COURT FILE NO.: CV-20-637621-0000

DATE: 20220208

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

ELECTEK POWER SERVICES INC.

Applicant

• and –

GREENFIELD ENERGY CENTRE LIMITED PARTNERSHIP

Respondent

Alan Mark and Christopher I.R. Morrison, for the Applicant

Pam Pengelley for the Respondent

HEARD: January 12, 2022

PERELL, J.

REASONS FOR DECISION

Table of Contents

A. Introduction and Overview.. 2

B. Methodology. 4

C. Procedural Background. 4

D. Standard of Review.. 5

E. Evidentiary Background. 7

1. The Witnesses and the Evidentiary Record. 7

2. The Lost Videorecording. 9

F. Factual Background. 10

1. The Contractual Relationship between Greenfield and Electek. 10

2. The Incident 17

3. The Submission to Arbitration. 18

4. The Arbitrators’ Decision. 19

G. The Jurisdiction of Arbitrators. 21

1. Introduction. 21

2. Contract Formation. 21

3. The Procedural Jurisdiction to Determine the Arbitrator’s Jurisdiction. 24

(a) Stay Motions. 24

(b) Declarations and Injunctions pursuant to s. 48 of the Arbitration Act, 1991. 27

(c) Application for Interpretation under Rule 14.05(3)(h) of the Rules of Civil Procedure. 27

(d) The Appointment of Arbitrator(s) 28

(e) Section 17 (8) Application. 28

(f) Section 46 Application. 29

(g) Appeals. 30

4. The Competence-Competence Principle. 31

5. The Substantive Law about the Jurisdiction of Arbitrators to Decide Disputes. 32

(a) Introduction. 32

(b) The Existence of an Arbitration Agreement 34

(c) The Legality of the Arbitration Agreement 34

(d) The Independent Agreement Principle. 35

(e) The Interpretation of Arbitration Agreements. 37

H. Critique of the Arbitration Panel’s Decision. 38

I. Is There a Binding Arbitration Agreement between Greenfield and Electek?. 40

J. Summary and Conclusion. 45

A. Introduction and Overview

[1] Electek Power Services Inc. (“Electek”) brings an application pursuant to s.17(8) of the Arbitration Act, 1991.[^1] Electek seeks an Order setting aside a “preliminary question” decision by a panel of Arbitrators. As an answer to a preliminary question, the Arbitrators decided that they had jurisdiction to decide the dispute between Electek and Greenfield Energy Centre Limited Partnership (“Greenfield”). Electek applies to have the Arbitrators’ decision set aside.

[2] By way of overview, the problem in the immediate case arises in the following way:

a. In 2009, in the context of making a sales pitch to provide goods and services to Greenfield, which operates an electricity power plant for industries in Sarnia, Ontario, Electek, which operates a high voltage equipment business in Sarnia, signed a document entitled “Purchase Order General Terms and Conditions” (“POGTC”). The POGTC contains an arbitration agreement.

b. No purchase orders were issued by Greenfield in 2009, and the first purchase order occurred in 2011. Hundreds of purchase orders followed.

c. In the contracting that occurred after 2011, Greenfield made its purchases of goods and services from Electek: (a) by issuing a Purchase Order that does not annex the POGTC; and (b) by signing Electek’s Timesheet, which includes terms and conditions of sale. Greenfield’s Purchase Orders state that the purchase order is governed by the “Terms and Conditions already agreed upon between the parties of this purchase order.” The Electek Timesheets, unlike the Greenfield Purchase Orders, does annex the terms and conditions of sale.

d. Sometimes, Greenfield’s Purchase Orders were issued before the goods and services were supplied. Other times, the Purchase Orders were issued after the goods and services were supplied. In any event, Electek’s Timesheet was always signed. Electek’s Timesheet includes a provision that states: “by approving this project Timesheet, you agree that you have read, understand, and accept [Electek’s] terms and conditions.” Electek’s terms and conditions do not include an arbitration agreement.

e. In the contracting that occurred after 2011, Electek had forgotten about the 2009 POGTC. In contrast, Greenfield remembered the POGTC and believed that it governed the relationship between the contracting parties. Subjectively, after 2011, the parties’ subjective contractual intention was that of ships passing in a foggy night. The ultimate legal problem of the immediate case is whether - objectively - the arbitration agreement in the POGTC governed the contractual relationship between the parties.

f. In 2018, Electek was hired to provide emergency services on transformer GSU #3 at Greenfield’s electricity power plant. Electek provided the services, then Greenfield signed an Electek Timesheet, issued a Purchase Order, and received an invoice from Electek for $49,720.

g. Electek’s work is alleged to have caused $10 million of damages to Greenfield’s power plant. In 2020, Greenfield claimed compensation from Electek. Greenfield submitted the dispute to arbitration. Electek disputed the submission to arbitration. Electek asked the Arbitrators to answer a preliminary question about their jurisdiction. In 2021, the Arbitrators unanimously held that they had jurisdiction to decide the dispute.

h. The Arbitrators treated the arbitration provision in the POGTC as a separate contract from the contract in which it was imbedded. The Arbitrators decided that the 2009 POGTC arbitration provision was a valid submission to arbitration to govern the dispute about the 2018 contract for goods and services. Otherwise, the Arbitrators expressly did not decide what terms and conditions applied to the 2018 contract for goods and services that is the subject of the dispute between Greenfield and Electek.

[3] This is a hearing de novo. For the reasons that follow, I set aside the Arbitrators’ decision.

B. Methodology

[4] Electek’s application pursuant to s.17(8) of the Arbitration Act, 1991 raises complex legal problems. My methodology for solving those legal problem is as follows:

• First, I shall describe the procedural background to the application now before the court.

• Second, I shall discuss, the manner of exercising my own jurisdiction on this application. I shall explain why the immediate application is a de novo hearing of the evidence that was before the Arbitrators.

• Third, I shall describe the evidentiary background, and I shall address a problem about a lost videorecording of the testimony at the arbitration hearing.

• Fourth, I shall discuss the factual background. I shall describe: (a) the history of the contracting between Greenfield and Electek; (b) the incident that gave rise to the dispute between the parties; (c) the chronology of the submission to arbitration; and (d) the Arbitrators’ decision.

• Fifth, I shall analyze and explain the law about the jurisdiction of arbitrators including: (a) the general principles of contract formation; (b) the procedural law associated with an arbitrator’s jurisdiction; (c) the competence-competence principle; and (d) the four critical substantive law principles about the jurisdiction of arbitrators that will be determinative of the jurisdictional problem of the immediate case.

• Sixth, I shall critique the decision of the Arbitrators in the immediate case.

• Seventh, I shall apply the law about the jurisdiction of arbitrators to the facts of the immediate case and answer the question of whether there is a binding arbitration agreement between Greenfield and Electek and whether the Arbitrators had jurisdiction to decide the dispute between the parties.

• Eighth, I shall summarize and conclude this decision.

C. Procedural Background

[5] The procedural background to the application now before the court is the following.

[6] On February 6, 2020, Greenfield delivered a Notice of Arbitration.

[7] In February 2020, Electek delivered a Response to Arbitration Application.

[8] On March 6, 2020, Electek commenced an Application in the Superior Court pursuant to s.48 of the Arbitration Act, 1991 for a declaration that the arbitration commenced by Greenfield is invalid.

[9] On March 16, 2020, Electek brought a motion in the Superior Court for an order for an interim stay of the arbitration until the hearing of Electek’s application pursuant to s.48 of the Arbitration Act, 1991.

[10] On June 15, 2020, while the Court was operating under emergency protocols because of the Covid-19 pandemic, Electek sought to schedule its motion for an interim stay of the arbitration. Justice Myers made the following endorsement:

Counsel concede the matter is not a short application. An urgent hearing is not one for which booking in December is sought. The court is not able to hear complex, lengthy matters yet [because of the operations protocols of the Covid-19 pandemic] absent urgency. The competence-competence principle suggests the panel should rule on its jurisdiction without prejudice to Electek’s right to raise the issue thereafter. This is especially the case where significant facts are in dispute. There is no short crisp ruling of law that could save significant trial expense either here or there. Start there. We’ll be here when you get back.

[11] In the summer of 2020, Electek asked the Arbitration Panel, which was comprised of Earl A. Cherniak Q.C., William G. Horton, and J. Brian Casey, to rule whether the Arbitrators had jurisdiction to resolve the dispute between Greenfield and Electek.

[12] An arbitration hearing took place on February 3, 4, 5, and 8, 2021. It was a Zoom hearing recorded by the International Centre for Dispute Resolution (“ICDR”).

[13] The Arbitrators released their decision on March 5, 2021.

[14] On August 16, 2021, Electek brought an application pursuant to s.17(8) of the Arbitration Act, 1991 for an Order setting aside the Arbitrators’ decision.

D. Standard of Review

[15] Electek’s application is brought pursuant to s.17(8) of the Arbitration Act, 1991.

[16] The parties disagree about the standard of review to be applied by the court on an application pursuant to. s.17(8). To resolve this disagreement, it is necessary to consider all of s.17.

[17] Section 17 states:

Jurisdiction of Arbitral Tribunal

Rulings and objections re jurisdiction

Arbitral tribunal may rule on own jurisdiction

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.

Independent agreement

(2) If the arbitration agreement forms part of another agreement, it shall, for the purposes of a ruling on jurisdiction, be treated as an independent agreement that may survive even if the main agreement is found to be invalid.

Time for objections to jurisdiction

(3) A party who has an objection to the arbitral tribunal’s jurisdiction to conduct the arbitration shall make the objection no later than the beginning of the hearing or, if there is no hearing, no later than the first occasion on which the party submits a statement to the tribunal.

Party’s appointment of arbitrator no bar to objection

(4) The fact that a party has appointed or participated in the appointment of an arbitrator does not prevent the party from making an objection to jurisdiction.

Time for objections, exceeding authority

(5) A party who has an objection that the arbitral tribunal is exceeding its authority shall make the objection as soon as the matter alleged to be beyond the tribunal’s authority is raised during the arbitration.

Later objections

(6) Despite section 4, if the arbitral tribunal considers the delay justified, a party may make an objection after the time limit referred to in subsection (3) or (5), as the case may be, has expired.

Ruling

(7) The arbitral tribunal may rule on an objection as a preliminary question or may deal with it in an award.

Review by court

(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.

No appeal

(9) There is no appeal from the court’s decision.

[18] In the immediate case, as noted above, after Greenfield commenced an arbitration, Electek brought an application to the court to stop the arbitration, but relying on the competence-competence principle, Justice Myers suggested that the matter of the arbitrators’ jurisdiction be decided by the Arbitrators.

[19] Electek took up this suggestion, and after four days of argument, the Arbitrators decided that they did have jurisdiction. Electek now returns to the court pursuant to s.17(8), to “make an application to the court to decide the matter.”

[20] It is Electek’s submission that the s.17(8) application is a hearing de novo using the evidence submitted to the Arbitrators. With one problem, discussed below, about a lost transcription of video and audio evidence, Greenfield agrees on the evidentiary record for the s.17(8) application. Greenfield, however, submits that the s.17(8) application is in the nature of a judicial review application governed by the principles of appellate and judicial review and in particular by the principles of judicial review set out by the Supreme Court of Canada in Canada (Minister of Citizenship and Immigration) v. Vavilov.[^2]

[21] Greenfield, however, is incorrect. The case law establishes that s.17(8) of the Arbitration Act, 1991 applications and the matching provision under the International Commercial Arbitration Act, 2017[^3] are hearings de novo.[^4]

[22] In this regard, keeping in mind that s.11(1) of Ontario’s International Commercial Arbitration Act, 2017 is the same as s. 17(8) of Ontario’s Arbitration Act, 1991, in The Russian Federation v. Luxtona Limited,[^5] Justice Corbett stated at paragraph 22:

22. The court is “to decide the matter” It is not “to review the tribunal's decision". "The matter", referenced in both art. 16(1) of the Model Law and s.11(1) of the [International Commercial Arbitration Act, 2017] is the issue of the tribunal's jurisdiction. This is clear language conferring original jurisdiction on the court to adjudicate the question of the tribunal's jurisdiction. This language is not qualified by a privative clause or terms of reference for the application. The court's task is entirely described by the phrase “decide the matter”.

[23] What is now before the court is a normal application under the Rules of Civil Procedure. It is not an appeal.

[24] The only procedural difference about this application is that the appeals from it are circumscribed by the appeal provisions of the Arbitration Act, 1991.

a. If a court dismisses an application under the Arbitration Act, 1991: (a) because of the competence-competence principle; or (b) because it decides that the arbitrator has jurisdiction, then an appeal of that decision is barred by the appeal provisions of the Act.[^6]

b. If a court concludes that a dispute is not subject to arbitration, then an appeal is not barred by the appeal provisions of the Arbitration Act, 1991. Where there is no arbitration agreement, the Arbitration Act, 1991 has no application, and it follows that if the court has decided that the Act is not applicable, then the prohibition against an appeal is equally not applicable.[^7]

[25] Having regard to my decision that there is no arbitration agreement in the immediate case, my decision de novo can be appealed.

E. Evidentiary Background

1. The Witnesses and the Evidentiary Record

[26] The matter now before the court is Electek’s application pursuant to s.17(8) of the Arbitration Act, 1991 to set aside the preliminary question decision of the Arbitrators that they had jurisdiction to decide the dispute between Greenfield and Electek. The evidence for this application is a composite of evidence that was proffered before, during, and after the arbitration hearing.

[27] As noted above, before the immediate matter, Electek had brought an application pursuant s.48 of the Arbitration Act, 1991 to have the arbitration stopped. Justice Myers declined to stay the arbitration even on an interim basis, and Electek asked the Arbitrators to rule on their jurisdiction.

[28] The parties delivered evidentiary statements for the hearing before the Arbitrators and the hearing proceeded as a virtual hearing with four days of examinations and cross-examinations.

[29] The parties have now returned to this Court, and the evidence for Electek’s application pursuant to s.17(8) consists of: (a) the evidence that the parties filed on the initial motion that was considered by Justice Myers; (b) the evidence both parties proffered for the hearing before the Arbitrators; (c) transcripts and video recordings of the hearing before the Arbitrators; (d) the Arbitrators’ decision; (e) several affidavits filed for the purposes of the s.17(8) application; (f) a joint documentary brief; and (g) compendia.

