Court File and Parties

COURT FILE NO.: CV-22-676250-0000 DATE: 20230531 ONTARIO SUPERIOR COURT OF JUSTICE

BETWEEN:

EDE CAPITAL INC. Applicant – and – LEI GUAN, NOVAMAX FINANCIAL GROUP CORP., 10109266 CANADA INC., JUAN DU, ZHUHUA XU, WEIXUAN ZHOU, WENBO GUO, MOFEI LI and RUYU YAN Respondents

Counsel: Sara J. Erskine and Adrienne Zaya, for the Applicant Michael Nowina and Juliette Mestre, for the Respondents

HEARD: November 7, 2022

VERMETTE J.

[1] The Applicant brings this Application for:

a. an order setting aside the Partial Award on Damages dated December 23, 2021 (“Damages Award”) of the arbitrator Tina Cichetti (“Arbitrator”) and ordering damages in favour of the Respondents in the amount of $1,050,000 plus interest;

b. in the alternative, an order setting aside the Damages Award and referring the determination of the quantum of damages back to the Arbitrator with directions from the Court;

c. an order setting aside the Arbitrator’s Partial Award on Costs dated May 2, 2022 (“Costs Award”) and referring the determination of the quantum of costs back to the Arbitrator with directions from the Court.

[2] In my view, the Applicant has not established any valid ground for setting aside the arbitral awards. Consequently, the Application is dismissed.

A. Factual Background

1. The Parties

[3] The Applicant is a corporation incorporated in 2016 under the Canada Business Corporations Act, R.S.C. 1985, c. C-44 (“CBCA”). It is the parent corporation in the “EDE group of companies” and the 100% shareholder of each of EDE Asset Management Inc. (“EDE Asset”), EDE Securities Inc. (“EDE Securities”) and EDE GP Inc., which is the general partner in the EDE Value Fund LP (“EDE Value Fund”). EDE Value Fund is a limited partnership that is only open to accredited investors. Its underlying investment is securities that focus on mining and energy.

[4] The Applicant, EDE Asset and EDE GP Inc. share the same directors and officers. Together, the directors directly or indirectly control 75.9% of the Class A shares of the Applicant.

[5] The Respondents are all accredited investors who have made investments in the Applicant (ranging from $50,000 to $200,000) and the EDE Value Fund (ranging from $100,000 to $1 million). They are all sophisticated, high net worth individuals with knowledge of their investment options. Their investments in the EDE Value Fund were based on the EDE Value Fund Offering Memorandum dated February 16, 2017, which set out in detail the risk factors associated with the investment, including the risk arising from the nature of the Fund’s underlying investments.

[6] As discussed further below, the Respondent Ruyu Yan resides in China while the other Respondents are in Canada.

2. Events Giving Rise to the Arbitration

[7] The facts set out below are based on findings of fact made by the Arbitrator in her awards.

[8] In February 2018, the Applicant hosted a luncheon with potential investors, including most of the Respondents, regarding a possible investment in the Applicant. At this luncheon, the Applicant made a PowerPoint presentation outlining the benefits of the investment. The stated objective was to raise funds in order to facilitate registering a “fully licensed broker to better serve the Chinese community in Canada (By EDE Securities Inc.)”.

[9] The Applicant also provided a one-page term sheet to describe the proposed investment (“Term Sheet”). The Term Sheet outlined a private placement of Class A Shares in the capital of the Applicant with the price of shares, use of proceeds and other requirements. It indicated that the Applicant was a holding company that owned all of the issued and outstanding shares in the capital of EDE Asset and EDE Securities (defined as the “Subsidiaries”). The Term Sheet also indicated that it was intended that EDE Securities would “apply for registration as an investment dealer with the Investment Industry Regulatory Organization of Canada (IIROC), although no assurance can be given that such registration will be granted”. The use of proceeds was described as follows in the Term Sheet:

The proceeds of the offering will be used by the Corporation for the purposes of (1) supporting the expansion of the Subsidiaries’ businesses, including the hiring of staff and the application of EDE Securities Inc. for registration as a securities dealer, and (2) general and administrative expenses.

[10] The Term Sheet stated that every subscriber of the offering was required to become a party to the shareholders’ agreement between the Applicant and all shareholders of the Applicant.

[11] In March 2018, each of the Respondents executed subscription agreements relating to their respective purchases of shares in the Applicant.

[12] On or about March 10, 2018, the private placement offering of Class A shares in the Applicant closed raising aggregate proceeds of up to $2,090,000. The Respondents invested a total of $1,050,000 in the capital of the Applicant. They are minority shareholders holding approximately 7.58% of the shares.

[13] Soon after the private placement closed, the Applicant transferred the majority of the aggregate proceeds of the offering to its BMO trading account (“BMO Account”) and began buying and selling securities as follows:

a. By March 22, 2018, the Applicant had transferred $600,000 into the BMO Account. By the end of April 2018, approximately 54% of those funds were being used to buy and sell securities, with the remainder held in cash and short-term investments.

b. On May 11, 2018, the Applicant transferred another $400,000 into its BMO Account. By the end of that month, 87% of the funds were being used to buy and sell securities.

c. On July 24, 2018, the Applicant transferred another $1,000,000 into its BMO Account. By the end of August 2018, 86% of the funds were being used to buy and sell securities.

[14] The securities that were being bought and sold in the BMO Account were the same type of investments as the EDE Value Fund, but they were selected to generate gains over shorter term holds.

[15] The Applicant, the Respondents and other shareholders all executed a Shareholders’ Agreement effective as of September 27, 2018 (“Shareholders’ Agreement”). Most of the Respondents executed the Shareholders’ Agreement at a shareholder meeting held on October 20, 2018.

