CITATION: Nordion Inc. v. Life Technologies Inc., 2015 ONSC 99
COURT FILE NO.: CV-11-00436281-0000
DATE: 20150107
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
NORDION INC.
Plaintiff
– and –
LIFE TECHNOLOGIES INC. and APPLIED BIOSYSTEMS, LLC
Defendants
Robert Harrison and Alex Cameron, for the Plaintiff
Bernie McGarva and David Stevens, for the Defendants
HEARD: July 30 and 31, 2014
REASONS FOR DECISION
JUSTICE W. MATHESON
[1] This action arises from the sale of a joint venture and a related arbitration before the Hon. Dennis Lane, Q.C. The plaintiff Nordion has brought a motion seeking summary judgment against the defendants in the amount of $35 million and related relief under Rule 20 of the Rules of Civil Procedure. The defendants (together, “LIFE”) have brought a Rule 21 motion in which they contend that the claims in this action are res judicata, or, alternatively, they should go to arbitration. In the further alternative, LIFE also asks for summary judgment.
[2] The issues before me relate to a number of the agreements entered into to accomplish the sale of the joint venture. While most of those agreements are governed by Ontario law, the Dispute Resolution Agreement is governed by U.S. federal and state law. Accordingly, in addition to the considerable evidence filed by the parties regarding the underlying facts, I have before me expert evidence from U.S. counsel regarding the relevant foreign law.
The Joint Venture
[3] From about 1986 to 2009, the parties (or their predecessors) operated a joint venture partnership under the name Applied Biosystems/MDS Analytical Technologies Instruments (the “Joint Venture”). Nordion (then, MDS) and LIFE (then, Applied Biosystems) were equal partners. The purpose of the Joint Venture was to develop and sell certain mass spectrometry instruments. In the time period relevant to this case, the partnership was governed by a Joint Venture Agreement dated October 1, 2001.
[4] The Joint Venture Agreement and other relevant agreements provided that each partner would play specific roles in the Joint Venture, such as research and development, manufacturing, marketing and sales of the mass spectrometry instruments. For example, Nordion manufactured the instruments. LIFE was responsible for sales and service. LIFE also frequently sold deferred service contracts to customers that purchased mass spectrometers (“Deferred Service Contracts”). Those Deferred Service Contracts are the focus of the claims made in this action.
Sale of the Joint Venture
[5] In the 2008/2009 time period, discussions began with respect to the potential sale of the Joint Venture to a third party – Danaher Corporation. As matters unfolded, the sale was accomplished through separate but simultaneous agreements between Danaher and Nordion and Danaher and LIFE.
[6] The parties negotiated with Danaher separately. Ultimately, each of Nordion and LIFE entered into separate but similar Stock and Asset Purchase Agreements (“SAPAs”) with Danaher.
[7] Under the SAPAs, the sale to Danaher would be completed only when certain conditions were met, including the dissolution of the Joint Venture.
[8] The Joint Venture was therefore to be dissolved, and the Joint Venture partners would each take an undivided 50% interest in the Joint Venture assets. The parties would then transfer their undivided interest in the Joint Venture assets to Danaher, along with other assets and liabilities held by each of them in connection with the mass spectrometry business. The Joint Venture partners then had to take certain post-closing steps to properly reconcile the accounts as between them.
[9] To effect the dissolution of the Joint Venture, Nordion and LIFE entered into a series of agreements including the following:
(a) the Dissolution and Termination of Obligations Agreement;
(b) the Satisfaction of Outstanding Amounts Agreement;
(c) the Amendment and Transfer Agreement; and,
(d) the Dispute Resolution Agreement.
[10] There is no issue that all the conditions precedent to the SAPAs were satisfied prior to the parallel sales to Danaher. However, just prior to the dissolution of the Joint Venture, LIFE identified an issue regarding inventory. Under the terms of the Joint Venture Agreement, it had purchased inventory and had paid an intercompany markup. It was concerned that it would suffer a loss in respect of the markup upon the transfer to Danaher. It requested that it be credited with the amount of the markup as part of the final reconciliation of the Joint Venture accounts in connection with the dissolution of the Joint Venture.
