may rule on its own jurisdiction to conduct the arbitration and may in that connection rule on objections with respect to the existence or validity of the arbitration agreement.

(8) If the arbitral tribunal rules on an objection as a preliminary question, a party may, within thirty days after receiving notice of the ruling, make an application to the court to decide the matter.

[15] Finally, the Arbitration Act, 1991, s. 46(1) provides that a party may (subject to an agreement pursuant to s. 46(1), [page246] para. 3 to contract out of s. 46) ask the court to set aside an arbitrator's award that "deals with a dispute that the arbitration agreement does not cover".

Issues

[16] The OMA submits that the motion judge erred in staying the action and raises the following ground of appeal:

1. On a proper interpretation of the contractual documents, is OMA bound by the broker/agent agreement to submit this dispute to arbitration?

[17] Aviva raises the following threshold issue:

2. Is an appeal to this court precluded by the Arbitration Act, 1991, s. 7(6)?

Analysis

[18] I turn first to the threshold issue of this court's jurisdiction to entertain the OMA's appeal.

(1) The competence-competence principle and the [Arbitration Act, 1991](https://www.canlii.org/en/on/laws/stat/so-1991-c-17/latest/so-1991-c-17.html)

[19] To properly characterize the nature of the motion judge's decision, it is necessary to consider the competence-competence principle that he applied.

[20] That principle gives precedence to the arbitration process and holds that "arbitrators should be allowed to exercise their power to rule first on their own jurisdiction": Dell Computer Corp. v. Union des consommateurs, [2007] 2 S.C.R. 801, [2007] 1 S.C.J. No. 34, 2007 SCC 34, at para. 70. Dell Computer involved the interpretation and application of provisions in the Quebec Code of Civil Procedure, CQLR, c. C-25 dealing with arbitration and stays against the background of the UNCITRAL Model Law on International Commercial Arbitration ("Model Law"), adopted in Ontario by the International Commercial Arbitration Act, R.S.O. 1990, c. I.9.

[21] Writing for the majority, Deschamps J., at paras. 69 and following, identified two competing schools of thought as to the appropriate degree of judicial involvement in disputes as to the jurisdiction of arbitrators. The first school of thought favours an interventionist and robust role for the courts to make the initial determination of all jurisdictional disputes. That was the traditional approach taken by the English and Canadian courts until relatively recently. The second, and in recent years, [page247] prevailing school of thought, is reflected by the competence-competence principle.

[22] Deschamps J. elaborated on the competence-competence principle, at paras. 84-86. She laid down as "a general rule that in any case involving an arbitration clause, a challenge to the arbitrator's jurisdiction must be resolved first by the arbitrator". That general rule should be departed from "only if the challenge to the arbitrator's jurisdiction is based solely on a question of law", an exception based upon the combination of the courts' expertise on matters of law and the efficiency to be achieved by having the issue dealt with when the request for a stay and referral is made. However, Deschamps J. [at para. 85] cautioned that "[i]f the challenge requires the production and review of factual evidence, the court should normally refer the case to arbitration, as arbitrators have, for this purpose, the same resources and expertise as courts". If questions of mixed law and fact are raised, the court should refer the issue to the arbitrator "unless the questions of fact require only superficial consideration of the documentary evidence in the record". Finally, Deschamps J. held [at para. 86] that when applying these exceptions, the courts should "be satisfied that the challenge to the arbitrator's jurisdiction is not a delaying tactic and that it will not unduly impair the conduct of the arbitration proceeding" and lean in favour of allowing the arbitrator to rule in his or her competence.

[23] In Dancap Productions Inc., a case arising under the International Commercial Arbitration Act and the Model Law, this court stated, at paras. 32-33:

It is now well-established in Ontario that the court should grant a stay under art. 8(1) of the Model Law where it is "arguable" that the dispute falls within the terms of an arbitration agreement. In Dalimpex Ltd. v. Janicki (2003), 2003 34234 (ON CA), 64 O.R. (3d) 737 (C.A.), at para. 21, Charron J.A. adopted the following passage by Hinkson J.A. in Gulf Canada Resources Ltd. v. Arochem International Ltd. (1992), 1992 4033 (BC CA), 66 B.C.L.R. (2d) 113 (B.C.C.A.), at paras. 39-40, as "the proper approach" to art. 8(1):

it is not for the court on an application for a stay of proceedings to reach any final determination as to the scope of the arbitration agreement or whether a particular party to the legal proceedings is a party to the arbitration agreement because those are matters within the jurisdiction of the arbitral tribunal. Only where it is clear that the dispute is outside the terms of the arbitration agreement or that a party is not a party to the arbitration agreement or that the application is out of time should the court reach any final determination in respect of such matters on an application for a stay of proceedings.