[16] In late 2018, markets were turbulent and the EDE Value Fund suffered in performance. Instead of pursuing IIROC registration, the Applicant kept the proceeds of the private placement in its BMO Account to preserve their value. These investments earned a 3.27% rate of return in 2018 and a 60.4% rate of return in 2019. The Respondents were not advised of this decision or that the funds had been invested in speculative stocks. In response to inquiries from investors as to the progress of the IIROC application, the Applicant’s directors advised that the plans were on track.

[17] In October 2019, the Applicant circulated a shareholder resolution that proposed to: (a) waive the requirement to have the company’s books audited; and (b) approve the payment of an aggregate dividend of $650,000. At the time that the Applicant proposed the payment of a dividend, it had not completed any of the steps required to obtain an IIROC dealer registration for EDE Securities.

[18] The Respondent Lei Guan refused to sign the resolutions, and the Applicant was required to hold a shareholder meeting.

[19] On December 4, 2019, the Applicant held an extraordinary meeting of shareholders in order to discuss and pass the proposed resolutions. During the meeting, a number of the Respondents asked questions about their investments. It was admitted that the Applicant had not pursued the IIROC registration for EDE Securities and that since June 2018, the Applicant had traded the fundraising proceeds.

[20] A number of shareholders were unhappy to learn that the funds raised had not been used to pursue the IIROC registration and demanded their money back. Ultimately, despite discussions to the contrary during the December 4, 2019 shareholder meeting, the Applicant’s directors advised the shareholders on December 14, 2019 that the Applicant would not engage in a share buyback of shares from the 2018 financing.

[21] By February 2020, the Respondents had all redeemed their investments in the EDE Value Fund.

[22] On March 23, 2020, the Respondents sent a letter to the Applicant demanding the return of the funds they had invested stating that the use of those funds was completely contrary to what had been represented and agreed. On March 30, 2020, the Applicant refused to return the funds.

[23] On May 1, 2020, the Applicant issued a notice to all shareholders that an Annual and Special Meeting of Shareholders would be held on May 15, 2020. The meeting notice stated that the Applicant considered the funds raised to become an IIROC securities dealer from the 2018 financing to be “excess cash for investment”. The Applicant sought to pass a resolution to authorize the Applicant to subscribe for up to $3 million worth of units in the EDE Value Fund. On May 15, 2020, the resolution was passed over the objections of the Respondents.

[24] In July 2020, the Applicant invested $2,400,000 in the EDE Value Fund. As of December 31, 2020, the return on that investment was 34.2%.

3. The Arbitration

[25] The Shareholders’ Agreement contains an arbitration agreement at section 8.11. It provides as follows:

Dispute Resolution. Subject to Section 8.12, all disputes and questions whatsoever which shall arise between any of the parties in connection with this Agreement, or the construction or application thereof or any Section or thing contained in this Agreement or as to any act, deed or omission of any party or as to any other matter in any way relating to this Agreement, shall be resolved by arbitration. Such arbitration shall be conducted by a single arbitrator. The arbitrator shall be appointed by agreement between the parties or, in default of such agreement, such arbitrator shall be appointed by a judge of the Superior Court of Justice sitting in Toronto, upon the application of any of the parties and such judge shall be entitled to act as such arbitrator, if he or she so desires. The arbitration shall be held in the City of Toronto. The procedure to be followed shall be agreed to by the parties or, in default of such agreement, determined by the arbitrator. The arbitration shall proceed in accordance with the provisions of the Arbitration Act, 1991 (Ontario). The arbitrator shall have the power to proceed with the arbitration and to deliver his or her award notwithstanding the default by any party in respect of any procedural order made by the arbitrator. The decision arrived at by the arbitrator shall be final and binding and no appeal shall lie therefrom. Judgement upon the award rendered by the arbitrator may be entered in any court having jurisdiction.

[26] The Shareholders’ Agreement also contains a governing law clause which provides that the Shareholders’ Agreement is governed by the laws of the Province of Ontario and the federal laws of Canada applicable in the Province of Ontario.

[27] By Notice to Arbitrate dated June 8, 2020, the Respondents commenced the arbitration in issue pursuant to section 8.11 of the Shareholders’ Agreement. The Notice to Arbitrate references Article 21 of the Model Law on International Commercial Arbitration (“Model Law”), which is set out in Schedule 2 to the International Commercial Arbitration Act, 2017, S.O. 2017, c. 2, Sched. 5 (“ICAA”). [^1]

[28] On July 24, 2020, the Applicant delivered its Statement of Defence to the Notice to Arbitrate. The Applicant denied all of the Respondents’ claims, including that the ICAA applied to the arbitration.

[29] The arbitration was conducted by the Arbitrator.

4. Procedural Orders Nos. 1 and 2 and Liability Award

[30] On October 16, 2020, the Arbitrator issued “Procedural Order No. 1 and Procedural Timetable” dated as of September 24, 2020 which reflected the parties’ agreement to bifurcate the proceedings into liability and damages phases.

[31] On March 18, 2021, the Arbitrator issued “Procedural Order No. 2 – Document Production Disputes” in which the Arbitrator ruled on the Respondents’ requests for documents that were objected to by the Applicant.

[32] The hearing with respect to the liability issues was held remotely on May 3-5 and 11, 2021. The Respondents raised the following issues:

a. whether the Applicant’s refusal to pursue an IIROC investment dealer registration for EDE Securities was a breach of a “Related Party Agreement” and the Shareholders’ Agreement;

b. whether the Applicant made misrepresentations to the Respondents contrary to section 130.1 of the Securities Act, R.S.O. 1990, c. S.5, or, in the alternative, fraudulent and/or negligent misrepresentations; and

c. whether the Applicant’s conduct was oppressive within the meaning of section 241 of the CBCA.