[30] More precisely, the evidence for the application now before the court consists of the following:

a. Max Autio provided a Statement dated September 27, 2020. Mr. Autio is a retired employee of Greenfield. From 2011 to mid-2013, he was the Chief Operating Engineer and Operations & Maintenance Manager at Greenfield. He was employed by the facility operator Ethos Energy (then known as Wood Group). He was examined and cross-examined at the arbitration hearing.

b. Lynne Ballard provided Statements dated July 23, 2020 and September 27, 2020. Ms. Ballard is currently employed by BC Hydro. She is a former employee of Greenfield, and she worked for it for seven years between 2007 and 2014. She was Plant Service Administrator/Purchaser, with a major role in implementing Greenfield’s procurement policies. She was examined and cross-examined at the arbitration hearing.

c. Charles Batrouny provided an affidavit dated September 12, 2021; i.e., after the arbitration hearing. Mr. Batrouny is a lawyer with Cozen O’Connor LLP, Greenfield’s lawyers. He was in attendance for the four days of hearings before the Arbitrators. He was cross-examined on his affidavit for the purposes of the application pursuant to s.17(8) of the Arbitration Act, 1991.

d. Hudson Chalmers delivered an affidavit dated August 16, 2021; i.e., after the arbitration hearing. Mr. Chalmers is a lawyer with Will Davidson LLP, the lawyers for Electek. He was in attendance for the four days of hearings before the Arbitrators. He was cross-examined on his affidavit for the purposes of the application pursuant to s.17(8) of the Arbitration Act, 1991.

e. Richard Dejonghe delivered a Statement dated July 24, 2020. From September 2009 to November 2010, he was the Plant Manager at Greenfield, where he was employed by the facility operator, Ethos Energy. He was examined and cross-examined at the arbitration hearing.

f. Rajesh Desai delivered a Statement dated August 4, 2020. Mr. Desai is a Lead Operator at Greenfield, which is to say that he is the operator in charge during a work shift. He was examined and cross-examined at the arbitration hearing.

g. Brad Gray delivered an affidavit dated June 11, 2020 and a Statement dated August 21, 2020. Mr. Gray was the Chief Operating Officer (“COO”) and Vice President of Operations for Electek from 2009 to 2011. He was examined and cross-examined at the arbitration hearing.

h. Marinela Kraju delivered an affidavit dated March 16, 2020; i.e., before the arbitration hearing. Ms. Kraju is an associate lawyer for Will Davidson LLP, the lawyers for Electek.

i. C. David Lamoureaux delivered a Statement dated July 24, 2020. Mr. Lamoureaux is the Regional Managing Counsel for Calprine Corporation which along with Mitsui & Co. Ltd. own Greenfield.

j. Shane Maddeford delivered an affidavit dated June 12, 2020. Mr. Maddeford is Electek’s Director of Technical Services. He performed the work that has given rise to the dispute between the parties. He was examined and cross-examined at the arbitration hearing.

k. Alex Palimaka delivered an affidavit dated July 6, 2020. He also delivered Statements dated August 21, 2020 and October 7, 2020. Mr. Palimaka is Electek’s General Legal Counsel. He is also an Electek Vice President. He was examined and cross-examined at the arbitration hearing.

l. Lorne Reddy delivered a Statement dated September 30, 2020. Mr. Reddy is the Facility Manager at Greenfield, a position he has held since August 2015. He was examined and cross-examined at the arbitration hearing.

m. Tim Valleau delivered Statements dated July 23, 2020 and September 29, 2020. Mr. Valleau is the Maintenance and TA Planner at Greenfield’s power plant. He is employed by Ethos Energy which operates the plant on behalf of its owners. He was examined and cross-examined at the arbitration hearing.

n. Joe Vandenboom delivered Statements dated August 20, 2020 and October 9, 2020. Mr. Vandenboom was Director of Operations at Electek. Mr. Vandenboom was examined and cross-examined at the Arbitration hearing.

2. The Lost Videorecording

[31] As required by the arbitration rules of the ICDR, the hearing was video recorded. For the arbitration, each witness produced a sworn statement as evidence-in-chief and they were examined and cross-examined at the hearing, which was a videoconference recorded on Zoom.

[32] However, the recording of February 4, 2021 (Day 2) of the hearing was lost. On that day, Mr. Autio for Greenfield, Ms. Ballard for Greenfield, Mr. Maddeford for Electek, and Mr. Valleau for Greenfield were examined and cross-examined.

[33] Mr. Chalmers attended the arbitration hearing as one of the lawyers representing Electek. For the purposes of Electek’s application pursuant to s.17(8) of the Arbitration Act, 1991, Mr. Chalmers delivered a 114-paragraph affidavit dated August 16, 2021 reporting on the missing cross-examination based on his recollection and on notes made at the hearing by him and Electek’s lawyers.

[34] Mr. Batrouny attended the arbitration hearing as one of the lawyers representing Greenfield. For the purposes of responding to Electek’s application pursuant to s.17(8) of the Arbitration Act, 1991, Mr. Batrouny delivered a 55-paragraph, 20-exhibit affidavit dated September 12, 2021, amongst other things, reporting on the missing cross-examination based on his recollection and on notes made at the hearing by him and Greenfield’s lawyers.

[35] For the purposes of Electek’s application pursuant to s.17(8) of the Arbitration Act, 1991, Greenfield took the position that Mr. Chalmers’ affidavit should be struck as inadmissible hearsay. I agree, and, therefore, in reaching my own decision in this matter, I shall not rely on Mr. Chalmers’ or Mr. Batrouny’s report of the testimony of Mr. Autio, Ms. Ballard, Mr. Maddeford, and Mr. Valleau.

[36] In any event, as the following discussion of the factual background will reveal, what all of the witnesses, including Mr. Autio, Ms. Ballard, Mr. Maddeford, and Mr. Valleau, subjectively thought: (a) about the contractual intentions of Greenfield and Electek, respectively; and (b) about what Greenfield and Electek, respectively, knew or ought to have known about what were the terms and conditions of the contract or contracts between Greenfield and Electek misses the point that the task for the court is to determine objectively whether a consensus ad idem was reached about an arbitration agreement and whether a valid and enforceable arbitration agreement was established to provide the Arbitrators with jurisdiction to decide the dispute between Greenfield and Electek. The subjective beliefs of the parties’ witnesses are not determinative. Moreover, what the documents reveal and what the conduct of the parties revealed is the place to find the objective truth in the case at bar.

F. Factual Background

1. The Contractual Relationship between Greenfield and Electek

[37] Greenfield is an Ontario limited partnership. It carries on business in Ontario operating an electricity power plant. It operates a power generating plant in Sarnia, Ontario. The plant, the Greenfield Energy Centre, became operational in 2008.

[38] Electek is an Ontario corporation that services high voltage electrical equipment. It was founded by Joe Vandenboom in 2002. In 2007, Electek was purchased by Bluewater Power Distribution Co. Mr. Vandenboom became an employee. Brad Gray, Bluewater’s VP of Operations became Electek’s COO.

[39] Greenfield had elaborate and detailed policies and procedures for procuring goods and services. Greenfield’s policies and procedures directed that vendors could only become authorized to contract with Greenfield if they agreed to Greenfield’s contractual terms and conditions. Those terms and conditions were set out in a document entitled “Purchase Order General Terms and Conditions” (“POGTC”).

[40] Greenfield’s policy was that it would not contract with a vendor unless the vendor had been assigned a vendor number and a vendor number would not be assigned unless the vendor had signed the POGTC.

[41] For present purposes the following provisions of the POGTC, which among other things included an arbitration agreement, are pertinent.

GEC – PURCHASE ORDER GENERAL TERMS AND CONDITIONS

IMPORTANT – READ CAREFULLY

Definitions

“Buyer” shall mean the entity identified as such on the face of the purchase order to which these terms and conditions are referenced and incorporated into.

“Purchase Order” shall mean the signatory document that specifies the specific purchase to be made by Buyer, all attachments, referenced specifications, and the General Terms and Conditions.

“Seller” shall mean the entity identified as such on the face of the purchase order to which these terms and conditions are referenced and incorporated and which will provide or perform the Scope of Work.

"Services" shall mean all services including but not limited to all performances provided and, all equipment and material supplied in connection with the Purchase Order.

“Scope of Work” shall mean the provision of the goods, materials, equipment, parts or services as specified in and in accordance with the written purchase order and any attachments or amendments and these General Terms and Conditions.

1. ACCEPTANCE: PURCHASE ORDER CONSTITUTES ENTIRE AGREEMENT

This Purchase Order constitutes Buyer’s offer and may be accepted by Seller only in accordance with the terms hereof. Any acceptance herein of an offer of Seller, or any confirmation herein of a prior agreement between Buyer and Seller or any confirmation herein of a prior agreement between Buyer and Seller is expressly made conditional on Seller’s agreement to the additional or different terms contained herein. Seller may accept this Purchase Order by commencement of Scope of Work, shipment of goods, or furnishing of services hereunder. Dispatch of Seller’s acknowledgment form or other written document will also act as an acceptance if it agrees with this Purchase Order with respect to the description, amount, price and time of delivery of the goods or services ordered. Notwithstanding any waiver in any instance, or any oral agreement, or any instructions terms and conditions that may be contained in any quotation, acknowledgement, invoice or other written document of Seller, no addition to, waiver for the future or modification of, any of the provisions herein contained shall be of any force or effect unless made in writing and executed by Buyer.

2 CHANGES

3. PRICE

4. SHIPPING

5. TIME OF THE ESSENCE

6 DELIVERY/TITLE

7. RIGHT OF INSPECTION AND REJECTION

8. ASSIGNMENT

9. GOVERING LAW

10 WARRANTY

11. PROJECT SITE

12. INVOICES

13.DOCUMENT

14. PATENT INDEMNITY

15. INDEMNITY AND INSURANCE

16. COMPLIANCE WITH LAWS

17. CHEMICAL SUBSTANCE IDENTIFICATION

15 [sic]. SAFETY AND HEALTH PROGRAMS

17. [sic]

18. CONFIDENTIALITY/TRADE SECRETS

19. WAIVER

20. CONSEQUENTIAL DAMAGES

21. DISPUTE RESOLUTION

The parties agree than any and all disputes or controversies that may arise between the parties arising out of or related to this Agreement shall be determined by binding arbitration. Any such arbitration shall be determined before the American Arbitration Association (“AAA”) in accordance with AAA rules then in effect with each party nominating one arbiter and the two arbiters nominating a third, and that any arbitration proceedings shall be held in Toronto, Ontario. Judgment upon arbitration awards may be entered in any court, provincial or federal, having jurisdiction.

22. CURRENCY

[42] The evidence from several of Greenfield’s employees and from several of Greenfield’s authorized vendors revealed that goods and services were provided to Greenfield in accordance with the POGTC.

[43] The evidence from several of Greenfield’s employees and from several of Greenfield’s authorized vendors was that an authorized vendor methodology was a custom of the trade in the “Chemical Valley” area of Sarnia, which was the location of numerous power generation facilities. They testified that the practice of authorizing vendors and of establishing a master contract to govern and stipulate the terms and conditions for purchases (purchase orders) was a standard, well-known, and routine practice in Sarnia.

[44] Mr. Palimaka for Electek disagreed about whether master contracts were the custom of the trade, and he stated in his reply Statement as follows:

2. Electek-Sarnia has 78 industrial customers of which we currently have 14 customers with Master Service Agreements. All other customers receive our Terms and Conditions with our Quote or Timesheet, or they provide a Purchase Order in advance with their own Terms and Conditions. None of our customers use the process which Greenfield is alleging was followed in this case, of having Electek sign Purchase Order Terms and Conditions and having those Terms and Conditions govern the relationship between the parties for an undefined period of time.

3. The process of contractor qualification for many of our customers is, in fact, managed by third party service providers, such as ISNetworld and Avetta. In order to become qualified under either program, Electek is required to submit very similar information to that required by Greenfield under its Contractor Qualification Package, which is referenced and attached to Exhibit L of Joe Vanderboom's [sic] Responding Statement, dated August 20, 2020. At this point in time, 17 of Electek's customers use ISNetworld and 6 customers use Avetta for contractor qualification.

[45] In 2008, Electek approached Greenfield and offered its services. The Plant Administrator at the time was Lynne Ballard. In accordance with Greenfield’s policies and procedures, it was Ms. Ballard’s routine practice to provide vendors a copy of the POGTC.

[46] On December 18, 2008 Greenfield and Electek met and although Ms. Ballard was not at the procurement discussions, she testified that she told Mr. Vandenboom of Electek that Greenfield required purchase orders that were governed by a document entitled Purchase Order General Terms and Conditions (POGTC).

[47] Mr. Vandenboom does not recall the conversation. Mr. Vandenboom and Mr. Gray attended the meeting, which was to solicit work for Electek. Neither had any recollection of the POGTC being discussed at the initial meeting between Greenfield and Electek. There is no evidence that Electek’s terms and conditions for contracting were discussed. The purpose of the meeting was to market Electek as a potential supplier of high voltage goods and services to Greenfield and the details of the contracting, if any, were left for further discussion.

[48] After the meeting on December 18, 2008, Shana-Rhea Gould, who is an Operation Project Coordinator at Bluewater, sent Ms. Ballard an email message and others at Greenfield additional information about Electek, including its standard rate schedule. However, Electek’s terms and conditions for contracting were not included in this correspondence.

[49] At some time in February or March 2009, Greenfield gave Electek a copy of the POGTC. Ms. Ballard’s evidence is that Mr. Vandenboom was the intermediary who got the POGTC to Mr. Gray and then presumably to Ms. Gould. There is documentary evidence that Ms. Gould reviewed the POGTC in February or early March 2009.

[50] On March 4, 2009, Brad Gray signed the POGTC, and he emailed it to Greenfield. In his testimony for the arbitration hearing, he admitted reading the POGTC and having the authority to sign it. In 2020, he testified that he could not recall signing the POGTC. His reconstructed thought was that he signed the POGTC for anticipated imminent work for a specific job that ultimately was not procured. There is no evidence about what that specific project might have been.