Where it is arguable that the dispute falls within the terms of the arbitration agreement or where it is arguable that a party to the legal proceedings is a party to the arbitration agreement then, in my view, the [page248] stay should be granted and those matters left to be determined by the arbitral tribunal.

As Charron J.A. explained in Dalimpex, at para. 22, "a deferential approach" allowing the arbitrator to decide whether the dispute is arbitrable, absent a clear case to the contrary, "is consistent both with the wording of the legislation and the intention of the parties to review their disputes to arbitration."

[24] The OMA argues that the Ontario authorities adopting the competence-competence principle were decided under the legislation based on the Model Law, Ontario's International Commercial Arbitration Act, and that they have no bearing on matters governed by the Arbitration Act, 1991.

[25] For the following reasons, I disagree with that submission.

[26] First, I can see no basis in the language of the two legislative regimes to justify a different approach to the important issue of how the jurisdiction of arbitrators is to be resolved. The provision governing stays in the Model Law, adopted by International Commercial Arbitration Act and the Arbitration Act, 1991, is art. 8(1):

8(1) A court before which an action is brought in a matter which is the subject of an arbitration agreement shall, if a party so requests not later than when submitting his first statement on the substance of the dispute, refer the parties to arbitration unless it finds that the agreement is null and void, inoperative or incapable of being performed.

[27] I can see no meaningful distinction between that language and s. 7(1) and (2) of the Arbitration Act, 1991.

[28] Article 16(1) of the Model Law gives arbitrators the power to decide their own jurisdiction:

16(1) The arbitral tribunal may rule on its own jurisdiction, including any objections with respect to the existence or validity of the arbitration agreement. For that purpose, an arbitration clause which forms part of a contract shall be treated as an agreement independent of the other terms of the contract. A decision by the arbitral tribunal that the contract is null and void shall not entail ipso jure the invalidity of the arbitration clause.

[29] As I have noted, the same power is conferred by s. 17(1) of the Arbitration Act, 1991.

[30] The power conferred on a court to grant a stay and the power of the arbitrator to determine his or her own jurisdiction are substantially the same under both regimes and I can see nothing in the language of the Model Law on the one hand, and the Arbitration Act, 1991 on the other, that could justify applying the competence-competence principle to the former while excluding it from the latter. [page249]

[31] Second, the argument advanced by the OMA is not supported by authority. The competence-competence principle has been applied to matters arising under the Arbitration Act, 1991.

[32] In Ontario First Nations Limited Partnership v. Ontario Lottery and Gaming Corp., [2013] O.J. No. 2800, 2013 ONSC 4166 (S.C.J.), Morgan J. applied the competence-competence principle to an arbitration agreement under the Arbitration Act, 1991. He stated, at para. 22, that the court will only retain jurisdiction where it is clear the dispute is outside the terms of the arbitration agreement. Campbell J. also applied the principle to a request for a stay under s. 7 in 2162683 Ontario Inc. v. Flexsmart Inc., [2010] O.J. No. 5409, 2010 ONSC 6493, 7 C.P.C. (7th) 347 (S.C.J.).

[33] 1338121 Ontario Inc. v. FDV Inc., [2011] O.J. No. 2807, 2011 ONSC 3816, 92 B.L.R. (4th) 1 (S.C.J.) did not concern a stay, but Brown J. commented, at paras. 30-31, on the application of the principle under the Arbitration Act, 1991:

To invoke the operation of the competence-competence principle, a party must demonstrate that it is "arguable" that a dispute falls within the terms of an arbitration agreement. . . .

In the case of domestic arbitration clauses, section 17(1) of the Arbitration Act, 1991, S.O. 1991, c. 17, adopts the competence-competence principle:

17(1) An arbitral tribunal may rule on its own jurisdiction to conduct the arbitrations and may in that connection rule on objections with respect to the existence or validity of the arbitration agreement.