[33] On May 17, 2021, the Arbitrator closed the proceedings with respect to the issues on liability.

[34] The Arbitrator released her “First Partial Award – Liability” on June 23, 2021 (“Liability Award”). The Liability Award sets out the Arbitrator’s findings of fact, many of which are set out above.

[35] The Arbitrator noted that the parties disagreed as to which act applied to the arbitration, i.e., the ICAA or the Arbitration Act, 1991. However, she did not resolve this issue. She wrote the following in a footnote in the Liability Award:

The Claimants [i.e., the Respondents] initially requested a ruling from the Arbitrator as to which act applied. As the Parties agreed to the procedure to be followed in the arbitration and it was not necessary to resort to the provisions of either act, the Claimants withdrew this request at the conclusion of the Hearing.

[36] The Arbitrator found, among other things, that the Term Sheet was a “Related Party Agreement” under the Shareholders’ Agreement and an offering memorandum for the purposes of the Securities Act. She summarized her Liability Award as follows in the last paragraph of her decision:

For the reasons set forth above, my partial final award is as follows:

a. I declare that EDE Capital’s refusal to pursue an IIROC investment dealer registration for EDE Securities is a breach of a “Related Party Agreement” and the Shareholder Agreement;

b. I declare that EDE Capital made misrepresentations to the Claimants contrary to section 130.1 of the Securities Act and/or fraudulent misrepresentations;

c. I declare that EDE Capital’s conduct is oppressive within the meaning of section 241 of the CBCA;

d. The Claimants’ claims for damages are not determined by this award and will, if necessary, be determined in a subsequent phase of this arbitration;

e. I reserve jurisdiction to determine all matters related to costs; and

f. I reserve jurisdiction to determine any other matters in dispute that have been submitted to arbitration in this proceeding that are not determined by this award.

5. Damages Award

[37] A revised Procedural Timetable was issued on August 6, 2021.

[38] The hearing with respect to the issue of damages was held remotely on November 8 and 9, 2021. The parties’ expert witnesses were cross-examined during the hearing.

[39] Post-hearing briefs were filed. On December 20, 2021, the Arbitrator closed the proceedings with respect to the issue of damages.

[40] The Arbitrator released the Damages Award on December 23, 2021, which addressed the remedy arising out of the Liability Award. The Arbitrator stated that the Liability Award and its findings were incorporated by reference in the Damages Award.

[41] The primary relief sought by the Respondents was under the oppression provisions of the CBCA, more particularly:

a. an order pursuant to subsection 241(3)(g) of the CBCA that the Applicant refund the $1,050,000 paid by the Respondents for their securities in the Applicant; and

b. an order for the disgorgement of the ill-gotten trading profits enjoyed by the Applicant as a result of its misconduct pursuant to subsection 241(3)(j) of the CBCA.

[42] The Respondents’ position was that the Arbitrator could also order the following additional remedies: a statutory right to damages or rescission under the Securities Act (in which case the Respondents would elect rescission), damages for loss of chance and punitive damages.

[43] The Applicant’s position was that by pleading and proving their claim for misrepresentation under section 130.1 of the Securities Act, the Respondents were entitled only to the relief set out in that act, i.e., rescission or damages.

[44] The Arbitrator found as follows with respect to the availability of remedies:

The Arbitrator is not persuaded that by pleading a breach of the Securities Act and succeeding in establishing that claim, the Claimants are precluded from seeking a remedy on the basis of their other causes of action, which were also established. The elements of the other causes of action overlapped but were not coincident with the elements of the Securities Act claim. For example, although there was no requirement to establish reliance for the Securities Act claim, there was a requirement to establish this for the misrepresentation claim and the Claimants succeeded in doing so.

Further, the policy basis for the limitation on damages in the Securities Act is not engaged on the facts of this case. The misrepresentation did not lead to a loss of the Investment Funds [^2] or a decrease in the value of the company such that there is a trade-off between the interests of past and future shareholders. Allowing the company to retain the increased value that resulted from the misrepresentation would unduly benefit future shareholders. The individuals who made the misrepresentations are also the majority shareholders in the company. There is no evidence in this case that compensating the Claimants beyond the return of the subscription price of their shares would “strip the entirety of EDE Capital down to compensate past investors, leaving other investors in EDE Capital with a valueless investment.”

Accordingly, the Claimants are not required to seek their remedy either primarily or exclusively based on the established breach of the Securities Act in circumstances where they pleaded and proved other causes of action.

[45] The Arbitrator stated that while the Respondents had multiple causes of action in the arbitration, their claim for oppression was the one that most fully captured the events and their impact on them. She concluded that, in these circumstances, it was appropriate to fashion a remedy that addressed the oppressive conduct.

[46] The Arbitrator found that an order requiring the Applicant to purchase the Respondents’ shares was necessary to rectify the oppressive conduct. She also found that, in the circumstances of this case, disgorgement of the profits earned from the investment of the funds raised was an appropriate remedy for the Applicant’s wrongdoing.