[51] Mr. Vandenboom did not know how or why Mr. Gray signed the POGTC. Mr. Palimaka, Electek’s in-house legal counsel, did not know how or why Mr. Gray signed the POGTC. Mr. Palimaka did not review it before it was signed. Mr. Palimaka testified that he was not aware of the existence of any master contract between Greenfield and Electek.

[52] There is evidence that Mr. Gray had Ms. Gould review the POGTC before March 4, 2009, when it was sent to Greenfield, because she sent the following email message to Mr. Gray on March 3, 2009:

I’ve read through the document. My only concerns are under the Safety & Health Program section. It states that if we are found to be non-compliant with their H&S performance requirements that work will cease (no big deal) but also that no payment shall be due when we are in non-compliance. It also states that we are responsible for occupational health monitoring and sampling to determine levels of exposure to our employees. They are also requesting us to carry Disease coverage on our insurance for $3M. I am not sure if we carry this coverage now.

[53] Ms. Gould who is still employed by Bluewater did not provide any evidence for the arbitration hearing.

[54] Electek was not retained for services in 2009, or 2010. There is evidence that in October 2009, Greenfield bid for a contract to install soft-starters on plant motors (900 hours of work), but nothing came of the bid. The bid was prepared by Barbara Fan, an Electek Engineer, who would have had to attend at the plant to prepare the bid. Ms. Fan did not provide evidence at the arbitration hearing.

[55] Documentation for other bids for work by Electek between 2002 to 2011 has been lost.

[56] In 2011, Electek renewed its efforts to market its services to Greenfield. By this time, Mr. Gray was no longer at Electek. He ended his employment with Electek in June 2011, but he did consulting work for Bluewater from time to time thereafter.

[57] In the summer of 2011, Mr. Vandenboom contacted Max Autio, Greenfield’s Chief Operating Engineer. They met on July 26, 2011, and Electek provided Greenfield with a rate sheet upon which there was the notation “all work will be performed in accordance with the terms and conditions on the reverse of the Electek customer Timesheet. The Timesheet terms and conditions does not include a submission to arbitration provision.

[58] On August 8, 2011, in response to Greenfield’s invitation to submit a proposal to do work, Electek submitted a bid to Ms. Ballard. The bid indicated that work was to be performed in accordance with Electek’s standard terms and conditions.

[59] Around this time, Mr. Palimaka was given a copy of the POGTC with Ms. Ballard’s business card attached. He did not recall who gave it to him, but he assumed it was Mr. Vandenboom. Mr. Palimaka made some notes on the POGTC. However, claiming solicitor and client privilege, Electek did not produce Mr. Palimaka’s annotations on the POGTC. During cross-examination, Mr. Palimaka said that Mr. Vandenboom told him that Greenfield’s terms and conditions were intended to cover all future work. Unaware of the POGTC signed by Mr. Gray in 2009, Mr. Palimaka deposed that the POGTC was never signed by Electek after he reviewed it in 2011.

[60] The 2011 bid was accepted, and Electek provided services on August 10, 2011. Ms. Ballard, whose responsibilities included rejecting contracts that did not include Greenfield’s contract terms and conditions, did not reject Electek’s quote and the work went forward. Greenfield did not issue a Purchase Order, and it paid for the services in accordance with Electek’s rate sheet fees. Electek was not advised that the POGTC applied.

[61] After 2011, Greenfield issued Purchase Orders without annexing the POGTC. Rather, Greenfield issued Purchase Orders that stated in a boxed alert that the Purchase Order was governed by the “Terms and Conditions already agreed upon between the parties of this purchase order.” Visualize:

[62] After the 2011 first contracting, Electek continued to provide services to Greenfield. It submitted quotes with the notation “all work will be performed in accordance with the terms and conditions on the reverse of the Electek customer Timesheet” or similar notation.

[63] Annually, Electek provided Greenfield with rate sheets, i.e., a price list for Electek’s goods and services. The rate sheet set out Electek’s terms and conditions for providing goods and services. On its written quotes for work, Electek indicated that its work was performed in accordance with Electek’s standard terms and conditions, which were set out in the quote itself.

[64] Annually, Greenfield provided Electek with a contractor qualification package including references to the procurement documents that were to be signed by Electek. There is no reference to the POGTC in the qualifications package although some of the procurement documents reflect terms of the POGTC. The contracting package itself, however, does not expressly reference the POGTC and did not include a copy of it.

[65] Electek denies that the POGTC was a master contract, and apart from the POGTC, there was no master contract between Greenfield and Electek.

[66] Electek had lost its institutional memory of Mr. Gray signing the POGTC, and on an annual basis it provided Greenfield with a rate sheet, a price list for its goods and services. The Timesheet noted that all work would be performed pursuant to the “terms and conditions on the reverse side of the Electek Customer Timesheet.” Before or after work was performed, Electek would provide Greenfield with a Timesheet, Greenfield invariably signed the Timesheets. Electek was told and complied with a directive that its invoices refer to Greenfield’s purchase order number.

[67] For present purposes, the following provisions from Electek’s Terms and Conditions are pertinent:

TERMS AND CONDITIONS

ELECTEK POWER DISTRIBUTION CORPORATION

General Terms and Conditions

The following terms and conditions of sale shall apply to any sale of goods or services by Electek Power Services Inc. (hereinafter called "Electek") and acceptance of these terms and conditions is an express condition of such sale. Purchaser shall be deemed to have full knowledge of the terms and conditions herein and such terms and conditions shall be binding.

1. GENERAL

In the event of any conflict or inconsistency between the terms and conditions of sale herein and the terms and conditions contained in the Purchaser's order or in any other form issued by Purchaser, whether or not any such form has been acknowledged or accepted by Electek, Electek's terms and conditions herein shall prevail. No waiver, alteration or modification of these terms and conditions shall be binding upon Electek unless made in writing and signed by a duly authorized representative of Electek.

2. QUOTATIONS

Unless otherwise stated, Electek's quotation shall be null and void unless accepted by Purchaser within thirty (30) days from the date of the quotation. All quoted prices are based on the current exchange rates, tariffs and costs of manufacture. Unless otherwise stated in the quotation, quoted prices are subject to change by Electek with or without notice until Purchaser's acceptance. Customary methods of transportation shall be selected by Electek and such transportation will be at Purchaser's expense.

3. TAXES

4. DELIVERY

5. HEALTH AND SAFETY

6. FORCE MAJEURE

7. TITLE

8. LIMITATION OF LIABILITY

9. WARRANTY

10. INSTALLATION

11. HANDLING OF PCBs

12. RETURNED GOODS

13. TERMS OF PAYMENT

14. CHANGES AND CANCELLATION

Orders accepted by Purchaser and not subject to changes or cancellation by Purchaser, except with Electek’s written consent. In such cases where Electek authorizes changes or cancellation, Electek reserves the right to charge Purchaser with reasonable costs based upon expenses already incurred and commitments made by Electek, including, with limitation, any labour done, material purchased and also including Electek’s usual overhead and reasonable profit and similar cancellation charges with Electek’s suppliers.

15. THE AGREEMENT

An acceptance and official confirmation of Purchaser's order by Electek shall constitute the complete agreement, subject to the terms and conditions of sale herein set forth, and shall supersede all previous quotations, orders or agreements. The law of the Province of Ontario shall govern the validity, interpretation and enforcement of these terms and conditions of sale and of any contract of which these terms and conditions are a part.

[68] In 2015, Electek made its Timesheets digital. For Greenfield to approve Electek’s work, a computer software prompt stated, “by approving this project Timesheet, you agree that you have read, understand, and accept the terms and conditions.” There was a hyperlink to Electek’s terms and conditions.

[69] Greenfield accepted this manner of contracting where it would submit Purchase Orders before or after work was performed and where it would sign Electek’s Timesheets.

[70] By February 2018, Electek had performed over a hundred work assignments for Greenfield. From 2011 to 2018, Electek’s services were procured by a call-out, by a written request, or by an accepted bid. Greenfield only rarely provided a Purchase Order before Electek performed the work. More than 150 Greenfield Purchase Orders were issued, a few of which were issued before the work was done, but most Purchase Orders were issued after the work was complete. Electek provided Greenfield with its rate sheet and a Timesheet indicating the work performed. As already noted above, the Timesheet stated that Greenfield accepted Electek’s terms and conditions. Greenfield routinely signed the Timesheets.

[71] At no time between 2009 to 2018 was a POGTC annexed to any of Greenfield’s Purchase Orders issued for Electek. Greenfield, however, believed that Electek was bound by Mr. Gray’s signature in 2009 on the POGTC. After 2009, on no occasion was Electek orally told that POGTC applied. Mr. Gray had left his job with Electek, and from 2011 to 2018, Electek was not conscious of the POGTC.

2. The Incident

[72] On February 10, 2018, at 4:55 a.m. a transformer relay opened. This indicated a fault condition at transformer G3 (“GSU #3”), which was manufactured by Pauwels Canada Inc.

[73] Greenfield made an urgent call to Electek to perform emergency services. No Purchase Order was issued on the 10th. Shane Maddeford of Electek took the telephone call from Greenfield. When Electek was called out on February 10, 2018, there was no specific tender or Purchase Order for the emergency work, and the price that was subsequently charged for the work was in accordance with the current rate sheet that included reference to Electek’s terms and conditions.

[74] On February 10, 2018, Mr. Maddeford went to Greenfield’s plant. He made a recommendation, and the transformer was re-energized. The transformer failed immediately. Greenfield alleges that the re-start triggered a catastrophic failure causing more than $10 million in damages.

[75] On February 12, 2018, Mr. Maddeford prepared a Timesheet for Electek’s already performed work.

[76] On February 14, 2018, Greenfield issued a purchase order for the work performed on February 10, 2018. The purchase order was #GEC-WGTS-11829. The Description of the work was “ESTIMATED TIME AND MATERIAL FOR ELECTRICAL SUPPORT FOR GSU #3 FAULT INSPECTION AND REPAIRS. NOTES OR SPECIAL INSTRUCTIONS: ELECTRICAL SUPPORT FOR GSU #3 FAULT WO#30452*2.” The price was $44,000 plus HST of $5,720 for a total of $49,720.

[77] The Purchase Order was issued by Henry N. Nader of Greenfield. The Purchase Order did not include a copy of the POGTC. The Purchase Order referenced terms and conditions “already agreed upon between the parties of this purchase order.” The Purchase Order stated: “’‘Purchase order number and P.O. line item numbers are required on invoice and all packing slips.’ Please sign purchase order and fax back to 519-867-337.” Electek did not sign the purchase order and fax it back to Greenfield.

[78] On February 20, 2018, Mr. Valleau of Greenfield approved Electek’s Timesheet for the GSU #3 work. He did this by electronically clicking the box that stated that Electek’s terms and conditions applied. In his Reply Statement for the Arbitration hearing, Mr. Valleau’s evidence was that he did not appreciate what he was doing other than approving work in accordance with the POGTC. Mr. Valleau stated:

Paragraph 28 of Joe Vandenboom's statement includes a screenshot of a box saying "Approve Project Timesheet". I would always just click "Approve" to approve the Timesheet. I never took in the fact that I was being asked to change any T&Cs [terms and conditions] to which Electek had agreed as an authorized vendor. I never thought or intended to do anything otherwise, and I never clicked on a link to T&Cs. I did not think that my approving their time was anything but that. After reading Joe's affidavit, out of curiosity, I went back to a timesheet email in my inbox to confirm that this box actually appeared. I see that it does. I clicked "Cancel" to see what happens. It simply closes the window and I see the screen requesting that I "Approve" the time. In other words, the only way I can approve the time is to click "Approve" twice. If I do not do this, the timesheet will not get approved and Electek will not get paid. My understanding is that [Greenfield’s] T&Cs are paramount and govern our vendor relationship; I would not expect that my approving their timesheets could in any way impact or change this.

[79] Electek’s position is that the reference in Greenfield’s Purchase Order that it identified to terms and conditions “already agreed upon between the parties” is to Electek’s terms and conditions and not the terms and conditions in the POGTC.

[80] Greenfield subsequently hired Electek to perform some of the repairs consequent to the transformer failure.

[81] In March 2018, Electek prepared its invoice, which was sent to Greenfield. The invoice referenced purchase order #GEC-WGTS-11829.

3. The Submission to Arbitration

[82] Two years passed after the incident of February 2018. On February 6, 2020, Greenfield brought a Notice of Arbitration against Electek relying on the arbitration agreement contained in the POGTC.

[83] By Notice of Arbitration dated February 6, 2020, delivered to the ICDR, Greenfield commenced an arbitration against Electek, claiming damages for negligence, misrepresentation, and breach of contract by Electek with respect to work performed on transformer GSU #3.

[84] On February 10, 2020, Electek delivered an Answer to the Notice of Arbitration stating there was no valid agreement to arbitrate. Electek denied all of Greenfield’s allegations. Electek specifically advised it did not attorn to this arbitration proceeding and it reserved all its rights.

[85] Almost immediately, Electek brought an application in the Ontario Superior Court of Justice to stop the arbitration proceeding.

[86] On May 1, 2020, the ICDR appointed Earl A. Cherniak Q.C., William G. Horton, and J. Brian Casey as the arbitral tribunal.

[87] On June 15, 2020, during the pandemic, the Electek Notice of Application was triaged by Justice Myers, who made the endorsement set out above, redirecting the parties back to the Arbitrators: “There is no short, crisp ruling of law that would save significant trial expense either here or there. Start there. We’ll be here when you get back.”

[88] Electek requested the Arbitrators to decide the issue of its jurisdiction over the dispute.

[89] Electek filed witness statements from: (a) Brad Gray, dated June 11, 2020 and August 21, 2020; (b) Shane Maddeford, dated June 12, 2020; (c) Alex Palimaka, dated July 6, 2020, August 21, 2020 and October 7, 2020; and (d) Joe Vandenboom, dated August 20, 2020.

[90] Greenfield filed witness statements from: (a) Max Autio, dated September 27, 2020; (b) Lynn Ballard, dated July 23, 2020 and September 27, 2020; (c) Rick Dejonghe, dated July 24, 2020; (d) Rajesh Desai, dated August 4, 2020; (e) David Lamoreaux, dated July 24, 2020; Lorne Reddy, dated September 30, 2020; and (f) Tim Valleau, dated July 23, 2020 and September 29, 2020.

