Court File and Parties

COURT FILE NO.: CV-17-587296 DATE: 20180412 SUPERIOR COURT OF JUSTICE - ONTARIO

RE: The Walt Disney Company, Applicant AND: American International Reinsurance Company, Ltd. as successor to Chartis Excess Limited, Respondent

BEFORE: Pollak J.

COUNSEL: Timothy M. Lowman and Trent Horne, for the Applicant James Doris and Derek Ricci, for the Respondent

HEARD: February 5, 2018

Endorsement

[1] In the original Application, the Applicant, The Walt Disney Company (“Disney”), applies for an order that a “dispute between the parties arising with respect to a policy of insurance no. 23810889 be finally resolved by arbitration at JAMS offices in Toronto,” in accordance with its confidential demand for arbitration filed on October 6, 2017.

[2] The Respondent, Chartis Excess Limited (“Chartis”), requests that Disney's application be dismissed with costs, and that this Court declare that the arbitration between the parties shall be conducted under the English Arbitration Act 1996 (UK), c. 23 (“English Arbitration Act”), and not be consolidated with arbitration proceedings in the United States or otherwise transferred to the United States.

[3] Chartis also submits that at the beginning of the hearing, Disney sought new relief from the Court for “broad and vague declaratory relief regarding the conduct of the arbitration and what procedures will apply at the arbitration,” as set out in its Supplementary Submissions. Disney’s new request is that the Court “declare that an arbitration has been commenced based on the confidential demand for arbitration dated October 17, 2017”.

[4] The Respondent submits that because this is entirely new relief, sought without prior notice to the Respondent, the Application should be dismissed. The Respondent, however, did not make any submissions on the prejudice it would suffer as a result of this change in position.

[5] The Respondent did make submissions on the new relief sought: Chartis submits that these issues should be resolved by the arbitrators properly appointed by the parties, rather than the Court. Chartis submits that there is no basis for the Court to find that the “JAMS Demand” is a properly commenced ad hoc arbitration.

[6] Neither party asked the Court to view this “confidential” demand, which was not included in the Application record before the Court. Disney had, however, indicated it was available for viewing by the Court in its factum, but neither counsel addressed this issue.

[7] After the hearing of this Application, the Court asked the parties for submissions as follows:

“Justice Pollak would appreciate submissions on the following with respect to the motion she heard by the parties on February 5, 2018.

In the application record, counsel for the moving party refers to the following jurisdiction of our court:

“The Ontario Superior Court has supervisory jurisdiction over the arbitration, pursuant to the International Commercial Arbitration Act“.

The parties advised the Court at the hearing that there was no dispute with respect to this Court's jurisdiction.

What is the nature of the “supervisory" jurisdiction, specifically having regard to the arbitrator's jurisdiction to interpret the arbitration agreement and terms of that agreement.

Is this application premature as the arbitrator has the jurisdiction to interpret the contract and what jurisdiction does this Court have to impose its interpretation of the arbitration agreement on the arbitrator?”

[8] In response, the parties provided supplementary submissions.

[9] This Court has supervisory jurisdiction over the arbitration, pursuant to the International Commercial Arbitration Act, 2017, S.O. 2017, c. 2, Sched. 5 ("ICAA"). Disney argues that Articles 6 and 11(4)(b) of the Model Law provide jurisdiction for this Court’s intervention to “rescue this arbitration from the Respondent’s strategy of delay and avoidance”. Disney relies on Article 11(4)(b) which provides that:

Where, under an appointment procedure agreed upon by the parties …(b) the parties … are unable to reach an agreement expected of them under such procedure; …any party may request the court or other authority specified in article 6 to take the necessary measures.

[10] Disney argues that as a result of Chartis’ actions, the parties “have been unable to reach an agreement expected of them under such procedure”. Disney submits that the arbitration will not be held unless the Court exercises its supervisory jurisdiction and decides on the applicable procedural rules for this arbitration.

[11] Chartis’ position is that this Court has no jurisdiction as alleged by Disney under the Model Law because there has been no “failure of the appointment procedure”.

[12] Chartis submits that the Court's only jurisdiction in this case is possibly under Rule 14.05(3)(d) of the Rules. It acknowledges that, to a limited extent, Rule 14.05(3)(d) may provide the necessary jurisdiction to determine the parties’ rights that depend on the interpretation of the arbitration agreement.

[13] Chartis further submits that the interpretation of the arbitration agreement is within the jurisdiction of the arbitrators appointed by the parties. It is emphasized that there is no provision of the Model Law providing the Court supervisory jurisdiction to interpret arbitration agreements.

[14] Chartis does not object to holding a properly constituted “ad hoc” arbitration proceeding in Toronto.

[15] The parties agree that procedures of the English Arbitration Act, with respect to appointing arbitrators, apply.

[16] Article 11 of the Model Law provides that “the parties can agree on a procedure to appoint arbitrators.” In this case, the parties have agreed on the procedure in the Policy.

[17] Pursuant to the Policy, the appointment procedure is that Disney and Chartis Express will appoint one arbitrator. There are no terms regarding the appointment of a particular institution (such as JAMS) to administer the arbitration.

[18] Chartis submits that Disney has not, pursuant to the Policy, appointed an arbitrator or delivered a request in writing to Chartis Express to appoint an arbitrator.

[19] The parties agree that s. 14(4) of the English Arbitration Act stipulates that “arbitral proceedings are commenced in respect of a matter when one party serves on the other party or parties a notice in writing requiring him or them to appoint an arbitrator or to agree to the appointment of an arbitrator in respect of that matter.”

[20] Chartis submits that Disney has not delivered this notice required by the Act and has not appointed an arbitrator. Disney has therefore not commenced the arbitration. Disney’s attempt to appoint JAMS as the administrator of the arbitration under JAMS Rules does not quality as an appointment of an arbitrator.

[21] Chartis therefore submits that Disney has not commenced an “ad hoc” arbitration.

[22] The Policy provides for ad hoc arbitration pursuant to the English Arbitration Act. Chartis argues that in contrast to “ad hoc” arbitration, a “JAMS” arbitration is one that is administered by a specialist arbitration institution, under its own rules of arbitration. Disney has requested JAMS to administer the arbitration in accordance with the JAMS Rules, which Chartis argues conflicts with the English Arbitration Act.

[23] Disney submits that this court’s intervention is required to break the impasse between the parties and permit the arbitral proceedings to commence. Chartis argues that there is no impasse. Rather, Disney has not complied with the procedure agreed to by the parties.

[24] I agree that this Court’s jurisdiction to intervene in the appointment of arbitrators only arises if there is a failure of the parties to agree on the appointment procedure. The parties have agreed on the appointment procedure as set out in the policy. I find that Disney has not followed this procedure. There is no proper request in writing for arbitration to Chartis and Disney has not appointed its arbitrator. I decline to appoint JAMS or otherwise interfere in the appointment procedure set out in the Act which was agreed to by the parties. For these reasons, I deny the new relief requested by Disney in this Application.

Costs

[25] If the parties are unable to agree on costs, they may make brief written submissions to me no longer than three pages in length. The Defendant’s submissions are to be delivered by 12:00 p.m. on April 23, 2018, and the Plaintiff’s submissions are to be delivered by 12:00 p.m. on April 30, 2018. Any reply submissions are to be delivered by 12:00 p.m. on May 7, 2018.

Pollak J.

Date: April 12, 2018