[47] The Arbitrator accepted the methodology of the Respondents’ expert to determine the amount to be disgorged. She stated the following:

Regarding the assumptions as to inflows and outflows attributable to the Claimants’ investment, Mr. Gilroy’s [i.e., the Respondents’ expert’s] assumption was reasonable in the circumstances, i.e. the majority of the investment funds were deployed into the BMO account in short order and there was no evidence provided as to the other sources of funding that investment or to explain the withdrawals from the account over the period. The Respondent [i.e., the Applicant in this Application] had the necessary information as to the source of the funds and the destination of the withdrawals but chose not to provide that information. Although the Respondent now says that the Investment Funds were co-mingled with other EDE Capital assets before investment, it provided no evidence to verify these amounts. When asked at the hearing on liability about whether any of the funds invested in the BMO account came from EDE Capital, Qi Guo referred to some funds being in the EDE Capital account from other sources but was unable with any certainty to quantify those amounts. EDE Capital did not subsequently provide any explanation of the flow of funds. The overall impression from the evidence was that the Investment Funds, as well as the other funds raised in the March 2018 offering flowed into the BMO investment account and there was no evidence of the destination or use of any withdrawals. In these circumstances, it is appropriate to use a first-in, last-out methodology to calculate the gains attributable to the Investment Funds.

[48] The Arbitrator held that the Respondents had established disgorgement damages in the pre-tax amount of $1,065,474 as of June 30, 2021, but that the Applicant was entitled to deduct the notional marginal tax rate attributable to these funds in order to arrive at an after-tax net profit figure.

[49] The Arbitrator summarized the Damages Award as follows in the last two paragraphs of her decision:

For the reasons set forth above, my partial award on damages is as follows:

a. EDE Capital is ordered to purchase the Claimants’ shares at the aggregate subscription price of $1,050,000 within 30 days;

b. EDE Capital is ordered to pay to the Claimants the after-tax profits attributable to the Claimants’ investment;

c. EDE Capital is ordered to pay to the Claimants interest on the amounts set out in (a) and (b) at the statutory rate from 30 June 2021 until payment in full;

d. I reserve jurisdiction to decide any disputes arising out of the calculation of the awarded damages; and

e. I reserve jurisdiction to determine all matters related to costs.

All other requests and claims for damages are rejected.

6. Request for Reconsideration and Procedural Order No. 3

[50] On January 7, 2022, the Applicant submitted a request for reconsideration of the Damages Award pursuant to subsection 44(1)(b) of the Arbitration Act. Subsection 44(1) reads as follows:

44 (1) An arbitral tribunal may, on its own initiative within thirty days after making an award or at a party’s request made within thirty days after receiving the award,

(a) correct typographical errors, errors of calculation and similar errors in the award; or

(b) amend the award so as to correct an injustice caused by an oversight on the part of the arbitral tribunal.

[51] In its request, the Applicant took the position that the Damages Award conflicted with findings made in the Liability Award. The Applicant’s lawyer stated the following in her letter to the Arbitrator:

Your finding in the Liability Decision that $2,000,000 of the $2,090,000 in funds raised through the March, 2018 offering were deposited into the EDE Capital BMO account was a final determination of fact. In the Liability Decision, you therefore determined that $2,000,000 of the funds raised through the March 2018 offering from individual investors including the Claimants and others were co-mingled when deposited into the BMO trading account.

This factual finding is the only factual finding upon which a quantification of damages can be assessed. As such, EDE Capital’s damages submissions were premised on this factual finding that the funds were co-mingled when deposited into the BMO trading account.

Once the finding was made that the funds were co-mingled when deposited, you cannot unmingle or segregate the funds when they are withdrawn to now find that only the Claimants funds remained after the withdrawals.

Further, it is not correct to state that there was no evidence of the destination or the use of the funds withdrawn. The citations to the above-quoted paragraph from your Liability Decision reference EDE Capital’s financial and trading statements. Within these statements, there are clear withdrawals of cash from the BMO Trading account after the sale of securities (including the $650,000.00 withdrawn for the proposed dividend in 2019) and the requisite entries in the financial statements for gains received from the sale of these securities. The co-mingled funds were deposited back into EDE Capital when the securities were sold, and then used in June 2020 to purchase $2,400,000 worth of units in EDE Value Fund, as you found in your Liability Decision.

As you found that the Claimants funds were co-mingled with other shareholder funds raised in the March 2018 offering, any withdrawal of those funds would necessarily have to be on a pro-rata basis. Based on your finding of the co-mingling of funds, it would be incorrect and unjust to use the first-in, last-out methodology to disgorge to the Claimants more than their pro-rata share of gains earned from the investments. Using the first-in, last-out methodology affects the rights of non-parties to the Arbitration after you found that funds raised from them were co-mingled with the Claimants’ funds when deposited into the BMO trading account.

Considering the foregoing, the Respondent requests under s. 44 of the Arbitration Act that you make an amendment to the Damages Decision to correct the above noted injustice and calculation of the disgorgement amount. […]

[52] On March 9, 2022, after receiving submissions from the parties regarding the Applicant’s request for reconsideration, the Arbitrator issued Procedural Order No. 3 which dismissed the Applicant’s request.

[53] The Arbitrator first addressed the threshold issue of the legislation applicable to the issue before her. She stated the following:

The issue at this stage of the proceedings is not which legislation governs in the sense of recourse to the courts and control of the arbitral procedure. The governing legislation is determined by operation of law and is not selected by the parties to the arbitration. That issue is one for a court to determine in the event it becomes necessary and is not relevant to any of the issues in dispute in the arbitration. Accordingly, this decision should not be read as making any determination as to this issue.

[54] The Arbitrator stated that the issue before her was whether the domestic legislation had any place in the procedure for the arbitration itself, which required an interpretation of the arbitration agreement. She found that the arbitration agreement evidenced the parties’ intent to apply the Arbitration Act to the day-to-day procedure of the arbitration. She stated that the section 44 procedure was part of that agreed procedure and was not inconsistent with the provisions of the ICAA.