[11] In order to facilitate the sale to Danaher on schedule, LIFE and Nordion agreed on a provision to preserve the right to pursue this issue at a later date. That provision became known as the “Parking Lot Provision”, presumably to recognize that the inventory issue had been “parked” for later attention. It became part of the Satisfaction of Outstanding Amounts Agreement.
[12] The Parking Lot Provision provided as follows:
2.8 The Parties acknowledge that:
(a) each of them and certain of their Affiliates will be executing and delivering agreements and documents necessary or desirable to complete the sale of various assets to Danaher and to wind up and terminate the Joint Venture; and
(b) the Parties are not currently in agreement with respect to whether or not any adjustment is appropriate relating to amounts paid or payable to the Joint Venture by Applied and/or its Affiliates with respect to inventory purchased from the Joint Venture by Applied and/or its Affiliates which at the time immediately before the dissolution of the Joint Venture, has not been resold to a third party customer and will be transferred to Danaher as a result of the change control transaction occurring with Danaher. In particular, the Parties have not resolved whether or not there should be an adjustment to eliminate the notional profit element from the transfer of inventory purchased from the Joint Venture by Applied and/or its Affiliates. In particular, the Parties have not resolved whether there should be any adjustment immediately before dissolution of the Joint Venture, which results from the difference between the standard cost as produced by MDS or its Affiliates and the marked up inventory cost for inventory purchased by Applied and/or its Affiliates from the Joint Venture.
The Parties on their own behalf and on behalf of their respective Affiliates agree that nothing in any agreements being entered into between the Parties on the date hereof in connection with the completion of the sale of various assets to Danaher or its Affiliates by them and their Affiliates and/or the winding up and terminating of the Joint Venture, including without limitation the Dissolution and Termination of Obligations Agreement, shall limit, qualify, affect or terminate the rights of any Party hereto to make any claim or request relating to the appropriate accounting or adjustments, if any, related to all or part of the notional profit made by the Joint Venture in connection with the sale of inventory to Applied and/or its Affiliates which inventory was held by Applied and/or its Affiliates immediately prior to the dissolution of the Joint Venture. [Emphasis added.]
[13] After the closing of the Danaher transactions, Nordion and LIFE proceeded with the Joint Venture reconciliation process under the Satisfaction of Outstanding Amounts Agreement. That Agreement set out a number of steps to be taken by the parties, including the provision of a Joint Venture Balance Sheet by each of them. In addition, each of Nordion and LIFE were obliged to provide Obligations Certificates regarding all amounts owing just prior to the dissolution of the Joint Venture. The certificates were to be exchanged within 20 days after closing.
[14] Quite apart from the Parking Lot Provision, the Satisfaction of Outstanding Amounts Agreement provided for the possibility of disputes regarding Obligations Certificates and Balance Sheet in section 2.6, as follows:
2.6 In the event that [LIFE] or [Nordion] disputes the accuracy or validity of the other party’s Obligations Certificate or if the Parties cannot agree upon a Final JV Balance Sheet within the time period set forth in section 2.3, such dispute or disagreement shall be dealt with in accordance with the terms of the Dispute Resolution Agreement.
[15] While I understand the practical benefit of specifically addressing the inventory issue by adding the Parking Lot Provision just before the sale, that provision was essentially “belt and suspenders”. LIFE would have been able to pursue the inventory issue through section 2.6 of the Satisfaction of Outstanding Amounts Agreement in any event.
[16] The parties discussed the inventory issue but did not reach agreement on it. LIFE then invoked the dispute resolution process, focusing specifically on the Parking Lot Provision rather than more generally on section 2.6 in any event.