[91] The preliminary hearing was held by Zoom video conference on February 3, 4, 5 and 8, 2021 during which each witness was examined and cross-examined and counsel made opening and closing submissions.

4. The Arbitrators’ Decision

[92] On March 5, 2021, the Arbitrators released their award and they decided that they had jurisdiction over the dispute. In their award, the Arbitrators stated:

34. The Dispute Resolution Clause contained in the POGTC is to be treated as an independent agreement that may survive even if the remaining terms of POGTC are ultimately found to be invalid or inapplicable to the Work. In other words, to the extent issues as to validity or applicability of the POGTC are within the scope of the agreement to arbitrate and are in contention, the arbitration clause is applicable. In our view, the Greenfield claim does relate to the POGTC and that is therefore within the scope of the arbitration agreement contained within the Dispute Resolution Clause.

35. Whether or not Mr. Vandenboom and Mr. Gray were of the belief the POGTC was not to apply to all jobs, including the Work, is to be determined in the arbitration. It is not relevant to the validity of the Dispute Resolution Clause itself. There is nothing in the clear language of the arbitration agreement to suggest it was only to be applicable to one job, or that it was applicable only in cases where the purchase order specifically makes reference to the POGTC. On the contrary, in the Dispute Resolution Clause “The parties agree that any and all disputes or controversies that may arise between the parties arising out of or related to this Agreement shall be determined by binding arbitration.” (Underlining added)

36. It is clear from the evidence that the POGTC was signed by Mr. Gray on the understanding that it was required in order for Electek to get any work from Greenfield. The extent to which the language of the POGTC respecting its other terms requires it be referenced in all purchase orders or that it was job specific need not be determined at this stage of the arbitration. Our sole task is to determine if the POGTC contained a valid arbitration agreement that is broad enough to cover the present dispute between the parties.

37. Electek has argued that the POGTC is not an enforceable agreement because it has no effect until it is attached to a PO and, on its own, lacks essential provisions as to such matters as the scope of the work to be done and price citing Bawitko Investments Limited v Kernels Popcorn Limited.[^8] This is not an argument that is applicable to the arbitration agreement before us. The arbitration agreement in the Dispute Resolution Clause speaks generally of a dispute between the “parties” not to a “Buyer” and “Seller” as used in the other provisions of the POGTC. It speaks of “any and all” disputes respecting the POGTC.

38. Electek also argued that the arbitration agreement is essentially unfair because the Dispute Resolution Clause in the POGTC was not specifically drawn to the attention of Electek, citing Brentwood Plastics Inc. v Topsyn Flexible Packaging Ltd.[^9] and Morgan Trust Company of Canada v Falloncrest Financial Corporation et al.[^10] In the former case, the original agreement did not contain an arbitration clause, but such a clause was added to an invoice for the goods. There is no basis for the argument here. The POGTC was given to Electek to consider at its own convenience and was independently reviewed by a senior officer of Electek before it was signed and faxed to Greenfield. The Dispute Resolution Clause was as prominent in the document as any other clause. Unlike the case of Dynatec Mining Limited v PCL Civil Constructors (Canada) Inc.,[^11] this is not a case where the agreement to arbitrate was incorporated by reference. The agreement to arbitrate is in the Dispute Resolution Clause and forms an integral part of the POGTC. The subsequent applicability of the POGTC to particular work may be disputed, as it clearly is for the Work in question in this case, but this does not affect the existence, validity or scope of the Dispute Resolution Clause which calls for the resolution of the issue of applicability by arbitration. Given that we are not deciding the issue of applicability of the POGTC to the Work in question at this stage, we do not need to consider the various cases cited by Electek on that point.

39. As Greenfield is arguing the POGTC applies to the Work and Electek is arguing that it does not, there is a dispute “arising out of or related to” the POGTC and it “shall be determined by binding arbitration.”

40. In our view, unless subsequently revoked, rendered null and void, or invalid, there is a valid enforceable arbitration agreement covering this dispute, and this tribunal has jurisdiction to decide the claim.

41. Electek argues that, even if the Work was governed by a purchase order to which the POGTC applied, Greenfield had accepted Electek’s Terms and Conditions when its personnel clicked on the “Approve” button on Electek’s electronic form, thus ending the legal effect of the Dispute Resolution Clause, at least for this job.

42. There are two problems with this argument. First, as stated above, the arbitration agreement, for the purposes of jurisdiction is to be treated as a separate agreement from the other terms of the POGTC. It is not sufficient to argue the POGTC is invalid or inapplicable, it must be shown the arbitration agreement is invalid or inapplicable. Unless that can be shown, the question of invalidity or non-applicability of the POGTC for the Work are matters to be decided by the tribunal when the merits are before us.

43. The “Approve” button clearly referenced the hours worked for the specific job. It does not contemplate or suggest it is intended to alter the Dispute Resolution Clause between the parties. A simple approval of the work done cannot be taken as an intention to suspend or nullify a separate arbitration agreement. By clicking the “Approve” button, at its highest, Greenfield may have been accepting different terms and conditions for the particular work. That is a matter of contention which does not relate to our jurisdiction and which we do not here decide. However, Greenfield could not be taken to have agreed to remove the Dispute Resolution Clause that governs any and all disputes between the parties relating to the POGTC. Something much more than a reference to Electek’s Terms and Conditions for this one particular work would be needed.

44. A second problem with Electek’s argument at this stage is that even if accepted, Electek’s Terms and Conditions are not exclusive and all encompassing. They are applicable only to the extent the terms and conditions of Greenfield’s Terms and Conditions are in conflict with or inconsistent with Electek’s Terms and Conditions. Electek’s Terms and Conditions make no mention of any dispute resolution process. The Dispute Resolution Clause in the POGTC is not inconsistent with anything in Electek’s Terms and Conditions. It can be read with Electek’s Terms and Conditions harmoniously and without any inconsistency.

45. The tribunal finds the arbitration agreement has not been invalidated or rescinded by Electek’s Terms and Conditions, even if they are later found to be applicable to the dispute in this arbitration.

46. In our view, Greenfield’s claim, including liability, the applicability or inapplicability of the POGTC to the Work in light of events subsequent to the signing of the POGTC, the course of business dealings and the precise documentation relating to the Work, is a substantive matter within the jurisdiction of the tribunal to decide.

Disposition

49. For the reasons set out herein, Electek’s motion for a declaration that the Dispute Resolution Clause contained in the POGTC does not apply to this dispute is dismissed. We have jurisdiction to decide the claim. We make no finding at this stage in the proceedings as to the applicability of the other terms contained in the POGTC to the Work at issue.

G. The Jurisdiction of Arbitrators

1. Introduction

[93] There is a complex and special body of law that governs the jurisdiction of arbitrators to decide disputes. There are three intertwined and interactive branches to this body of law. The first branch is the general law of contract that is associated with arbitration agreements. The second branch is the special procedural and statutory law for determining the jurisdiction of arbitrators. The third branch is the special substantive law about the jurisdiction of arbitrators that has developed from the general law of contract and the special procedural and statutory law. As the discussion below will reveal, the procedural and statutory law is the main source of the substantive law that governs the jurisdiction of arbitrators.

[94] In this part of my Reasons for Decision I will discuss, the three branches of the complex general and special law that governs the jurisdiction of arbitrators.

2. Contract Formation

[95] An arbitration agreement is a contract. Contract law is at the heart of the special law about the jurisdiction of arbitrators. General contract law about the formation, interpretation, performance, and enforcement of contracts explains the special law about the jurisdiction of arbitrators.

[96] A contract does not come into existence until there has been a definite offer and an unconditional acceptance of the offer communicated to the offeror.[^12] An enforceable contract also requires consideration.[^13] A contract requires a consensus ad idem, “a meeting of the minds” on the essential terms of the bargain.[^14] A party’s signature is one way of manifesting consent where it is reasonable for the party relying on the signed document to believe that the signer really did assent.[^15]

[97] For an agreement to be legally binding, there must be sufficient certainty that the parties have agreed as to its essential terms.[^16] To be a good contract, there must be a concluded bargain and a concluded contract is one which settles everything that is necessary to be settled by agreement between the parties.[^17] An agreement to agree or an agreement to negotiate an agreement is not enforceable.[^18]

[98] The common law adheres to an objective theory of contract formation under which a subjective mutual consensus is neither necessary nor sufficient for the creation of an enforceable contract and a person may be bound by contractual obligations that she did not intend subjectively to assume. The approach of the common law is to examine objectively how a party’s words and conduct would appear to a reasonable person in the position of the other party as constituting an offer, an acceptance, communication of acceptance, or agreement about the terms of an agreement.[^19]

[99] When a contract is to be found in a series of communications between the parties and not in a formal note or memorandum signed as evidence of the contract, "the whole of that which has passed between the parties must be taken into consideration.[^20]

[100] The test is objective, and the offer, acceptance, consideration, and terms may be inferred from the parties' conduct and from the surrounding circumstances. The classic statement of the objective theory comes from Smith v. Hughes,[^21] where Blackburn, J. stated:

If, whatever a man's real intention may be, he so conducts himself that a reasonable man would believe that he was assenting to the terms proposed by the other party, and that other party upon that belief enters into [a] contract with him, the man thus conducting himself would be equally bound as if he had intended to agree to the other party's terms.

[101] In UBS Securities Canada Inc. v. Sands Brothers Canada Ltd.[^22] at paragraph 2, the Court of Appeal explained the objective test for contract formation by adopting the comments of Professor Waddams in The Law of Contracts (5th ed.), at page 103, where he stated:

The principal function of the law of contracts is to protect reasonable expectations engendered by promises. It follows that the law is not so much concerned to carry out the will of the promisor as to protect the expectation of the promisee. This is not, however, to say that the will of the promisor is irrelevant. Every definition of contract, whether based on agreement or on promise, includes a consensual element. But the test of whether a promise is made, or of whether assent is manifested to a bargain, does not and should not depend on an inquiry into the actual state of mind of the promisor, but on how the promisor's conduct would strike a reasonable person in the position of the promisee.

[102] The point made by Professor Waddams was made by Lord Pearce in Henry Kendell and Sons v. William Lillico and Sons Ltd.[^23] at p. 113, where he stated:

The court's task is to decide what each party to an alleged contract would reasonably conclude from the utterances, writings or conduct of the other.

[103] Thus, a determination as to whether a concluded agreement exists does not depend on an inquiry into the actual state of mind of one of the parties or on the parole evidence of one party’s subjective intention.[^24]

[104] In performing its task of determining objectively whether the parties have reached an agreement on the fundamental terms of their bargain, the court should not be too quick to hold that there is not the degree of certainty in any of the contract’s essential terms needed for a binding contract.[^25] This does not mean that the court is to make a contract for the parties or to go beyond the words used by the parties, but it means that if satisfied that there was an ascertainable and definitive intention to contract with a definite meaning, the court will do its best to make sense of the contract.[^26]

[105] Whether a communication is a definite offer or is a pre-offer, an “invitation to treat” that is not capable of acceptance depends on the language used and the particular circumstances.[^27] An acceptance of an offer must be unqualified and unconditional and if the recipient of the offer signs it with material changes, it is a counter-offer and not an acceptance.[^28] An offer may be accepted in the manner to be implied from or found in the nature of the offer and the surrounding circumstances, and the offeror may specify the time and the manner of acceptance.[^29]

[106] Before a court will conclude that a contract has been established, it must be satisfied that the parties have concluded their negotiations and settled the fundamental terms of their bargain.[^30] If the essential terms are complete, the court will give effect to the contract and the failure to parties to agree on minor matters will not invalidate the contract.[^31]

[107] Misunderstandings, errors, and other irregularities that may arise during the contract formation process are generally addressed through the doctrines of mistake, misrepresentation, frustration, non est factum, illegality, unconscionability, and through the remedies of rectification and rescission.[^32]

3. The Procedural Jurisdiction to Determine the Arbitrator’s Jurisdiction

[108] The matter of determining whether an arbitrator has jurisdiction comes to the court in seven ways as described below. The seven procedural ways of determining whether an arbitrator has jurisdiction are: (a) stay motions; (b) applications for declarations and injunctions pursuant to s.48 of the Arbitration Act, 1991; (c) applications for interpretations of the arbitration agreement pursuant to rule 14.05 of the Rules of Civil Procedure; (d) applications for the appointment of arbitrators; (e) applications pursuant to s.17(8) of the of the Arbitration Act, 1991; (f) applications pursuant to s.46 of the Arbitration Act, 1991; and (g) appeals of arbitration awards.

[109] Some but not all of these procedural means are influenced by the competence-competence principle, discussed in detail below. This principle directs that subject to certain exceptional circumstances, the court respects that arbitrators have the competence to determine whether they have the competence (i.e. the jurisdiction) to decide whether they can decide a dispute.

(a) Stay Motions

[110] The first way that a court may determine the jurisdiction of an arbitrator is pursuant to s.7 of the Arbitration Act, 1991. Pursuant to s.7, when a party brings a court action, his or her opponents may bring an application to have the civil action stayed on the ground that the parties have agreed that their dispute be arbitrated. The court’s jurisdiction to stay a civil action and allow the arbitration to proceed is set out in s.7 of the Arbitration Act, 1991, which states:

Stay

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:

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.

[111] In the context of deciding the stay application, the court may decide that the arbitrator has or may have jurisdiction to decide the parties’ dispute, in which case, the court will grant a stay of the civil action, and it will remit the case to the arbitrator. Pursuant to the competence-competence principle on the stay motion, the court may decide to let the arbitrator rule on his or her own jurisdiction to decide the dispute.

[112] Or, in the context of deciding the stay application, the court may decide that the arbitrator does not have jurisdiction, in which case it will not stay the action. In defined circumstances, the court may not stay the civil action for statutorily defined reasons, such as the case is suitable for a summary judgment in which cases, practically speaking, the court will decide the dispute and the arbitrator’s jurisdiction, if any, is preempted.