[55] The Arbitrator then turned to the Applicant’s argument that there was an inconsistency between the factual findings in the Liability Award and the Damages Award. The Arbitrator quoted the excerpt from the Damages Award reproduced in paragraph 47 above, and stated the following:

The quote from the Damages Award set out above makes clear that the finding of co-mingling made in the Liability Award was not overlooked in the Damages Award, which specifically states that “[t]he overall impression from the evidence was that the Investment Funds, as well as the other funds raised in the March 2018 offering flowed into the BMO investment account”. The Damages Award repeats that finding from the Liability Award.

However, this was stated to be an “overall impression” from the evidence that the offering would raise “up to $2,090,000” and the Claimants provided evidence of the exact amount of the Investment Funds. The total amount actually raised from the offering was not in evidence and stated to be “approximately $2,000,000”. Mr. Qi Guo testified that some of the funds in the EDE Capital BMO account came from other sources but provided no certain figures or any documentary evidence. There was sufficient evidence to infer that the Investment Funds were deployed into the EDE Capital BMO account shortly after they were received from the Claimants and that these were co-mingled with funds from “other sources”, since the total amount invested exceeded the amount of the Investment Funds. However, EDE Capital provided no explanation of the destination or use of any withdrawals. There was evidence that $650,000 was withdrawn at a time that coincides with the proposal to pay a dividend to the shareholders. That dividend was never paid. No information was in the record regarding the other withdrawals from the BMO account. Only EDE Capital had this information and it chose not to provide the details of the sources of the funds invested in the BMO account or of the uses of the funds withdrawn from this account over the relevant period.

In relying on Mr. Gilroy’s methodology, the Tribunal did not overlook the finding that the Investment Funds were co-mingled. Accordingly, it would not be appropriate to amend the Damages Award pursuant to section 44(1)(b).

Further and in any event, the Tribunal is not persuaded that the scope of section 44(1)(b) can be extended to correct an injustice to non-parties to the arbitration. The only parties to the arbitration are the Claimants and EDE Capital. The Tribunal’s jurisdiction is limited to making orders binding these parties within the scope of disputes arising under the Arbitration Agreement. The award in this arbitration binds EDE Capital, as the Respondent in these proceedings. It would not be consistent with the arbitration process to interpret section 44(1)(b) in a manner that permits amendment of an award to correct an injustice to non-parties to the arbitration.

Further, the alleged injustice identified (the method of calculation of disgorgement when there has been a finding of co-mingling of funds) relates to a final determination, which is beyond the scope of section 44(1)(b), as it seeks to correct an alleged error in the Damages Award.

[56] Thus, the Arbitrator denied the Applicant’s application to amend the Damages Award pursuant to section 44(1)(b) of the Arbitration Act.

7. Procedural Order No. 4 and Costs Award

[57] On March 28, 2022, counsel advised the Arbitrator that the parties disagreed as to the manner of calculation of the notional taxes to be deducted from the profits ordered to be disgorged. On April 7, 2022, the Arbitrator issued Procedural Order No. 4 in which she found that the Respondents’ calculation of the notional tax to be deducted was more consistent with the Damages Award. The Arbitrator held that the amount of the notional marginal tax to be deducted from the profits awarded of $1,065,474 was $282,350.61.

[58] On May 2, 2022, the Arbitrator released her Costs Award. She ordered the Applicant to pay to the Respondents: (a) $380,584.58 for the reasonable legal fees of the Respondents; and (b) $91,952.80 for the fees and expenses of the arbitration. The Arbitrator reserved jurisdiction to determine any issues arising out of the awards.

[59] The Applicant commenced this Application to set aside the arbitral awards on February 2, 2022.

B. Positions of the Parties

1. Position of the Applicant

[60] The Applicant’s position is that the ICAA does not apply in this case. It states that the arbitration was governed by the Arbitration Act, as agreed upon by the parties in the Shareholders’ Agreement and as applied by the Arbitrator when determining the Applicant’s request for reconsideration under section 44 of the Arbitration Act. The Applicant argues that at the time the parties entered into the arbitration agreement, the parties resided or had their places of business in Ontario. In the alternative, the Applicant argues that the Respondent Ruyu Yan did not have her habitual place of residence in China when she signed the Shareholders’ Agreement as she had just moved back to China at that time.

[61] The Applicant contends that it was not treated equally and fairly and that the Arbitrator’s procedures offended the procedural guarantees in the Arbitration Act, thereby violating the Applicant’s procedural rights. As a result, this Court should set aside the Damages Award under subsection 46(1) of the Arbitration Act.

[62] The Applicant submits that the Arbitrator breached the procedures established for the conduct of the arbitration by: (a) reopening issues that were finally determined at the liability stage of the arbitration in the Damages Award; and (b) making new findings of fact in the Damages Award that were inconsistent with and contrary to the final findings of fact in the Liability Award.

[63] The Applicant argues that based on the provisions of the Arbitration Act, the procedure that the Arbitrator herself established in her Procedural Order No. 1, and fundamental principles of fairness, it was not open to the Arbitrator to: (i) determine a central issue at the liability phase of the proceedings, (ii) issue a final and binding award (i.e., the Liability Award), and (ii) then vary the award at the later damages phase of the proceedings. According to the Applicant, this is precisely what the Arbitrator did in the Damages Award.