[17] The Dispute Resolution Agreement provides for an escalating dispute resolution process of mutual discussion, mediation and arbitration. The process applies to disputes that fall within the following section:
3.1 Absent fraud or an intentional and material breach, from and after the Closing, in the event of any dispute, controversy or claim arising out of, relating to or in connection with (each a “Dispute”):
(a) this Agreement or any Document…;
(b) the breach, termination or validity thereof or the negotiation, execution or performance of this Agreement or any Document…; or
(c) the amount of any damages payable as a consequence of any breach of this Agreement or any Document…,
The Parties… shall [attempt to settle through discussion]. [Emphasis added.]
[18] If the parties are unable to settle, as occurred here, sections 3.3 and 3.4 provide for mandatory mediation then arbitration.
[19] Under section 3.4 of the Dispute Resolution Agreement, if the dispute is not resolved through the earlier stages, it “shall be finally and exclusively resolved by arbitration….”
[20] This submission to arbitration clause applies to numerous agreements, which are captured under the definition of “Document”. That definition includes the Satisfaction of Outstanding Amounts Agreement, which includes the Parking Lot Provision.
[21] Since agreement was not reached regarding the inventory issue, LIFE proceeded to arbitration. It advanced a claim for $9.1 million regarding the inventory issue. Ultimately, the inventory issue was arbitrated before the Hon. Dennis Lane, Q.C.
[22] Nordion asserts that it did not fully understand the accounting theory LIFE was relying on for its claim on the inventory issue until the arbitration process had commenced. At that point, Nordion came to understand LIFE’s accounting theory and concluded that it had ramifications in another aspect of the final reconciliation. Specifically, Nordion concluded that LIFE had made a profit on the transfer of the Deferred Service Contracts to Danaher and that profit had not been put on the table to be shared with Nordion.
[23] At the arbitration hearing, Nordion attempted unsuccessfully to raise this issue which, in its view, led to a claim by it for half of about $62 million. LIFE objected to the issue being addressed in the arbitration, even as a potential set-off of its $9.1 million claim. For example, in the course of the hearing, counsel to LIFE submitted that the Deferred Service Contract issue that Nordion was advancing was “not the subject of any claim at issue in this arbitration”. LIFE’s counsel submitted that the Deferred Service Contract issue could not be raised in the arbitration because it did not fall within the Parking Lot Provision.
[24] The arbitration award was released in August 2011 (the “Award”) and found in favour of LIFE on the inventory issue. Arbitrator Lane ordered that as part of the final reconciliation Nordion was required to credit LIFE with the sum of $9.1 million.
[25] In his Award, Arbitrator Lane also addressed the attempt by Nordion to raise the Deferred Service Contract issue arising from LIFE’s accounting theory. There were considerable submissions before me about the single paragraph of the Lane Award in which this issue is addressed. LIFE advances what I regard as artificial parsing of parts of that paragraph in an effort to suggest that Arbitrator Lane did decide the Deferred Service Contract issue despite LIFE’s own objections made at the time. I come to the contrary conclusion. Arbitrator Lane plainly concluded as follows: “I do not think that the issue is properly before me. It is outside the scope of the Parking Lot Provision.” As I find below, the arbitration before him was limited to the single issue addressed by the Parking Lot Provision.
[26] Nordion then commenced this action in order to pursue its claim regarding the Deferred Service Contracts. In this action, it claims half the profits that it attributes to the Deferred Service Contracts, specifically about $31 million. Nordion advances its claim on the grounds of equitable fraud and breach of contract. It claims to be entitled to sue in court, rather than arbitrate, because it submits that the action falls within the claims excluded from arbitration by virtue of the introductory words of section 3.1 of the Dispute Resolution Agreement excluding claims of “fraud or an intentional and material breach”.