[113] Under the Arbitration Act, 1991, the exceptions to granting a stay and the application of the competence-competence principle are that the court may refuse to stay its own proceedings: (1) if a party entered into the arbitration agreement while under a legal incapacity; (2) if the arbitration agreement is invalid; (3) if the subject matter of the dispute is not capable of being the subject of arbitration under Ontario law; (4) if the motion was brought with undue delay;[^33] or (5) if the matter is a proper one for default or summary judgment.[^34]

[114] In Haas v. Gunasekaram,[^35] the Court of Appeal set out a five-part analytical framework for determining whether an action should be stayed for arbitration: (1) Is there an arbitration agreement? (2) What is the subject matter of the dispute? (3) What is the scope of the arbitration agreement? (4) Does the dispute arguably fall within the scope of the arbitration agreement? (5) Are there grounds on which the court should refuse to stay the action?

[115] Earlier cases about s.7(1) of the Arbitration Act, 1991 had summarized the approach to take when deciding whether an action should be stayed as first interpreting the arbitration provision, second analyzing the claim to determine whether it is encompassed by the arbitration provision and third, if so, then the court must allow the arbitration to proceed, unless one of the exceptions in s.7(2) applied to the circumstances of the case.[^36] In the seminal case of Heyman v. Darwins Ltd.,[^37] discussed below, Lord Macmillan stated at p. 370:

Where proceedings at law are instituted by one of the parties to a contract containing an arbitration clause and the other party, founding on the clause, applies for a stay, the first thing to be ascertained is the precise nature of the dispute which has arisen. The next question is whether the dispute is one which falls within the terms of the arbitration clause.

(b) Declarations and Injunctions pursuant to s. 48 of the Arbitration Act, 1991

[116] The second way that a court may determine the jurisdiction of an arbitrator to decide a dispute is pursuant to s.48 of the Arbitration Act, 1991. Pursuant to s.48, when a litigant brings an arbitration, his or her opponent may apply under s.48 for a declaration that the arbitration agreement is invalid and to enjoin the submission to arbitration. The court’s jurisdiction to declare the arbitration agreement invalid and to enjoin the arbitration is set out in s.48 of the Arbitration Act, 1991, which states:

Declaration of invalidity of arbitration

48 (1) At any stage during or after an arbitration, on the application of a party who has not participated in the arbitration, the court may grant a declaration that the arbitration is invalid because,

(a) a party entered into the arbitration agreement while under a legal incapacity;

(b) the arbitration agreement is invalid or has ceased to exist;

(c) the subject-matter of the dispute is not capable of being the subject of arbitration under Ontario law; or

(d) the arbitration agreement does not apply to the dispute.

Injunction

(2) When the court grants the declaration, it may also grant an injunction against the commencement or continuation of the arbitration.

[117] In the context of deciding the declaration/injunction motion, the court may rule on the arbitrator’s jurisdiction. The analytical framework for deciding whether to enjoin the arbitration mirrors the analysis used for a stay motion, described above. Pursuant to the competence-competence principle, the court may decide to let the arbitrator rule on his or her own jurisdiction to decide the dispute and thus refuse to enjoin the arbitration.

(c) Application for Interpretation under Rule 14.05(3)(h) of the Rules of Civil Procedure

[118] The third way that a court may determine the jurisdiction of an arbitrator is similar to the second way and arises when a party initiates an arbitration and one of the other parties named in the arbitration brings an application pursuant to rule 14.05(3)(d) of the Rules of Civil Procedure for an interpretation of the alleged arbitration agreement. Rule 14.05(3)(g) also empowers the court to grant an injunction. Rules 14.05(3)(d) and (g) state:

14.05(3) A proceeding may be brought by application where these rules authorize the commencement of a proceeding by application or where the relief claimed is,

(d) the determination of rights that depend on the interpretation of a deed, will, contract or other instrument, or on the interpretation of a statute, order in council, regulation or municipal by-law or resolution;

(g) the court may determine the jurisdiction of an arbitrator when a litigant brings an arbitration and his or her opponent brings a civil action for a declaration that the arbitration agreement is invalid and to enjoin the submission to arbitration.

[119] In the context of deciding the application under rules 14.05(3)(d) and (g), the court may rule on the arbitrator’s jurisdiction. The analytical framework for deciding whether to enjoin the arbitration mirrors the analysis used for a stay motion. Pursuant to the competence-competence principle, the court may decide to let the arbitrator rule on his or her own jurisdiction to decide the dispute and thus refuse to enjoin the arbitration.

(d) The Appointment of Arbitrator(s)

[120] The fourth way that a court may determine the jurisdiction of an arbitrator is pursuant to s.10 of the Arbitration Act, 1991, which authorizes the court to appoint arbitrator(s). Section 10 states:

Appointment of arbitral tribunal

10(1) The court may appoint the arbitral tribunal, on a party’s application, if,

(a) the arbitration agreement provides no procedure for appointing the arbitral tribunal; or

(b) a person with power to appoint the arbitral tribunal has not done so after a party has given the person seven days notice to do so.

No appeal

(2) There is no appeal from the court’s appointment of the arbitral tribunal.

More than one arbitrator

(3) Subsections (1) and (2) apply, with necessary modifications, to the appointment of individual members of arbitral tribunals that are composed of more than one arbitrator.

Chair

(4) If the arbitral tribunal is composed of three or more arbitrators, they shall elect a chair from among themselves; if it is composed of two arbitrators, they may do so.

[121] On an application for the appointment of an arbitrator, the Court must ascertain the nature of the dispute and whether it falls within the scope of the relevant arbitration agreement.[^38] Once again, the jurisdictional analysis is similar to the analysis used for a stay motion, and if an arbitrator is appointed, once again, the court may decide to allow the arbitrator to determine his or her jurisdiction to decide the dispute between the parties.

(e) Section 17 (8) Application

[122] The fifth way that a court may determine the jurisdiction of an arbitrator is pursuant to s.17(8) of the Arbitration Act, 1991. Section 17(8) becomes available, among other things, when a party to an arbitration asks the arbitrator as a preliminary question to rule on his or her own jurisdiction to decide the dispute. If the arbitrator rules on his or her own jurisdiction as a preliminary matter, then pursuant to s.17(8) of the Arbitration Act, 1991, a party may make an application to the court to decide the matter. As the discussion above revealed, the s.17(8) application is a review de novo.

[123] Sections 17(8) and (9) state:

Review by court

(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.

No appeal

(9) There is no appeal from the court’s decision.

[124] On an application under s.17(8), the jurisdictional analysis is similar to that used on a stay application, except the court cannot avoid deciding the matter of the arbitrator’s jurisdiction by the competence-competence principle.

[125] For the purposes of the immediate case, as will be described in detail below, the issue of the jurisdiction of the Arbitrators arises in the context of an application pursuant to s.17(8) of the Arbitration Act, 1991. Thus, in the immediate case, the competence-competence principle is not a factor. In the immediate case, the Arbitrators have ruled on jurisdiction, and now it is the court’s turn to do so de novo.

(f) Section 46 Application

[126] The sixth way that a court may determine the jurisdiction of an arbitrator is pursuant to s.46 of the Arbitration Act, 1991. Section 46 is available when a party brings an arbitration, the arbitrator makes an arbitral award, and then the opponent challenges the arbitrator’s award pursuant to s.46 of the Arbitration Act, 1991, which states:

Setting aside award

46 (1) On a party’s application, the court may set aside an award on any of the following grounds:

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

2. The arbitration agreement is invalid or has ceased to exist.

3. The award deals with a dispute that the arbitration agreement does not cover or contains a decision on a matter that is beyond the scope of the agreement.

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

[127] On an application under s.46, the jurisdictional analysis is similar to that used on a stay application, except the court cannot avoid deciding the matter of the arbitrator’s jurisdiction by the competence-competence principle.

(g) Appeals

[128] As the discussion of the substantive law below will reveal, the jurisdiction of arbitrators is essentially a matter of interpreting the arbitration agreement. As a juridical matter, the interpretation of contracts is an issue of mixed fact and law.[^39] Pursuant to s.45 of the Arbitration Act, 1991, depending on the arbitration agreement, a party to an arbitration agreement may have a right to appeal an arbitrator’s award. Thus, appeals may provide a vehicle for the court to rule on an arbitrator’s jurisdiction.

[129] Section 45 of the Arbitration Act, 1991 states:

Appeals

Appeal on question of law

45(1) If the arbitration agreement does not deal with appeals on questions of law, a party may appeal an award to the court on a question of law with leave, which the court shall grant only if it is satisfied that,

(a) the importance to the parties of the matters at stake in the arbitration justifies an appeal; and

(b) determination of the question of law at issue will significantly affect the rights of the parties.

Idem

(2) If the arbitration agreement so provides, a party may appeal an award to the court on a question of law.

Appeal on question of fact or mixed fact and law

(3) If the arbitration agreement so provides, a party may appeal an award to the court on a question of fact or on a question of mixed fact and law.

Powers of court

(4) The court may require the arbitral tribunal to explain any matter.

Idem

(5) The court may confirm, vary or set aside the award or may remit the award to the arbitral tribunal with the court’s opinion on the question of law, in the case of an appeal on a question of law, and give directions about the conduct of the arbitration.

[130] In the context of appeals, the court’s analysis of the arbitrator’s jurisdiction will apply the substantive law developed for stay motions, except the court cannot avoid deciding the matter of the arbitrator’s jurisdiction by the competence-competence principle.

4. The Competence-Competence Principle

[131] As noted above, for some of the procedural branches for a court to determine the jurisdiction of arbitrators, the court may apply what is known as the competence-competence principle. Thus, for example, on a stay application, pursuant to the competence-competence principle, the court may allow the arbitrator to determine whether he or she has jurisdiction to decide the dispute between the parties to the arbitration agreement.

[132] Pursuant to the competence-competence principle, subject to its exceptions, the court should allow the arbitrator to determine whether he or she has jurisdiction to decide the dispute. Under s.17(1) of the Arbitration Act, 1991, which is based a treaty known as the Model Law on International Commercial Arbitration, arbitrators have the power to rule on their own jurisdiction. Under what is known as the competence-competence principle, if there is an arguable or prima facie case that the arbitrator has jurisdiction, the court should defer the issue of jurisdiction to the arbitrator.[^40]

[133] The general rule of the competence-competence principle is that a challenge to the arbitrator’s jurisdiction should be first resolved by the arbitrator. The exceptions to the general rule are where the challenge is based solely on question of law. If the challenge to the arbitrator’s jurisdiction raises questions of mixed fact and law, the court should refer the challenge to the arbitrator unless the questions of fact require only superficial consideration of the documentary evidence in the record.[^41] The competence-competence principle was summarized by the Supreme Court of Canada in Rogers Wireless Inc. v. Muroff,[^42] as follows:

[W]hen an arbitration clause exists, any challenges to the jurisdiction of the arbitrator must first be referred to the arbitrator. Courts should derogate from this general rule and decide the question first only where the challenge to the arbitrator’s jurisdiction concerns a question of law alone. Where a question concerning jurisdiction of an arbitrator requires the admission and examination of factual proof, normally courts must refer such questions to arbitration. For questions of mixed law and fact, courts must also favour referral to arbitration, and the only exception occurs where answering questions of fact entails a superficial examination of the documentary proof in the record and where the court is convinced that the challenge is not a delaying tactic or will not prejudice the recourse to arbitration.

[134] The issue of whether an arbitrator has jurisdiction is a matter of contract formation and interpretation and the interpretation of a contract is a question of mixed fact and law,[^43] and thus pursuant to the competence-competence principle, the court should defer to the arbitrator unless the interpretative question can be answered based on a superficial examination of the documentary proof in the record.

[135] In numerous cases under the Arbitration Act, 1991, courts have applied the competence-competence principle and dismissed applications to stay court actions and so have allowed arbitrators to determine whether a valid arbitration agreement exists and to interpret the agreement to determine whether the particular dispute between the parties falls within the scope of the arbitration provision.[^44]

[136] The competence-competence principle statutorily overrules an aspect of Heyman v. Darwins Ltd.,[^45] discussed below, the foundational case about the jurisdiction of arbitrators. There is a proposition in Heyman v. Darwins Ltd. that the arbitrator has no jurisdiction if the arbitration agreement was void ab initio and thus the arbitrator has no jurisdiction to rule on his or her own jurisdiction. This proposition arises from the judgment of Viscount Simon, L.C., where he stated:

If the dispute is whether the contract which contains the clause has ever been entered into at all, that issue cannot go to arbitration under the clause, for the party who denies that he has ever entered into the contract is thereby denying that he has ever joined in the submission. Similarly, if one party to the alleged contract is contending that it is void ab initio (because, for example, the making of such a contract is illegal), the arbitration clause cannot operate, for on this view the clause itself is also void.[^46]

[137] However, under Ontario law, the question of whether or not the parties have entered into a binding and valid arbitration agreement is capable of being the subject of arbitration and an arbitrator is empowered to determine whether a valid arbitration agreement exists, in which case the arbitrator will be deciding whether or not he or she has the jurisdiction to adjudicate the dispute between the parties.[^47]

5. The Substantive Law about the Jurisdiction of Arbitrators to Decide Disputes

(a) Introduction

[138] Turning to the special substantive law that defines the authority or jurisdiction of arbitrators, apart from some statutes that require parties to submit their disputes to arbitration, the jurisdiction or authority of an arbitrator to decide the law and the facts of a dispute is entirely a matter of contract.

[139] The Arbitration Act, 1991 stipulates the nature of arbitration agreements, which may be oral or in writing. Arbitration agreements may be an independent agreement or be part of another agreement. Section 5 of the Arbitration Act, 1991 states:

Arbitration agreements

5(1) An arbitration agreement may be an independent agreement or part of another agreement.

Further agreements

(2) If the parties to an arbitration agreement make a further agreement in connection with the arbitration, it shall be deemed to form part of the arbitration agreement.

Oral agreements

(3) An arbitration agreement need not be in writing.

“Scott v. Avery” clauses

(4) An agreement requiring or having the effect of requiring that a matter be adjudicated by arbitration before it may be dealt with by a court has the same effect as an arbitration agreement.

Revocation

(5) An arbitration agreement may be revoked only in accordance with the ordinary rules of contract law.