[64] The Applicant states that the Arbitrator made the following findings in the Damages Award which are contrary to express findings of the Arbitrator in the Liability Award: (a) that the funds were not co-mingled (i.e., they were segregated) when they were withdrawn such that only the Respondents’ funds remained in the BMO Account after the withdrawals; [^3] and (b) that there was no evidence provided as to the source of the funds in the BMO Account other than that of the Respondents. The Applicant submits that changing the Liability Award findings was unfair and prejudicial to the parties who were bound by these findings, which circumscribed the scope of argument that could be made heading into the damages stage of the arbitration. The Applicant further submits that it was not given an opportunity to respond to the new findings put forward by the Arbitrator in the Damages Award and to point to relevant evidence in the record.

[65] The Applicant argues that the Arbitrator mischaracterized the Respondents’ claim under section 130.1 of the Securities Act and their claims of misrepresentation as being cumulative in nature when, in fact, those claims were framed in the pleadings as being disjunctive. The Applicant states that the Arbitrator’s reasoning hinged on issues that were not advanced in the pleadings, which violated its procedural rights and rendered the awards inherently unreliable.

[66] The Applicant further argues that in refusing to grant a remedy on the finding of a breach of section 130.1 of the Securities Act and, instead, granting a remedy under the oppression claim, the Arbitrator recast the finding in the Liability Award to grant further remedies than the finding of liability under section 130.1 provides. The Applicant submits that having elected to pursue recission, the Respondents were precluded from also pursuing a claim for damages for the same underlying conduct. According to the Applicant:

The Arbitrator stepped outside the case as it was developed by the parties and ignored the finding under Section 130.1 of the Securities Act so as to avoid the limitations the provision imposes of the remedies available to be awarded to the Respondents. In doing so, the Arbitrator acted contrary to the principles of procedural fairness and natural justice, and this Court should intervene to set aside the Damages Award.

[67] The Applicant also takes the position that the Arbitrator exceeded her jurisdiction by making a decision that affects non-parties to the arbitration. It states that by concluding that it was appropriate to disgorge to the Respondents more than their pro-rata share of the gains earned in the BMO Account on the co-mingled funds of all investors who bought shares of the Applicant pursuant to the March 2018 offering, the Arbitrator has disgorged to the Respondents the non-party shareholders’ profits earned on their funds deposited into the BMO Account.

[68] The Applicant submits that in addition to exceeding her jurisdiction by rendering a decision that affects non-parties, the Arbitrator also exceeded her jurisdiction by reopening liability issues once she was functus on the liability issues.

[69] In the alternative, the Applicant argues that since the issue of the source of the funds raised in the 2018 fundraising and the subsequent withdrawals was the subject matter of a prior determination (i.e., the Liability Award), the doctrine of issue estoppel applies.

[70] The Applicant submits that if it is successful in setting aside the Damages Award, the Costs Award should also be set aside and the determination of the quantum of costs should be referred back to the Arbitrator with directions from the Court.

2. Position of the Respondents

[71] The Respondents’ position is that this Application “is nothing more than an attempt to overturn the just result of the arbitration through trumped up fairness and jurisdictional arguments.”

[72] The Respondents submit that the ICAA applies to this case due to the commercial nature of the parties’ agreement and the fact that the habitual residence of one of the Respondents was in China at the time the arbitration agreement was signed. They state that no ruling was made on the legislation that applies to the arbitration. They point out that the evidence of Ruyu Yan regarding her habitual place of residence at the time she signed the Shareholders’ Agreement is unchallenged. According to the Respondents, Ruyu Yan’s Chinese residence, coupled with the commercial nature of the relationship, require the application of the ICAA by operation of law.

[73] The Respondents state that regardless of which legislation applies, judicial intervention in arbitrations is very narrow. They stress that a reviewing court may not set aside an award simply because it believes that the arbitral tribunal wrongly decided a point of fact or law, and that there must be serious procedural unfairness or lack of jurisdiction before an arbitral award may be set aside.

[74] The Respondents submit that the Damages Award is consistent with the findings made in the Liability Award. They point out that the Arbitrator specifically considered the co-mingling in the Damages Award. According to the Respondents, their expert evidence – more specifically the first-in, last-out methodology – was preferred by the Arbitrator because the Applicant did not provide important evidence for the relevant period that would have supported its alternative calculation methodology. The Respondents state that the Applicant’s alternative damages methodology relied on unproven assumptions that the Respondents represented 52.45% of the funds raised in March 2018 and that certain funds withdrawn in 2019 did not earn a return.

[75] The Respondents argue that the Applicant’s failure to lead evidence cannot be recast as procedural unfairness. They note that the Applicant had the opportunity to: (a) make submissions on the methodology to calculate disgorgement, both in their Statement of Case, at the hearing on damages, and in answering the post-hearing questions from the Arbitrator; (b) cross-examine the Respondent’s expert witness on his methodology at the hearing on damages; and (c) present their own evidence on these issues.

[76] The Respondents submit that the Damages Award was properly decided on the issues as pleaded. They state that they pleaded oppression and sought the repurchase of their shares at their original subscription price and an order that the Applicant pay the Respondents their respective percentage of any trading profits. They note that these remedies are available under section 241 of the CBCA. According to the Respondents, the fact that they also pleaded and succeeded in proving a fraudulent misrepresentation and a misrepresentation contrary to s. 130.1 of the Securities Act is wholly irrelevant given that all of the remedies that were ordered in the Damages Award could be ordered as a remedy for the Applicant’s oppressive conduct.

[77] The Respondents state that they successfully argued before the Arbitrator that the Securities Act did not preclude other non-statutory remedies where another cause of action existed at law. They further state that, in any event, this Application is not an appeal and it is not for this Court to decide whether the Arbitrator erred in her interpretation of the Securities Act.