[27] LIFE notified Nordion of its position that if the Deferred Service Contract issue was allowed to go ahead at all, it had to be pursued through the dispute resolution mechanism set out in the Dispute Resolution Agreement, not in court. However, LIFE’s primary position is that Nordion cannot now pursue the issue at all because it was or should have been addressed in the Lane arbitration.
Discussion
[28] Given the nature of the issues in these cross-motions, I find it best to begin with the LIFE motion under Rule 21.01(3). LIFE asserts that this action should be dismissed or stayed as res judicata and as an abuse of process or should go to arbitration.
Res judicata/issue estoppel
[29] The doctrine of res judicata prevents relitigation of matters that have already been determined by a court of competent jurisdiction. It applies equally to arbitration decisions: Rathwell v. Hershey Canada Inc., 2001 CanLII 8598 (ON CA), [2001] O.J. No. 3730, 152 O.A.C. 1.
[30] There are two branches of the doctrine ˗ issue estoppel and cause of action estoppel: 420093 BC Ltd. v. Bank of Montreal, 1995 ABCA 328 at para. 17.
[31] For issue estoppel to apply, three criteria must be met, as set out in Danyluk v. Ainsworth Technologies, 2001 SCC 44, [2001] 2 S.C.R. 460 at para. 25:
(i) the same question must have been decided in the earlier proceeding;
(ii) the decision that is said to create the estoppel must be final; and
(iii) the parties to the earlier decision must be the same as the parties to the proceedings in which the estoppel is raised.
[32] Issue estoppel fails on the first criteria. Arbitrator Lane expressly declined to decide the Deferred Service Contract issue.
[33] LIFE relies on Nordion’s unsuccessful attempts to advance the Deferred Service Contract issue in the course of the arbitration. This is insufficient. The issue must have been “fundamental to the decision arrived at” in the earlier proceedings: Danyluk at para. 24, citing Angle v. Minister of National Revenue, 1974 CanLII 168 (SCC), [1975] 2 S.C.R. 248 at p. 255. It was not.
[34] Moving then to cause of action estoppel, for it to apply four criteria must be met as set out in Metropolitan Toronto Condominium Corp. No. 946 v. J.V.M. (Public Guardian and Trustee of), [2008] O.J. No. 5412 (S.C.J.) (“MTCC”) at para. 39, citing Grandview (Town) v. Doering, 1975 CanLII 16 (SCC), [1976] 2 S.C.R. 621:
(i) there must be a final decision of a tribunal of competent jurisdiction in the prior proceeding;
(ii) the parties to the subsequent litigation must have been parties to or in privity with the parties to the prior proceeding;
(iii) the cause of action in the prior proceeding must not be separate and distinct; and
(iv) the basis of the cause of action in the subsequent action was argued or could have been argued in the prior action if the parties had exercised reasonable diligence.
[35] Cause of action estoppel is broader than issue estoppel in that it is not necessary that the issue was actually decided in the prior proceeding. It is sufficient that the issue should have been advanced. When a matter becomes the subject of litigation, the parties involved must bring forward their whole case: MTCC at para. 39, citing Cobb v. Holding Lumber Co. (1977), 1977 CanLII 1694 (BC SC), 79 D.L.R. (3d) 332 (B.C.S.C.).
[36] Further, cause of action estoppel may apply even if the issue was not pursued in the first proceeding due to negligence, inadvertence or accident: MTCC at para. 39.
[37] However, when cause of action estoppel applies, the Court has discretion to relieve against it by permitting relitigation to avoid real injustice: MTCC at para. 40, citing Toronto (City) v. Canadian Union of Public Employees Local 79, 2001 CanLII 24114 (ON CA), [2001] O.J. No. 3239 (C.A.).
[38] In this case, LIFE submits that the Deferred Service Contract issue was raised at the arbitration, at least by way of a potential set-off, and that in any event if Nordion had wanted to pursue the Deferred Service Contract issue, it ought to have taken steps to see that it was properly before Arbitrator Lane.