[140] From the trite proposition that arbitration is a consensual matter of verbal contracting, four complex legal principles about the jurisdiction of arbitrators emerge. First, for there to be an arbitration, an arbitration agreement must exist between the parties.[^48] Second, for there to be an arbitration, the arbitration agreement must be legal; i.e. not illegal and void ab initio.[^49] Third, the existence and validity of an arbitration agreement is independent of any contract in which the arbitration agreement is imbedded.[^50] Fourth, if a legal arbitration agreement exists, it is a matter of contract interpretation whether the arbitrator has jurisdiction over the particular dispute; if as a matter of interpretation, the court determines that the particular arbitration agreement does not apply to the dispute, then the arbitrator has no jurisdiction to decide the arbitration and the arbitration is invalid.[^51]

[141] The aggregation of the four principles is that if: (a) there is no contract agreeing to submit disputes to arbitration; (b) the arbitration agreement is void ab initio because it was illegal; or (c) the particular dispute is not covered by the arbitration, then there is no obligation to submit the dispute to arbitration and the arbitrator has no jurisdiction.[^52]

(b) The Existence of an Arbitration Agreement

[142] The first principle about the jurisdiction of an arbitrator is that an arbitration agreement must exist for the arbitrator to have jurisdiction. This principle is demonstrated by Secure Solutions Inc. v. Smiths Detection Toronto Ltd.,[^53] where the Court of Appeal stated: "If there is no arbitration provision contracted for at the relevant time, that ends the matter."

[143] In Secure Solutions Inc. v. Smiths Detection Toronto Ltd., the parties had contracts from 1997 to 2010. Over the 13 years of continuous dealings between the parties, there was a written contract in place only in 2005 and 2007. Only in those two contracts was there a reference to arbitration. The 2007 contract expired in 2008. It was not renewed. In 2009, Smiths Detection took the policy decision that their disputes with Secure Solutions would not be arbitrated. They continued to do business with no written contracts. The terms of the oral agreement reflecting the issues on which they were ad idem, could only be gleaned from their conduct. The events that triggered the litigation took place in 2009 and 2010. There was a dispute, and Secure Solutions sued Smiths Detection. Next, Smiths Detection moved to have the action stayed for arbitration proceedings. The motion was unsuccessful. Upholding the decision of the motions judge, the Court of Appeal held it was simply not arguable that there was a meeting of minds that their disputes would be arbitrated. If there is no arbitration provision contracted for at the relevant time, that ends the matter.

[144] The first principle is also demonstrated by the cases that hold that a non-party to an arbitration agreement cannot be compelled to submit to arbitration.[^54] A court lacks the jurisdiction to compel those who are not parties to an arbitration agreement to submit their claims to arbitration, and an arbitrator cannot make an arbitral award that disposes of the rights between a party and a non-party to the agreement.[^55]

(c) The Legality of the Arbitration Agreement

[145] The second principle about the jurisdiction of an arbitrator is that the arbitration agreement must be legal for the arbitrator to have jurisdiction. The second principle is demonstrated by the decisions of the Court of Appeal of Ontario and the Supreme Court of Canada in Uber Technologies Inc. v. Heller.[^56]

[146] In a class proceeding, Mr. Heller sued Uber for his entitlements under what he alleged was an employment contract, but which contract Uber contended was a contracting with an independent contractor and not an employee. However the contract might be characterized, the contract between Uber and the Class Members contained an agreement requiring submission to arbitration to arbitrators situated in the Netherlands. The Ontario Court of Appeal and the Supreme Court of Canada held that the Class Members’ agreement to submit their disputes to arbitration was unenforceable on the grounds of unconscionability and thus the class proceeding was not stayed.

(d) The Independent Agreement Principle

[147] The third legal principle about the jurisdiction of an arbitrator is the principle that an arbitration agreement is independent from an agreement in which it may be imbedded. This principle is codified by s. 17(2) of the Arbitration Act, 1991, which states:

Independent agreement

17. (2) If the arbitration agreement forms part of another agreement, it shall, for the purposes of a ruling on jurisdiction, be treated as an independent agreement that may survive even if the main agreement is found to be invalid.

[148] To understand the independent agreement principle, it is helpful to understand that an obligation to arbitrate may arise in three ways: namely: (a) as a statutory obligation; (b) as a genuine independent contract; and (c) as an agreement embedded in another contract. The independent agreement principle is the third way that an obligation to arbitrate may be imposed. As noted by s.17(2) of the Arbitration Act, 1991, the independent agreement principle applies “if the arbitration agreement forms part of another agreement.”

[149] The independent agreement principle in s.17(2) is a codification of common law jurisprudence about agreements to arbitrate. As a matter of judicial history, the independent agreement principle emerged out of a decision of the House of Lords in Heyman v. Darwins Ltd.,[^57] a case in which, ironically, the independent agreement principle actually was irrelevant to the outcome of the case.

[150] For the present purposes of explaining the independent agreement principle, the pertinent facts of Heyman v. Darwins Ltd. are that Darwins Ltd. was a steel manufacturer and Heyman was a distributor of Darwins Ltd.’s product. The distribution agreement had a submission to arbitration provision. There was a dispute, and Heyman sued Darwins Ltd. for alleged repudiation of the distribution agreement. Darwins Ltd. successfully moved for a stay of the court proceedings and argued that the issue about whether the distribution agreement had been breached should be submitted to arbitration. In the context of that argument, the English Court of Appeal and the House of Lords rejected the proposition that the arbitration agreement was terminated with the repudiation of the distribution agreement in which it was embedded.

[151] The judges of the English courts applied and explained the normal law of contract for the circumstances where future performance of an agreement is not required because the contract has been terminated. The several judges of the English courts explained that the termination of a contract does not entail that all the terms of the contract are at an end. Thus, the arbitration provision is separated from other terms of the contract and has the appearance of being a separate contract.[^58]

[152] The operative legal principle that underlies Heyman v. Darwins Ltd. is perhaps best expressed by Lord Macmillan. He stated at page 373 of the decision:

Repudiation, then, in the sense of a refusal by one of the parties to a contract to perform his obligations thereunder, does not of itself abrogate the contract. The contract is not rescinded. It obviously cannot be rescinded by the action of one of the parties alone. But, even if the so-called repudiation is acquiesced in or accepted by the other party, that does not end the contract. The wronged party has still his right of action for damages under the contract which has been broken, and the contract provides the measure of those damages. It is inaccurate to speak in such cases of repudiation of the contract. The contract stands, but one of the parties has declined to fulfil his part of it. There has been what is called a total breach or a breach going to the root of the contract and this relieves the other party of any further obligation to perform what he for his part has undertaken. Now, in this state of matters, why should it be said that the arbitration clause, if the contract contains one, is no longer operative or effective? A partial breach leaves the arbitration clause effective. Why should a total breach abrogate it? The repudiation being not of the contract but of obligations undertaken by one of the parties, why should it imply a repudiation of the arbitration clause so that it can no longer be invoked for the settlement of disputes arising in consequence of the repudiation? I do not think that this is the result of what is termed repudiation.

[153] As should now be apparent, Heyman v. Darwins Ltd. was not a case where there was a separate arbitration agreement, and it was not a case in which the validity of the arbitration agreement was considered independently of the validity of the agreement in which it was embedded. In Heyman v. Darwins Ltd., there was no suggestion that the distribution agreement in which the arbitration agreement was embedded was not a properly and validly formed contract. The controversy in Heyman v. Darwins Ltd. was about the afterlife of a terminated contract. Heyman v. Darwins Ltd. is authority that a dispute about whether a contract has been vitiated by allegations of fraud or fraudulent misrepresentation could be within the scope of an appropriately worded agreement to arbitrate.[^59] Subsequent cases have confirmed that an arbitration agreement survives the repudiation or termination of the contract or allegation that the contract has been breached and whether a contract has been terminated by breach is an arbitrable issue.[^60]

[154] As the discussion later in these Reasons for Decision will reveal and as might be gathered from the introduction and overview, the independent agreement principle is the source of some of the problems of the immediate case.

[155] With respect to the case at bar and to the codification of the third principle about the independence of arbitration agreements as it manifests itself in s.17(2) of the Arbitration Act, 1991, what needs to be emphasized is that the articulation of the principle that “if the arbitration agreement forms part of another agreement, it shall, for the purposes of a ruling on jurisdiction, be treated as an independent agreement that may survive even if the main agreement is found to be invalid” does not mean that an arbitration agreement does not itself get a pass on the other principles about the jurisdiction of an arbitrator.

[156] For an arbitrator to have jurisdiction, an arbitration agreement must exist and the dispute must be within the authority granted to the arbitrator. In other words, since an arbitrator’s jurisdiction is commensurate with the authority granted by an arbitration agreement, there must be a legally enforceable arbitration contract covering the subject matter of the dispute. An arbitration agreement may be a free-standing agreement, or it may be embedded in another agreement, but in either case, it must be a validly formed agreement.

(e) The Interpretation of Arbitration Agreements

[157] Heyman v. Darwins Ltd. also demonstrates the fourth principle about an arbitrator’s jurisdiction. The fourth principle is that if a legal arbitration agreement exists, it is a matter of contract interpretation whether the arbitrator has jurisdiction over the particular dispute. In Heyman v. Darwins Ltd., having decided that the arbitration agreement existed, the judges of the English court went on to interpret the arbitration agreement to determine whether it covered the circumstances of the dispute in the case. Thus, Heyman v. Darwins Ltd. is a seminal case about the interpretation of arbitration agreements.

[158] Contractual interpretation is an exercise in which the principles of contractual interpretation are applied to the words of the written contract, considered in light of the factual matrix.[^61] The goal of contractual interpretation is to determine the intent of the parties at the time the contract was made and the scope of their understanding giving the words used their ordinary and grammatical meaning, consistent with the surrounding circumstances known to the parties at the time of formation of the contract.[^62]

[159] The case law has developed canons of interpretation or approaches to the interpretation of arbitration agreements. Arbitration agreements are to be given a large and liberal interpretation.[^63] If an arbitration agreement is capable of two meanings, one of which provides for arbitration of the disagreement, the court will generally adopt that interpretation.[^64]

[160] An arbitration agreement may be incorporated by reference into a contract, but this must be done clearly and unambiguously.[^65]

[161] If the language of the contract is ambiguous as to whether the contracting parties have agreed to submit disputes to arbitration and one of the interpretations provides for arbitration, courts should privilege that interpretation given the contemporary public policy towards encouraging parties to submit their differences to consensual dispute resolution mechanisms outside of the regular court stream as encouraged by the Arbitration Act, 1991.[^66]

[162] Some cases have identified arbitration provisions that are narrow and described as “executory” and concerned just about working out the small or incidental details of a particular contract as opposed to clauses of a "universal" character that require the contracting parties to submit all disputes that arise between the contracting parties.[^67] Contractual language calling for the arbitration of disputes “relating to a contract” are interpreted broadly and may depending on the interpretation of the particular contract extend to tort claims, oppression remedy claims, or breach of fiduciary claims relating to the contract claims or to the relationship between the parties.[^68]

H. Critique of the Arbitration Panel’s Decision

[163] Strictly speaking, it is not necessary for me to determine the soundness of the Arbitrators’ decision in the immediate case. Since Electek’s Application under s.17(8) is a hearing de novo, the decision of the Arbitrators is not binding and, strictly speaking, I could ignore it and come to my own decision based on the same evidence that was put before the Arbitrators. I shall eventually do just that. However, I shall not ignore the Arbitrators’ decision, and before making my own analysis, I shall briefly explain why the Arbitrators’ decision in the immediate case is not correct.

[164] The first sentence of paragraph 34 of the Arbitrators’ decision is correct. They correctly state that the Dispute Resolution Clause contained in the POGTC is to be treated as an independent agreement that may survive even if the remaining terms of POGTC are ultimately found to be invalid or inapplicable to the Work.

[165] The next sentence of paragraph 34 of the Arbitrators’ decision, however, is incorrect by omission or insufficiency. To assert that if the applicability of the POGTC is under contention, the arbitration agreement is applicable obscures the critical first question that an arbitrator must ask. Before determining the application of the Dispute Resolution Clause and before determining whether the dispute between the parties is within the scope of the Dispute Resolution Clause, the arbitrator must determine whether there exists an arbitration agreement.

[166] As noted above in Haas v. Gunasekaram, the Court of Appeal set out a five-part analytical framework for determining whether an arbitrator has or may have jurisdiction: (1) Is there an arbitration agreement? (2) What is the subject matter of the dispute? (3) What is the scope of the arbitration agreement? (4) Does the dispute arguably fall within the scope of the arbitration agreement? (5) Are there grounds on which the court should refuse to stay the action? The methodology of the Arbitrators in the immediate case skips the fundamental step of determining whether there was an arbitration agreement. In the immediate case, in a tautological leap, the Arbitrators skipped over the first analytical step and concluded that because the POGTC, including its arbitration provision, was in dispute, the dispute was within the terms of the Dispute Resolution Clause and therefore the Arbitrators had jurisdiction.

[167] Although I articulate the fundamental problem with the Arbitrators’ decision somewhat differently, I essentially agree with Electek’s criticism of the decision found in paragraphs 12 of its Factum and paragraph 10 of its Reply Factum; visualize:

12. The Panel conflated the issues of inapplicability and invalidity of the underlying document to retain jurisdiction. Such analysis sidesteps the required exercise of determining whether there has been a consensual agreement to submit the specific dispute to arbitration. The circular reasoning employed by the Panel – that a submission to arbitration can be found based on an arbitration clause in a set of standard form terms which the Panel has not found to apply to the work in question – would result in substantial mischief. This is illustrated in the case at bar where Electek is forced to defend at substantial cost an arbitration proceeding before a three-member panel of the ICDR in the absence of substantial procedural rights afforded to it under the Rules of Civil Procedure merely because it is “contended” by the claimant that an arbitration agreement applies.

10 […] [The Arbitration Panel] failed to determine whether or not the POGTC actually applied to the work which was the subject matter of the dispute. The Panel was required to determine whether there was consensus ad idem that any dispute that arose about the work performed on February 10, 2018 was to be subject to a binding arbitration and, consequently, there had to be an arbitration clause that was applicable to that work. The Panel sidestepped this threshold question, by going down the rabbit-hole that is the doctrine of severability. In order for the doctrine of severability to apply, there must have been a primary contract containing the agreement to arbitrate which can then be said to survive if the rest of the contract does not; the severability doctrine does not apply so as to create an agreement to arbitrate when there was no contract in the first instance. Because the original POGTCs was not a contract, there was no contract for the arbitration clause to be excised from.