[78] The Respondents’ position is that the Arbitrator did not exceed her jurisdiction. They note that the Arbitrator specifically reserved her jurisdiction in the Liability Award “to determine any other matters in dispute that have been submitted to arbitration in this proceeding that are not determined by [the Liability Award]”. They submit that the Arbitrator did not reopen Liability Award findings in the Damages Award, and that her decision to accept most of the Respondents’ methodology for calculating the amount to be disgorged can be attributed to the Applicant’s failure to lead important evidence regarding the assumptions it gave to its expert. The Respondents also state that a failure to provide procedural fairness does not amount to an excess of jurisdiction.

[79] The Respondents argue that the Applicant’s submission that the Arbitrator exceeded her jurisdiction by binding or affecting the rights of other non-party shareholders should be rejected. They state that the Applicant’s argument “ignores a basic corporate law principle that when a shareholder pays money to a corporation for a share of its ownership then the monies paid no longer belong to the original shareholder, but to the company.” The Respondents state that the arbitration only binds the Applicant and does not directly affect the legal rights of non-party shareholders.

C. Discussion

1. Applicable Law

[80] Section 2(1) of the Arbitration Act provides that the Arbitration Act applies to an arbitration conducted under an arbitration agreement unless the ICAA applies. Thus, the ICAA and the Arbitration Act are exclusive: if the ICAA governs an agreement, the Arbitration Act does not, and vice versa. See Uber Technologies Inc. v. Heller, 2020 SCC 16 at para. 20 (“Uber”).

[81] The ICAA provides that the Model Law has force of law in Ontario: see section 5 of the ICAA. The Model Law applies to international commercial arbitrations.

[82] The term “commercial” is to be given a wide interpretation. An investment transaction has been recognized as a relationship of a commercial nature for the purpose of the Model Law: see the footnote to Article 1(1) of the Model Law reproduced in Uber at para. 23. In my view, the arbitration in this case was commercial in nature. This does not appear to be contested by the Applicant. However, the Applicant’s position is that the arbitration was not an international one.

[83] An arbitration is international if the parties to an arbitration agreement have, at the time of the conclusion of that agreement, their places of business in different countries. If a party does not have a place of business, reference is made to the party’s habitual residence. See Articles 1(1), 1(3)(a) and 1(4)(b) of the Model Law.

[84] The Respondent Ruyu Yan gave the following evidence in her witness statement filed in the arbitration:

a. She signed a subscription agreement in Toronto in March 2018.

b. Prior to signing the subscription agreement, she had a conversation with one of the Applicant’s directors who knew that she was planning to move back to China.

c. She moved to Beijing, China in June 2018.

d. Because she was living in Beijing, she signed and returned her copy of the Shareholders’ Agreement by e-mail on November 10, 2018.

e. She did not attend the shareholders’ meetings on October 20, 2018 and December 4, 2019 because she had moved to China.

[85] In summary, Ruyu Yan’s evidence is that she moved to China after signing a subscription agreement but before signing the Shareholders’ Agreement. It is the Shareholders’ Agreement that contains the arbitration agreement.

[86] There is no basis for not accepting Ruyu Yan’s evidence regarding her place of residence. Since she was not cross-examined by the Applicant, her evidence that her habitual place of residence was in China at the time she signed the Shareholders’ Agreement is unchallenged. There is no evidence that Ruyu Yan had a place of business in Ontario.

[87] When Ruyu Yan signed the Shareholders’ Agreement in November 2018, she had been residing in China for approximately five months. This is sufficient to make China her habitual residence at the time of the conclusion of the arbitration agreement.

[88] Thus, I conclude that the arbitration in this case is an international commercial arbitration to which the Model Law applies.

[89] This raises the question of whether the parties could contract out of the ICAA and the Model Law in favour of the Arbitration Act, as argued by the Applicant based on the language of the arbitration agreement in the Shareholders’ Agreement.

[90] Courts have recognized that the Model Law includes mandatory provisions that cannot be excluded by agreement of the parties. Thus, the parties cannot contract out of the ICAA and the Model Law, including Article 34 of the Model Law, for all purposes: see Popack v Lipszyc, 2015 ONSC 3460 at paras. 42-47, 52; aff’d 2016 ONCA 135.

[91] Article 5 of the Model Law states that “[i]n matters governed by this Law, no court shall intervene except where so provided in this Law.” In my view, Article 5 contains mandatory language and is a mandatory provision of the Model Law. If a court is to intervene and set aside an award to which the Model Law applies, the court can only do so in accordance with and based on the provisions of the Model Law.

[92] Consequently, I find that the applicable law on this Application is the Model Law and that the appropriate framework to analyze the Applicant’s request to set aside the Damages Award is under Article 34 of the Model Law. [^4]

[93] While the analysis below is conducted under the Model Law, I note that I would have reached the same conclusions in this case under the Arbitration Act.

2. General Principles Applicable to Applications to Set Aside an Arbitral Award

[94] Article 34 of the Model Law provides as follows:

(1) Recourse to a court against an arbitral award may be made only by an application for setting aside in accordance with paragraphs (2) and (3) of this article.

(2) An arbitral award may be set aside by the court specified in article 6 only if:

(a) the party making the application furnishes proof that:

(i) a party to the arbitration agreement referred to in article 7 was under some incapacity; or the said agreement is not valid under the law to which the parties have subjected it or, failing any indication thereon, under the law of Ontario; or

(ii) the party making the application was not given proper notice of the appointment of an arbitrator or of the arbitral proceedings or was otherwise unable to present his case; or

(iii) the award deals with a dispute not contemplated by or not falling within the terms of the submission to arbitration, or contains decisions on matters beyond the scope of the submission to arbitration, provided that, if the decisions on matters submitted to arbitration can be separated from those not so submitted, only that part of the award which contains decisions on matters not submitted to arbitration may be set aside; or

(iv) the composition of the arbitral tribunal or the arbitral procedure was not in accordance with the agreement of the parties, unless such agreement was in conflict with a provision of this Law from which the parties cannot derogate, or, failing such agreement, was not in accordance with this Law; or

(b) the court finds that:

(i) the subject-matter of the dispute is not capable of settlement by arbitration under the law of Ontario and any laws of Canada that are in force in Ontario; or

(ii) the award is in conflict with the public policy of Ontario.