[39] In support of its position, LIFE submits that “the broad subject matter of the prior Arbitration was the resolution of any remaining issue between LIFE and Nordion as to amounts in relation to the JV business up to the time of dissolution, to allow for the final accounting for the JV to be completed.” This submission is not borne out by LIFE’s own arbitration pleadings, its position taken repeatedly at the arbitration, or the decision of Arbitrator Lane. It is apparent from all of those items that the arbitration was limited to the Parking Lot Provision.
[40] Contrary to the submissions of LIFE, this is not a case where a party is seeking to litigate an issue a second time by re-packaging the facts: Las Vegas Strip Ltd. v. Toronto (City), 1996 CanLII 8037 (ON SC), [1996] O.J. No. 3210, 30 O.R. (3d) 286 (Gen. Div.), aff’d 1997 CanLII 3841 (ON CA), [1997] O.J. No. 1033, 32 O.R. (3d) 651 (C.A.).
[41] LIFE also submits that cause of action estoppel applies to matters that could have been raised by counterclaim. That is so: Chafchak v. Hungry Howie’s Pizza & Subs Inc., [2007] O.J. No. 734 (S.C.J.) at para. 32, citing Hennig v. Northern Heights (Sault) Ltd., 1980 CanLII 1574 (ON CA), 30 O.R. (2d) 346 (C.A.). However, as is amply demonstrated by the record, Nordion’s attempts to raise the Deferred Service Contract issue were unsuccessful. Further, it is artificial to suggest, as LIFE did before me, that Nordion could have amended the pleadings to include this separate claim by counterclaim or otherwise. As LIFE said in its own written reply in the Arbitration, the Deferred Service Contract issue was “not the subject of any claim at issue in this Arbitration, nor could it be.”
[42] Having worked hard (and successfully) to keep the Deferred Service Contract issue out of the Lane Arbitration, it is at best ironic that LIFE works so hard to suggest now that it ought to have been included. I find that the third and fourth criteria for cause of action estoppel have not been met.
[43] I further note that if I had found that the criteria had been met, I would have exercised my discretion to relieve against estoppel in the particular circumstances of this case. It is apparent on the record that this issue has not been litigated in any meaningful way. It is a separate claim, not a re-packaged claim, and can go forward under section 2.6 of the Satisfaction of Outstanding Amounts Agreement. Further, LIFE ought not to be permitted to avoid addressing the issue on its merits given the position it took in the arbitration.
[44] I therefore find that this action is not precluded by res judicata in either of its forms.
Abuse of process
[45] The claim that this action is an abuse of process is founded on the same essential arguments and also fails.
Submission to Arbitration
[46] I will next address LIFE’s motion under Rule 21.01(3)(a) advanced on the footing that the action should be stayed in favour of arbitration including with respect to jurisdictional issues.
[47] The parties agree that Ontario law should be employed on the question of whether or not a stay in favour of arbitration should be granted. However, there are two preliminary issues that must be addressed:
(1) which Ontario arbitration legislation applies; and,
(2) whether or not LIFE has waived its right to seek a stay on this basis.
[48] LIFE relies on the Arbitration Act, 1991, S.O. 1991, c. 17 (“Arbitration Act”). Nordion submits that the International Commercial Arbitration Act, R.S.O. 1990, c. I.9 (“ICAA”) more likely applies. While there is no material difference between them on the question of the threshold test for a stay in favour of arbitration, there are differences on two other issues: the question of waiver and the availability of summary judgment.
[49] The Lane Arbitration proceeded under the Arbitration Act. However, that was done on consent. Before me, there is no consent.
[50] The Arbitration Act and the ICAA are mutually exclusive. Section 2 of the Arbitration Act provides as follows:
2(1) This Act applies to an arbitration conducted under an arbitration agreement unless,
(b) the [ICAA] applies to the arbitration.