[168] In the immediate case, the Arbitrators concluded that the matter of what constituted the terms of the contracting that occurred on February 10, 2018 was an arbitrable matter concerning their jurisdiction; however, they did not determine whether the POGTC standing alone constituted a settled arbitration agreement in 2009, and they did not determine whether the POGTC was an independent part of the contracting that occurred on February 10-14, 2018. The Arbitrators did not make the first determination at all, and they deferred making a decision about the terms of the contracting in February 2018 until later in the arbitration.

[169] Thus, with respect, in my opinion, the Arbitrators made two fundamental analytical errors in their analysis of the POGTC as an independent arbitration agreement because they never analyzed whether it was a fully formed contract in 2009 or a fully formed contract as part of the contracting that occurred in February 2018.

[170] A related third fundamental error is that the Arbitrators dismissed Electek’s argument that the governance of the POGTC, if it existed at all, ended when Greenfield accepted Electek’s Terms and Conditions when Greenfield’s personnel clicked the “Approve” button on the Timesheet. The Arbitrators dismissed this argument because they concluded that Electek’s Terms and Conditions are not inconsistent with the POGTC. That, however, is an odd conclusion, given that the Arbitrators were deferring deciding what were the terms of the 2018 contracting. Moreover, the conclusion’s correctness is doubtful, but for present purposes, the fundamental error is that the matter of the consistency of the POGTC with Electek’s Terms and Conditions is not pertinent to the issue of whether it could be objectively determined by the words and the conduct of the parties that there was a meeting of the minds about an arbitration agreement.

[171] I agree with the Arbitrators that the matter of what constituted the terms of the contracting that occurred in February 2018 was an arbitrable matter concerning their jurisdiction; however, that is no more and no less than an articulation of the competence-competence principle. The Arbitrators had to go further and actually determine whether they had jurisdiction, which with respect, I do not think they ever did.

[172] The competence-competence principle is no longer a bar to my determining the jurisdiction of the Arbitrators, and I shall next demonstrate that there was no arbitration agreement based on the POGTC, either as an independent contract that came into existence in 2009 or as an independent contract within the contracting that occurred in February 2018.

[173] As I shall explain, in 2009 the POGTC was not a settled contract; it did not constitute an independent arbitration agreement. As I shall explain, in 2018, the POGTC did not form a part of the contracting between the parties; it did not constitute an independent contract. As I shall explain further below, the Arbitrators did not understand Electek’s argument based on the principle that for a contract to exist it must be objectively manifested that there was a consensus ad idem, a meeting of the minds. Rather, by assuming that the POGTC was a contract, the Arbitrators conflated determining whether a contract has been formed with interpreting what was formed.

[174] In my opinion, in the immediate case, the Arbitrators relied on the independent agreement principle to skip making an independent decision about the existence of a valid arbitration agreement that encompassed the particular dispute between Greenfield and Electek about the contract of services about transformer GSU #3.

I. Is There a Binding Arbitration Agreement between Greenfield and Electek?

[175] As a review of the jurisprudence about the jurisdiction of arbitrators reveals, for an arbitrator to have jurisdiction, two matters have to be established in law. First it must be established that there is an arbitration agreement, and second it must be established that the particular dispute between the parties to the arbitration agreement is within the terms of the arbitration provision. Typically, the first matter is not controversial, and typically the analysis focuses on the second matter.

[176] The immediate case, however, is a rare inversion of the typical problem. In the immediate case, one does not begin by interpreting the arbitration agreement; one begins by determining whether there is an arbitration agreement to interpret. In the immediate case, first it must be established that there was an arbitration agreement between Greenfield and Electek. Second, it must be established that the particular dispute between the parties was arbitrable, which is to say that the particular dispute between Greenfield and Electek is encompassed by the language of the arbitration agreement. In the immediate case, in my opinion, the first matter is controversial, and the second matter is uncontroversial and not seriously contested by Electek.

[177] In my opinion, whether the dispute about Electek’s work on GSU #3 is encompassed by the POGTC – if it existed as an arbitration agreement - is not controversial. In the immediate case, assuming that the POGTC was an arbitration agreement, I agree with the Arbitrators insofar as they concluded that the dispute about the purchase order issued for GSU #3 was within the Arbitrators’ jurisdiction or competence to decide. However, as the above critique of the Arbitrators’ decision reveals, the problem in the immediate case is whether the POGTC was an independent arbitration agreement either: (a) that was settled in 2009; or (b) that was settled in 2018 as part of the contracting that occurred in 2018.

[178] What is required in the immediate case is an analysis of whether orally or in writing, the parties entered into an arbitration agreement. As the above critique of the Arbitrators’ decision reveals, they just assumed that the POGTC was an independent arbitration agreement. The Arbitrators begged the fundamental question upon which their jurisdiction depended. In a tautological way, the Arbitrators interpreted the existence of the arbitration agreement as being a matter of interpreting the POGTC.

[179] To repeat, in a typical case, the analytical step of determining whether there is an arbitration agreement is rarely a necessary step. In the typical situation, it is a given that there is an arbitration agreement, and the controversy about an arbitrator’s jurisdiction just requires an analysis of the nature of the dispute and then an interpretative analysis of the arbitration agreement to determine whether the scope of the arbitration agreement encompasses the particular dispute. The immediate case is one of the rare cases where the existence of an arbitration agreement between the parties is not a given. The case at bar is one of the rare cases where the determination of the arbitrator’s jurisdiction is dependent upon determining whether an arbitration agreement exists. The question that must be asked and answered in the immediate case is: Is there an arbitration agreement between Greenfield and Electek?

[180] In the immediate case, Greenfield submits that the POGTC is the arbitration agreement between the parties. Its submission has two mutually exclusive branches.

[181] One branch is that the POGTC that was signed by Mr. Gray for Electek in 2009 (and forgotten thereafter by Electek and remembered thereafter by Greenfield) is an independent agreement to arbitrate.

[182] The second branch is that the POGTC is an independent arbitration that was part of the contracting that occurred in 2018 when Greenfield issued a purchase order for goods and services for work on GSU #3.

[183] Thus, in the immediate case, Greenfield argues that the arbitration provision in the POGTC is a stand-alone agreement to arbitrate. And, in the immediate case, Greenfield argues that the POGTC was a part of the contracting that occurred when Electek provided services for transformer GSU #3.

[184] Electek’s counterargument is that the POGTC, including its Dispute Resolution Agreement, did not establish a free-standing arbitration agreement and that the POGTC was not a part of the contracting associated with GSU #3. As I shall explain in more detail below, I agree with Electek’s arguments. My analysis of the contracting that did occur in the immediate case leads me to the conclusion that the POGTC did not apply to the Purchase Order issued by Greenfield. Therefore, in the immediate case, there is no Dispute Resolution Clause and no arbitration agreement. It follows that the Arbitrators did not have jurisdiction and their decision should be set aside.

[185] Before detailing my analysis, I must address one preliminary matter and I have three observations.

[186] Before analyzing the merits of the competing arguments about contract formation, I need to address Greenfield’s argument that Electek is estopped from making its argument. To quote, from paragraph 4 of Greenfield’s factum:

4. At the hearing, having delved deeply into its ‘battle of the forms’ argument, Electek was gently nudged by the Tribunal to consider the issue of separability of the arbitration clause. By closing arguments, the ball finally dropped for Electek, and it expressly directed the Tribunal not to decide whether Electek’s T&Cs applied to the work in issue. Audaciously, Electek now relies on its own directive to the Tribunal as the main ground for bringing this Application. Estoppel should apply.

[187] I can quickly say that there is no basis for an estoppel. Greenfield did not change its evidence, or its argument or its position based on the position that Electek took at the hearing before the arbitrators or on this application under s.17(8) of the Arbitration Act, 1991. There was no reliance, let alone detrimental reliance upon which to establish an estoppel in equity.

[188] The s.17(8) application is a hearing de novo; there are no issue estoppels or res judicata because of the Arbitrators’ decision. Moreover, it is not correct to say that the main ground for bringing this s.17(8) application is the Arbitrators’ alleged mishandling of the issue of the separability of the arbitration agreement. The notion of the separability of the arbitration is not the main reason for the s.17(8) application; the main reason is Electek’s argument that an arbitration agreement never came into existence.

[189] My first observation is that the undoubted circumstance that there was a contract for goods and services between Greenfield and Electek and that there is a dispute about whether Greenfield has a claim for damages for negligence, misrepresentation, and breach of contract must not obscure or confound the issue of whether treating an arbitration agreement as a separate agreement, it existed in the immediate case. Although a contract between Greenfield and Electek undoubtedly existed in the immediate case, the question remains whether an arbitration agreement between Greenfield and Electek also existed.

[190] The second observation, which is related to the first observation, is that while undoubtedly there was a valid or legal contract in the immediate case and while the normal law about what happens to the terms of a contract alleged to be breached undoubtedly applies in the immediate case, that circumstance should not obscure or confound the issue of whether there was an arbitration agreement in the immediate case.

[191] Although it was within their jurisdiction to determine whether there was a valid contract for goods and services between Greenfield and Electek (which was undisputed) and to determine what were the terms and conditions of that contract (there is, among other things, a dispute about exculpatory provisions), treating the arbitration agreement as a separate contract, the Arbitrators still needed to address whether there existed a settled agreement to arbitrate about the contract associated with GSU #3.

[192] The third observation is that Greenfield’s subjective belief that the POGTC was an arbitration agreement and Electek’s subjective non-belief that there was no agreement to arbitrate is not determinative. From the utterances, writing, and conduct of the contracting parties, the court must determine objectively whether there was a concluded bargain between them with certainty about the essential terms. The subjective beliefs of the parties are not determinative.

[193] These three observations entail that treating the arbitration agreement as a separate agreement still means that it is necessary to determine whether it existed as a stand alone agreement or as part of the terms and conditions that applied to the contract of sale of services that occurred on February 10-14, 2018.

[194] Greenfield’s predominant argument is that the POGTC is a free-standing agreement that includes an arbitration agreement. Greenfield argues that the arbitration agreement came into existence in 2009. For a slew of reasons, Electek disagrees with Greenfield’s predominant argument. I also disagree. In my opinion, in 2009, the POGTC was not a settled contract.

[195] The strongest aspects both logically and passionately of Greenfield’s predominant argument that the POGTC is a free-standing agreement that came into existence in 2009 is that Electek signed a copy of the POGTC in 2009 with knowledge that it would not obtain purchase orders from Greenfield unless it agreed to the POGTC. However, upon analysis, the strength of this argument dissipates.

[196] By its own written terms, the POGTC was not a free-standing agreement. It was an inchoate or nascent provision that would be stillborn in the absence of a purchase order that annexed the POGTC or that clearly incorporated the POGTC by reference. Neither circumstance ever occurred. The POGTC was never annexed to the purchase orders. There was no incorporation by reference of the POGTC.

[197] The reference in Greenfield’s purchase orders that the purchase order is governed by the “Terms and Conditions already agreed upon between the parties of this purchase order” is all of: (a) too uncertain to be enforceable; (b) ambiguous as to whether the terms and conditions agreed upon were those of Greenfield or Electek; and (c) not incorporating the POGTC by clear reference.

[198] Treating the Dispute Resolution Clause of the POGTC as a separate contract does not change the circumstance that it was a nascent or inchoate provision that would be stillborn unless the parties came to the end of the task of agreeing on a contract of purchase and sale about which they could have a dispute resolved. Even where there is no uncertainty as to the terms of the agreement, where the intention of the parties is that their legal obligations are to be deferred until a formal contract has been approved and executed, the initial agreement is not binding.[^69] The point to emphasize is that the signing of the POGTC, including its Dispute Resolution Clause, was not a free-standing agreement to arbitrate; it was expressly connected to the issuance of a purchase order and would have no contractual life until that occurred.

[199] The POGTC was not a master contract, a memorandum of agreement (a MOU), or an open contract with a formula to settle the financial terms or the specifications or details of performance. Rather, it was no more than terms to be added if the parties completed the contracting process. The POGTC might have worked as Greenfield subjectively intended had Greenfield annexed it to its purchase orders or had Greenfield clearly incorporated the POGTC by reference in its purchase orders. In those circumstances – which did not exist in the immediate case – applying an objective standard, a court could conclude that the parties intended the POGTC to govern.

[200] Greenfield argued that it was a business necessity that the terms of its procurement of goods and services be agreed to in advance with qualified, skilled, and approved vendors because it would have been impossible to carry on business by negotiating each and every procurement, some of which might require an urgent response. Assuming Greenfield’s business necessities about procurement are true, then it would have been an easy enough matter to just annex the POGTC to the purchase orders rather than saving the paper of a one page document by the vague to the point of incomprehensible statement in bold text in the Purchase Order that “This PO is governed by the Terms and Conditions already agreed upon between the parties to this purchase order.”

[201] To be clear, it does not matter whether Electek had forgotten that Mr. Gray had signed the POGTC in 2009. Nor would it have mattered whether Electek remembered that Mr. Gray had signed the POGTC in 2009 and that Mr. Palimaka had reviewed in 2011. What matters is that an objective analysis leads to the conclusion that the POGTC as it was used by the words and conduct of the parties does not establish that it was a settled term of any contract reached by Greenfield and Electek.

[202] Standing alone, the POGTC was in the nature of an agreement to agree and, therefore, it lacks contractual force as a free-standing agreement. More precisely, the inchoate nature of the POGTC was that it envisioned being a part of a contract for goods and services if the parties could come to agreement about what goods and services were to be procured and about the commercial or financial terms for the sale of goods and services by purchase order.

[203] Turning to whether the POGTC was a part of the contracting associated with the work done by Electek in February 2018 with respect to transformer GSU #3. As a matter of contract formation, the POGTC was negated by the manner of contracting that actually occurred.

[204] Electek’s work was completed before Greenfield issued its Purchase Order. Greenfield did not annex the POGTC to its Purchase Order. Greenfield agreed to accept Electek’s Terms and Conditions as governing the particular contracting that occurred associated with the incident on February 10, 2018 and Electek’s Terms and Conditions did not include an arbitration provision.