[34] In Bell Canada v. The Plan Group (2009), 2009 ONCA 548, 96 O.R. (3d) 81, [2009] O.J. No. 2829 (C.A.), a case arising under the Arbitration Act, 1991, Gillese J.A. (dissenting on other grounds) suggested, at paras. 122-24, that an application judge should have been asked to refer a matter to arbitration based on the "general rule" laid down in Dell Computer that, with two exceptions, "in any case involving an arbitration clause, a challenge to the arbitrator's jurisdiction must be resolved first by the arbitrator".

[35] Counsel for the OMA was unable to cite any authority that explicitly recognizes the distinction he was attempting to draw between the two regimes but submits nonetheless that under s. 7(1), the court is required to decide the issue rather than simply pass it on to the arbitrator, a proposition that is inconsistent with the competence-competence principle. The OMA relies on the following passage from Mantini v. Smith Lyons LLP (2003), 2003 20875 (ON CA), 64 O.R. (3d) 505, [2003] O.J. No. 1831 (C.A.), at para. 17:

In order to determine whether a claim should be stayed under s. 7(1) of the Arbitration Act, the court first interprets the arbitration provision, then [page250] analyzes the claims to determine whether they must be decided by an arbitrator under the terms of the agreement, as interpreted by the court. If so, then under s. 7(1), the court is required to stay the action and refer the claims to arbitration subject to the limited exceptions in s. 7(2).

(Citation omitted)

[36] There is no reference to the competence-competence principle in the Mantini judgment and no suggestion that either party asked the court to defer the question of jurisdiction to the arbitrator. It appears to have been common ground between the parties that the court should resolve the question of jurisdiction as a matter of law. As I have noted, the competence-competence principle does allow a court to decide a challenge to the arbitrator's jurisdiction where the challenge is based solely on a question of law, as was done in Mantini. In my view, Mantini does not stand for the proposition that the competence-competence principle does not apply to proceedings arising under the Arbitration Act, 1991.

[37] Third, there is no basis in principle to define the respective roles of the courts and arbitrators differently under the Arbitration Act, 1991. The competence-competence principle has gained wide acceptance as the appropriate model to determine the jurisdiction of arbitrators, and absent legislative language or binding authority pointing in another direction, I would hold that it applies to the Arbitration Act, 1991.

(2) Is the appeal barred by s. 7(6)?

[38] I now turn to the question of whether s. 7(6) bars an appeal from a decision granting a stay on the basis that the issue of the arbitrator's jurisdiction should be determined by the arbitrator under the competence-competence principle.

[39] Aviva submits that the motion judge's order referring the matter to arbitration amounts to a "decision" within the meaning of s. 7(6) from which no appeal lies. The OMA submits that s. 7(6) only precludes an appeal where the judge actually decides the issue of jurisdiction. Here, the motion judge made no decision other than to refer any decision on that issue to the arbitrator.

[40] A distinction has emerged in the case law under s. 7(6) between cases where the motion judge finds that the plaintiff's claim is governed by an arbitration agreement and cases where the motion judge decides that the matter is not governed by an arbitration clause. If the motion judge determines that the arbitration clause applies, the order falls within s. 7 and any appeal from that order is barred by s. 7(6): see Radewych v. Brookfield Homes (Ontario) Ltd., [2007] O.J. No. 4012, 2007 ONCA 721; [page251] SLMSoft.com Inc. v. First Ontario Credit Union Ltd., 2003 64355 (ON CA), [2003] O.J. No. 912, 172 O.A.C. 201 (C.A.), affg [2002] O.J. No. 3984, [2002] O.T.C. 757 (S.C.J.); Lamb v. AlanRidge Homes Ltd., [2009] A.J. No. 1117, 2009 ABCA 343, 464 A.R. 46.

[41] On the other hand, if the motion judge decides that the matter is not subject to arbitration because one of the parties is not a party to the arbitration agreement or because the dispute falls outside the reach of the arbitration clause and refuses the stay, it has been held that there is no order under s. 7(1) and that an appeal is not barred by s. 7(6).