[51] The ICAA adopts the UNCITRAL Model Law, set out in the Schedule to the ICAA. Article 1 of the Model Law provides that it applies to international commercial arbitration. Article 1(3) provides that an arbitration is international if:
(a) the parties to an arbitration agreement have, at the time of the conclusion of that agreement, their places of business in different States; or
(b) one of the following places is situated outside the State in which the parties have their place of business:
(i) the place of arbitration if determined in, or pursuant to, the arbitration agreement,
(ii) any place where a substantial part of the obligations of the commercial relationship is to be performed or the place with which the subject-matter of the dispute is most closely connected; or
(c) the parties have expressly agreed that the subject-matter of the arbitration agreement relates to more than one country.
[52] In this case, the plaintiff is a Canadian company and one of the defendants is a Delaware company. Further, the Dispute Resolution Agreement requires that the arbitration be conducted in New York. I therefore conclude that the ICAA applies pursuant to Article 1(3)(a) and (b)(i).
[53] Nordion then submits that LIFE has waived its right to seek a stay, relying upon Article 8(1) of the Model Law. Article 8(1) provides as follows:
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. [Emphasis added.]
[54] Nordion submits that LIFE has failed to follow the above requirements through undue delay and has also attorned to the jurisdiction of this Court.
[55] With respect to delay, Nordion submits that LIFE’s statement of defence does not expressly seek a stay. However, LIFE did give prompt notice of its position regarding arbitration and its statement of defence does expressly plead that the court has no jurisdiction because of the arbitration clause in the Dispute Resolution Agreement. Further, the parties agreed at the outset that these cross-motions (including Nordion’s motion for summary judgment, where a statement of defence is a prerequisite) proceed together and there is nothing in Rule 21.01(3)(a) that requires a motion for a stay in favour of arbitration to be brought before the delivery of the statement of defence: Momentous.ca Corp. v. Canadian American Association of Professional Baseball Ltd., 2012 SCC 9, [2012] 1 S.C.R. 359 at para. 8.
[56] Nordion’s argument regarding attornment also fails. Having agreed to have these cross-motions go forward together, with notice of LIFE’s position regarding arbitration, LIFE’s various alternative grounds for relief are not a waiver.
[57] I therefore conclude that LIFE is free to pursue a stay on this ground.
[58] The parties dispute whether or not the claims made in this action fall within the submission to arbitration. The crux of the issue relates to the exclusion from the submission to arbitration, which is found in the opening words of section 3.1 of the Dispute Resolution Agreement. Those opening words are: “Absent fraud or an intentional and material breach, from and after the Closing, ....”
[59] This action alleges “equitable fraud”, which is pleaded as including breach of fiduciary duty and the duty of good faith. It also alleges “material and intentional breach” of the Dissolution and Termination of Obligations Agreement and the Satisfaction of Outstanding Amounts Agreement. Nordion submits that it has limited its action to claims that are excluded by the opening words of section 3.1. LIFE submits that the claims are not excluded from the arbitration clause, and in any event any dispute about jurisdiction should properly be decided by the arbitrator, not the court.
[60] As a general rule, in any case involving an arbitration clause a challenge to the arbitrator’s jurisdiction must be resolved first by the arbitrator: Dell Computer Corp. v. Union des consommateurs, 2007 SCC 34, [2007] 2 S.C.R. 801 at para. 84; Ontario Medical Association v. Willis Canada Inc., 2013 ONCA 745, 118 O.R. (3d) 241 at para. 22.
[61] A court should depart from the rule of systematic referral to arbitration only if the challenge to the arbitrator’s jurisdiction is based solely on a question of law: Dell Computer at para. 84.
[62] Where questions of mixed law and fact are concerned, the court hearing the referral application must refer the case to arbitration unless the questions of fact require only superficial consideration of the documentary evidence in the record: Dell Computer at para. 85.