[205] Greenfield argues that the Dispute Resolution Clause of the POGTC was a separate or independent contract and there is no evidence that the parties ever turned their mind to varying amending the Dispute Resolution Clause in the POGTC signed by Mr. Gray, and, therefore, this separate contract governed and continued to govern notwithstanding that Greenfield acknowledged that it agreed to Electek’s Terms and Conditions.

[206] The fatal flaws in Greenfield’s argument are that: (a) for the reasons already expressed above, severally or taken altogether, none of the POGTC’s terms and conditions including its Dispute Resolution Clause constituted a settled contract; and (b) since there was no arbitration contract, it is a non sequitur to discuss whether it was varied or amended by a subsequent agreement.

[207] The point to note is that from an objective perspective the only contract terms and conditions that governed the contracting around the unfortunate goods and services contract of February 10, 2018 were Electek’s contract terms and conditions, which Greenfield accepted when Mr. Valleau electronically signed the Timesheet, about which it may be observed, there was nothing stealthy, because if he wanted to review those terms and conditions, they were readily available to him.

[208] In short, the immediate case is similar to Secure Solutions Inc. v. Smiths Detection Toronto Ltd., discussed above, where the Court of Appeal held it was simply not arguable that there was a meeting of minds between the parties that their disputes would be arbitrated. If there is no arbitration agreement contracted for at the relevant time, that ends the matter.

J. Summary and Conclusion

[209] For the above reasons, I hold that the Arbitrators’ decision should be set aside.

[210] By way of summary of those reasons, analyzing the POGTC as an independent contract in accordance with the objective theory of contract formation and having regard to the words and conduct of Greenfield and Electek and the contractual/factual nexus in 2009 or in 2018, there was no arbitration agreement contracted for between Greenfield and Electek. It follows that the Arbitrators had no jurisdiction.

[211] If the parties cannot agree about the matter of costs, they may make submissions in writing beginning with Electek’s submissions within twenty days of the release of these Reasons for Decision, followed by Greenfield’s submissions within a further twenty days.

Perell, J.

Released: February 8, 2022

COURT FILE NO.: CV-20-637621-0000

DATE: 20220208

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

ELECTEK POWER SERVICES INC.

Applicant

• and -

GREENFIELD ENERGY CENTRE LIMITED PARTNERSHIP

Respondent

REASONS FOR DECISION

PERELL J.

Released: February 8, 2022

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Willis Canada Inc., 2013 ONCA 745, aff’g 2013 ONSC 2253; Ontario v. Imperial Tobacco Canada Ltd., 2011 ONCA 525; Jean Estate v. Wires Jolley LLP, 2009 ONCA 339; Dancap Productions Inc. v. Key Brand Entertainment Inc., 2009 ONCA 135; Dell Computer Corp. v. Union des consommateurs, 2007 SCC 34; Dalimpex Ltd. v. Janicki (2003), 2003 CanLII 34234 (ON CA), 64 O.R. (3d) 737 (C.A.). [^41]: Heller v. Uber Technologies Inc., 2020 SCC 16 at para. 34; Haas v. Gunasekaram, 2016 ONCA 744 rev’g 2015 ONSC 5083; Blind Spot Holdings Ltd. v. Decast Holdings Inc., 2014 ONSC 1760 at paras. 20–22; Ontario Medical Assn. v. Willis Canada Inc., 2013 ONCA 745 at paras. 20–23, aff’g 2013 ONSC 2253; Seidel v. TELUS Communications Inc., 2011 SCC 15; Dell Computer Corp. v. Union des consommateurs, 2007 SCC 34 at paras. 84–86. [^42]: 2007 SCC 35 at para. 11. [^43]: Sattva Capital Corp. v Creston Moly Corp., 2014 SCC 53. [^44]: Ontario Medical Assn. v. Willis Canada Inc., 2013 ONCA 745, aff’g 2013 ONSC 2253; Ontario First Nations Limited Partnership v. Ontario Lottery and Gaming Corp., 2013 ONSC 4166; Kolios v. Vranich, 2012 ONCA 269; Robert v. Markandu, 2012 ONSC 6891; Nazarinia Holdings Inc. v. 2049080 Ontario Inc. (c.o.b. J.W. Car Care), 2010 ONSC 1766, aff’d 2010 ONCA 739, [2010] O.J. No. 4674 (C.A.), leave to appeal to S.C.C. ref’d. [2010] S.C.C.A. No. 500; 2162683 Ontario Inc. v. Flexsmart Inc., 2010 ONSC 6493; Dancap Productions Inc. v. Key Brand Entertainment Inc., 2009 ONCA 135; MDG Kingston Inc. v. MDG Computers Canada Inc., 2008 ONCA 656; Jacob v. Beamish, [2008] O.J. No. 4175 (S.C.J.); T.J. Whitty Investments Corp. v. Tagr Management Ltd., [2004] O.J. No. 3523 (S.C.J.); AMEC E & C Services Ltd. v. Nova Chemicals (Canada) Ltd., [2003] O.J. No. 2663 (S.C.J.); Dalimpex Ltd. v. Janicki (2003), 2003 CanLII 34234 (ON CA), 64 O.R. (3d) 737 (C.A.). [^45]: [1942] A.C. 356 (H.L). [^46]: [1942] A.C. 356 at p. 366 (H.L). [^47]: IMG Canada Ltd. v. Melitta Canada Inc. 2001 CanLII 28385 (ON SC), [2001] O.J. No. 2331 (S.C.J.); Ontario v. Abilities Frontier Co-operative Homes Inc. [1996] O.J. No. 2586 at paras. 36-41 (Gen. Div.), leave to appeal refused [1997] O.J. No. 238 (C.A.). [^48]: Rhinehart v. Legend 3D Canada Inc., 2019 ONSC 3296; Kanda Franchising Inc. v. 1795517 Ontario Inc., 2017 ONSC 7064; Novatrax International Inc. v. Hägele Landtechnik GmbH, 2016 ONCA 771; Secure Solutions Inc. v. Smiths Detection Toronto Ltd. 2011 ONCA 337; Rampton v. Eyre, 2007 ONCA 331; Stella Jones Inc. v. Mariana (The), 2001 FCT 1148. [^49]: Rhinehart v. Legend 3D Canada Inc., 2019 ONSC 3296; Heller v. Uber Technologies Inc. 2020 SCC 16, aff’g 2019 ONCA 1, rev’g 2018 ONSC 718. [^50]: Rhinehart v. Legend 3D Canada Inc., 2019 ONSC 3296; 2986806 Ontario Ltd. v. Blyth, 2016 ONSC 8087; Nazarinia Holdings Inc. v. 2049080 Ontario Inc. (c.o.b. J.W. Car Care), 2010 ONSC 1766 aff’d 2010 ONCA 739, [2010] O.J. No. 4674 (C.A.), leave to appeal to S.C.C. ref’d. [2010] S.C.C.A. No. 500; MDG Kingston Inc. v. MDG Computers Inc., 2008 ONCA 656. [^51]: Ontario v. Abilities Frontier Co-operative Homes Inc. [1996] O.J. No. 2586 (Gen. Div.), leave to appeal refused [1997] O.J. No. 238 (C.A.); Heyman v. Darwins Ltd. [1942] A.C. 356 (H.L). [^52]: Nazarinia Holdings Inc. v. 2049080 Ontario Inc. (c.o.b. J.W. Car Care), 2010 ONSC 1766, aff’d 2010 ONCA 739, [2010] O.J. No. 4674 (C.A.), leave to appeal to S.C.C. ref’d. [2010] S.C.C.A. No. 500.; MDG Kingston Inc. v. MDG Computers Inc., 2008 ONCA 656; Penn-Co Construction Canada (2003) Ltd. v. Constance Lake First Nation, [2007] O.J. No. 3940 (S.C.J.), aff’d 2008 ONCA 768; Fairfield v. Low (1990), 1990 CanLII 6955 (ON SC), 71 O.R. (2d) 599 (H.C.J.); Heyman v. Darwins Ltd. [1942] A.C. 356 (H.L). [^53]: 2011 ONCA 337 at para. 4. See also: Rhinehart v. Legend 3D Canada Inc., 2019 ONSC 3296. [^54]: Kanda Franchising Inc. v. 1795517 Ontario Inc., 2017 ONSC 7064; Novatrax International Inc. v. Hägele Landtechnik GmbH, 2016 ONCA 771. [^55]: Novatrax International Inc. v. Hägele Landtechnik GmbH, 2016 ONCA 771 at paras. 24, 32; Ontario v. Imperial Tobacco Canada Ltd., 2011 ONCA 525 at paras. 119, 141-42. [^56]: 2020 SCC 16, aff’g 2019 ONCA 1, rev’g 2018 ONSC 718. Heller v. Uber Technologies Inc. was followed in Rhinehart v. Legend 3D Canada Inc., 2019 ONSC 3296. Heller v. Uber Technologies Inc. was distinguished in Evans v. Mattamy Homes Ltd., 2019 ONSC 3883 (Master), where a stay was granted because the plaintiff did not demonstrate that the arbitration agreement was invalid because of unconscionability or undue influence. See also: Leon v. Dealnet Capital Corp., 2021 ONSC 3636 (Master); Gupta v. Lindal Cedar Homes Ltd. 2020 ONSC 6333. [^57]: [1942] A.C. 356 (H.L.). [^58]: The phenomena that some terms of a contract survive the termination of the contract is also illustrated by such things as exculpatory provisions and confidentiality clauses. See P.M. Perell, “The Afterlife of a Contract” (2008), 34 Advocates’ Quarterly 62. [^59]: Nazarinia Holdings Inc. v. 2049080 Ontario Inc. (c.o.b. J.W. Car Care), 2010 ONSC 1766 at para. 47, aff’d 2010 ONCA 739, [2010] O.J. No. 4674 (C.A.), leave to appeal to S.C.C. ref’d. [2010] S.C.C.A. No. 500.; Fairfield v. Low (1990), 1990 CanLII 6955 (ON SC), 71 O.R. (2d) 599 at paras. 22-27(H.C.J.). [^60]: Nazarinia Holdings Inc. v. 2049080 Ontario Inc. (c.o.b. J.W. Car Care), 2010 ONSC 1766 at para. 35, aff’d 2010 ONCA 739, [2010] O.J. No. 4674 (C.A.), leave to appeal to S.C.C. ref’d. [2010] S.C.C.A. No. 500; Rampton v. Eyre 2007 ONCA 331; Campbell v. Murphy (1993), 1993 CanLII 5460 (ON SC), 15 O.R. (3d) 444 (Gen. Div.). [^61]: Sattva Capital Corp. v. Creston Moly Corp., 2014 SCC 53 at para. 50. [^62]: Harvey Kalles Realty Inc. v. BSAR (Eglinton) LP, 2021 ONCA 426; Sattva Capital Corp. v. Creston Moly Corp., 2014 SCC 53 at para. 47; Tercon Contractors Ltd. v. British Columbia (Transportation and Highways), 2010 SCC 4 at paras. 64-65; Skye Properties Ltd. v. Wu, 2010 ONCA 499; Jesuit Fathers of Upper Canada v. Guardian Insurance Co. of Canada, 2006 SCC 21 at para. 27; Frenette v. Metropolitan Life Insurance Co., [1992] 1 S.C.R. 64; Consolidated-Bathurst Export Ltd. v. Mutual Boiler & Machinery Insurance Co., 1979 CanLII 10 (SCC), [1980] 1 S.C.R. 888. [^63]: Hopkins v. Ventura Custom Homes Ltd., 2013 MBCA 67 at paras. 58-64. [^64]: Hopkins v. Ventura Custom Homes Ltd., 2013 MBCA 67 at paras. 58-64; Ontario v. Imperial Tobacco Canada Ltd., 2011 ONCA 525 at para. 60; Wright v. Nova Scotia Public Service Long Term Disability Plan Trust Fund, 2006 NSCA 101 at para. 77. [^65]: Morgan Trust Company of Canada v. Falloncrest Financial Corporation, [2006] O.J. No. 4603 (C.A.); St. Andrew Goldfields Ltd. v. Newmont Canada Limited, 2009 CanLII 40549 (ON SC), [2009] O.J. No. 3266 (S.C.J.); Dynatec Mining Ltd. v. PCL Civil Construction (Canada) Ltd. [1996] O.J. NO. 29 (Gen. Div.); LED Roadway Lighting Ltd. v. Alltrade Industries Inc., 2019 NSSC 62. [^66]: Greenfield Ethanol Inc. v. Suncor Energy Products Inc., [2007] O.J. No. 3104 at para. 8 (S.C.J.), aff’d 2007 ONCA 823; Canadian National Railway Co. v. Lovat Tunnel Equipment Inc. 1999 CanLII 3751 (ON CA), [1999] O.J. No. 2498 (C.A.); Onex Corp. v. Ball Corp. (1994), 1994 CanLII 7537 (ON SC), 12 B.L.R. (2d) 151 (Ont. Gen. Div.). [^67]: Greenfield Ethanol Inc. v. Suncor Energy Products Inc., [2007] O.J. No. 3104, aff’d 2007 ONCA 823; Ontario v. Abilities Frontier Co-operative Homes Inc., [1996] O.J. No. 2586 (Gen. Div.). [^68]: Leon v. Dealnet Capital Corp., 2021 ONSC 3636 (Master); Advanced Explorations Inc. v. Storm Capital Corp., 2014 ONSC 3918; Greenfield Ethanol Inc. v. Suncor Energy Products Inc., [2007] O.J. No. 3104, aff’d 2007 ONCA 823; Woolcock v. Bushert, 2004 CanLII 35081 (ON CA), [2004] O.J. No. 4498 (C.A.); Kassem v. Secure Distribution Services Inc., [2004] O.J. No. 508 (S.C.J.); Armstrong v. Northern Eyes Inc. (2000), 2000 CanLII 29047 (ON SCDC), 48 O.R. (3d) 442 (Div. Ct.), aff’d [2001] O.J. No. 1085 (C.A.); Ontario v. Abilities Frontier Co-operative Homes Inc., [1996] O.J. No. 2586 (Gen. Div.). [^69]: Georgian Windpower v. Stelco, 2012 ONSC 3759 at para. 123; Bawitko Investments Ltd. v. Kernels Popcorn Ltd., 1991 CanLII 2734 (ON CA), [1991] O.J. No. 495 at para. 21 (C.A.).