[42] The leading case in this second category is Huras v. Primerica Financial Services Ltd., 2000 16892 (ON CA), [2000] O.J. No. 3772, 137 O.A.C. 79 (C.A.), where the motion judge had found that the dispute was not governed by the agreement containing the arbitration clause. This court held, at para. 10:

Where there is no arbitration clause, the Arbitration Act, 1991 has no application, or putting it another way, the dispute lies beyond the scope of s. 7. It follows that if the court has decided that the Act is not applicable, then the prohibition against an appeal in s. 7(6) is equally not applicable.

(Citations omitted)

[43] Huras has been followed by this court: see Brown v. Murphy (2002), 2002 41652 (ON CA), 59 O.R. (3d) 404, [2002] O.J. No. 1545 (C.A.), and in other provinces: see A.G. Clark Holdings Ltd. v. HOOPP Realty Inc., [2013] A.J. No. 223, 2013 ABCA 101, 544 A.R. 114; Opron Maritimes Construction Ltd. v. Irving Oil Ltd., [2011] N.B.J. No. 238, 2011 NBCA 60, 386 N.B.R. (2d) 1.

[44] I am unaware of any case dealing with the type of order at issue on this appeal, namely, an order made under the competence-competence principle that grants a stay but does not determine the ultimate issue of the arbitrator's jurisdiction to deal with the dispute.

[45] In my view, s. 7(6) bars this appeal. I reach that conclusion for the following reasons.

[46] First, it is my view that this case is not caught by the Huras line of authority. While the motion judge did not decide that the arbitration clause applied to the OMA's claims so as to bring the case squarely within the Radewych v. Brookfield Homes (Ontario) Ltd. line of authority, he did grant a stay pursuant to s. 7(1) and therefore he did not decide that "the dispute lies beyond the scope of s. 7" as was the case in Huras. Moreover, while the motion judge did not finally resolve the issue of the arbitrator's jurisdiction, he did make a preliminary assessment of the case and decide that it was at least arguable that the matter was arbitrable. [page252]

[47] Second, it is my view that the purpose of s. 7(6), when combined with the competence-competence principle, supports barring the appeal. The rationale behind the competence-competence principle is that unless it is clear as a matter of law that the arbitrator does not have jurisdiction, the issue of jurisdiction should be decided by the arbitrator. I agree with the observation of the Alberta Court of Appeal in Lamb v. AlanRidge Homes Ltd., at para. 14, that the preclusion of appeals in s. 7(6) reflects an important policy consideration:

[N]amely that the process of determining whether the parties should proceed with arbitration, or legal proceedings, should not become bogged down by resort to the appeal process. The legislature obviously intended that the decision of the Court of Queen's Bench should be final, so as to promote an expeditious determination of the forum to hear the disputes of the parties.

[48] There is an understandable inclination to resist the idea that any decision is not subject to review by way of appeal. However, there are situations where the need for finality and an expeditious resolution trump reviewability. It seems to me that a decision to grant a stay pursuant to the competence-competence principle falls into that category. The threshold for granting a stay pursuant to the test articulated in Dell Computer involves an exercise of judicial discretion. The competence-competence principle directs most disputes about jurisdiction away from the courts in favour of arbitrators in the first instance. The legislature has clearly stated that there should be no appeal from a decision to grant a stay under s. 7 and, in my view, that legislative policy would be frustrated by allowing this appeal to proceed.

[49] It is also significant to observe that granting a stay and referring the issue of jurisdiction to the arbitrator in the first instance does not eliminate the possibility of judicial review. The Arbitration Act, 1991, s. 17(8) provides for review of a preliminary ruling on jurisdiction and s. 46 provides that an award may be set aside if it strays beyond what is covered by the arbitration agreement.

[50] I conclude, accordingly, that this appeal is barred by s. 7(6), and for that reason, I would dismiss the appeal.

(3) Other issues

[51] As I have concluded that this appeal is barred, there is no basis for me to consider the OMA's alternate submission that the motion judge erred by refusing to deal with the challenge to the arbitrator's jurisdiction as being based solely on a question of law. [page253]

Disposition

[52] For the foregoing reasons, I would dismiss the appeal with costs to the respondent in the amount agreed to by the parties, namely, $15,000.

Appeal dismissed.

End of Document