[63] This competence-competence approach calls for deference to arbitrators to resolve challenges to their jurisdiction. LIFE need only show that it is “arguable” that the dispute falls within the terms of the arbitration agreement: Dancap Productions Inc. v. Key Brand Entertainment Inc., 2009 ONCA 135 at para. 32. A court will decline to have the arbitrator determine his or her jurisdiction only when it is clear or obvious that there is no jurisdiction: Dancap Productions Inc. at para. 40.
[64] The jurisdictional issue raised by this action turns on foreign law, and how that law applies to the claims made in this action.
[65] The Dispute Resolution Agreement has two choice of law provisions, both of which invoke foreign law. Although there are some complications in regard to the role of each of the two provisions, there is no question that the Dispute Resolution Agreement is required to be interpreted under foreign law.
[66] Each side has put forward an expert witness on the applicable U.S. federal and New York State law. Daniel Murdock is put forward by Nordion and John Townsend is put forward by LIFE. Both meet the basic criteria for an expert based upon the material before me. Their expertise has not been challenged.
[67] Both experts focus on the interpretation of the opening words of section 3.1. Their opinions conflict regarding the applicable U.S. law and how the opening words of section 3.1 should be interpreted in the context of the claims made in this action. Mr. Townsend is of the opinion that the opening words are ambiguous; however, he concludes that they should be interpreted to the effect that the action is not excluded from the submission to arbitration. Mr. Murdock takes the contrary view.
[68] One key area of disagreement relates to the word “fraud” in the opening words of section 3.1 of the Dispute Resolution Agreement and whether, in the context of that Agreement, it includes “equitable fraud” or breach of fiduciary duty or breach of a duty of good faith. There is evidence that New York law makes a careful distinction between actual fraud and “constructive fraud”, and only constructive fraud would arguably include the claims made in the action. The action does not allege actual fraud. There is also a dispute about the meaning of the phrase “intentional and material breach” in the context of the allegations in the action, including in particulars and in answers given in connection with those claims.
[69] In Mr. Townsend’s view, Nordion’s interpretation of both phrases would essentially remove any meaning from the intended submission to arbitration. And although the experts disagree on many things, they agree that arbitration clauses should be interpreted broadly such that issues are arbitrable unless it is clear that the issues have been excluded.
[70] There is not only considerable expert evidence before me but also a number of arguments about how both foreign and domestic law regarding the causes of action should be applied to the allegations in the statement of claim, bearing in mind other relevant context. These are precisely the sort of arguments and contextual analyses that should be addressed by the arbitrator under the competence-competence principle. They are not pure questions of law, even bearing in mind that expert evidence regarding foreign law is somewhat different than other types of evidence.
[71] I cannot conclude that it is “clear and obvious” that the arbitrator has no jurisdiction. This action should therefore be stayed in favour of the process set out in section 3.1 of the Dispute Resolution Agreement, and the parties may raise their jurisdictional arguments before the arbitrator.
Summary Judgment
[72] Given my decision that the action be stayed, I will not proceed to decide Nordion’s motion for summary judgment or LIFE’s related alternative summary judgment relief. Only the Arbitration Act contains an exception for summary judgment. There is no exception in the ICAA, which applies here.
Order
[73] This action is therefore stayed pending arbitration. If the parties are unable to agree on costs, they may make written submissions on the following schedule: any claims for costs shall be advanced by brief written submissions, including a costs outline, to be delivered by January 30, 2015. Any responses to cost claims shall be made by brief written submissions, to be delivered by February 11, 2015.
Justice W. Matheson
Released: January 7, 2015
CITATION: Nordion Inc. v. Life Technologies Inc., 2015 ONSC 99
COURT FILE NO.: CV-11-00436281-0000
DATE: 20150107
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
NORDION INC.
Plaintiff
– and –
LIFE TECHNOLOGIES INC. and
APPLIED BIOSYSTEMS, LLC
Defendants
REASONS FOR DECISION
Justice Matheson
Released: January 7, 2015