(3) An application for setting aside may not be made after three months have elapsed from the date on which the party making that application had received the award or, if a request had been made under article 33, from the date on which that request had been disposed of by the arbitral tribunal.

[95] Courts have held that to justify setting aside an arbitral award under Article 34(2)(a)(ii) of the Model Law for reasons of fairness or natural justice, the conduct of the arbitral tribunal must be sufficiently serious to offend our most basic notions of morality and justice. Judicial intervention for alleged violations of the due process requirements of the Model Law will be warranted only when the tribunal’s conduct is so serious that it cannot be condoned under Ontario law. See Consolidated Contractors Group S.A.L. (Offshore) v. Ambatovy Minerals S.A., 2017 ONCA 939 at para. 65 (“Consolidated Contractors”); application for leave to appeal dismissed: .

[96] In Nelson v. The Government of the United Mexican States, 2022 ONSC 1193 at para. 34 (“Nelson”), Penny J. stated that a party may be said to have been “unable to present their case” when:

a. the award is based on a theory of liability that either or both of the parties were not given an opportunity to address, or based on a theory of the case not argued for by either of the parties;

b. a party was not given an opportunity to respond to arguments made by an opposing party; or

c. the tribunal ignored or failed to take the evidence or submissions of the parties into account.

[97] A party is not permitted to review the award on its merits under the guise of alleged breaches of Article 34(2)(a)(ii) of the Model Law. Where a party merely disagrees with the outcome, the court should not permit re-argument of the merits in the guise of a claim for breach of procedural fairness. See Nelson at para. 35. The duty of fairness is concerned with ensuring that adjudicators act fairly in the course of making decisions, not with the fairness of the actual decisions they make. See Highbury Estates Inc. v. Bre-Ex Limited, 2015 ONSC 4966 at paras. 21, 24-25, Baffinland Iron Mines Corp. v. Tower-EBC, 2022 ONSC 1900 at para. 77, and Chadeesingh v. Flores, 2020 ONSC 5534 at para. 32.

[98] The standard of review that applies to questions related to a tribunal’s jurisdiction under Article 34(2)(a)(iii) of the Model Law is one of correctness. Courts are expected to intervene only in rare circumstances under this provision, i.e., where there is a true question of jurisdiction. See Consolidated Contractors at paras. 28-32.

[99] In Alectra Utilities Corporation v. Solar Power Network Inc., 2019 ONCA 254 (“Alectra”) at paras. 25-27, the Court of Appeal stated the following with respect to an application to set aside an arbitral award on jurisdictional grounds under subsection 46(1)3 of the Arbitration Act, which contains language that is similar to the language of Article 34(2)(a)iii) of the Model Law: [^5]

[25] Although the court cannot apply s. 46(1)3 without having regard to an arbitrator’s decision, the court’s authority to set aside an arbitration award under that subsection depends on the mandate the arbitration agreement confers on the arbitrator to resolve a particular dispute. In order to succeed on an application to set aside an arbitration award, an applicant must establish either that 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 arbitration agreement.

[26] For example, if an arbitration agreement provides that an arbitrator shall resolve a particular question and the arbitrator does so, the court has no authority to set aside the award on the basis that the arbitrator’s decision is unreasonable or incorrect. If, however, in the course of resolving the particular question remitted the arbitrator asks and answers an additional second question, the award may be set aside – not because the arbitrator’s answer to the second question is unreasonable or incorrect, but because the arbitrator had no authority to reach any conclusion on the second question at all.

[27] In short, s. 46(1)3 requires that arbitrators act within the bounds of the authority granted by the arbitration agreement pursuant to which they are appointed – no less, but no more. Section 46(1)3 is not an alternate appeal route and must not be treated as such. [Emphasis in the original.]

[100] Thus, jurisdiction is determined not by asking whether the arbitrator made a correct decision, but by asking whether the arbitrator had the authority to make the inquiry that they made: see Parc-IX Limited v. The Manufacturer’s Life Insurance Company, 2021 ONSC 1252 at paras. 40-42.

3. Application to This Case

a. Grounds to Set Aside the Award Under Article 34(2)(a)(ii) – Procedural Fairness [^6]

[101] As articulated in their request for reconsideration, most of the Applicant’s arguments regarding procedural fairness are based on the premise that it is impossible to adopt a first-in, last-out methodology for disgorgement of profits when funds have been co-mingled. I do not need to rule on the correctness of this premise because such a question relates to the merits of the Arbitrator’s decision, not its procedural fairness.

[102] The expert report on which the Respondents relied at the damages phase of the arbitration contained the following note: “I have assumed that the first monies invested were those of the [Respondents]. Since all company funds are co-mingled I have no way to separate them”. Thus, it is clear that the Respondents, through their expert, were putting forward a first-in, last-out methodology despite the co-mingling of the funds. The Applicant had an opportunity to: (a) put forward a different methodology and adduce expert evidence in response to the Respondents’ expert evidence; (b) cross-examine the Respondents’ expert; and (c) make submissions on the appropriate methodology. Thus, the Applicant was able to present its case on this issue.

[103] It is apparent from the Damages Award that the Arbitrator did not ignore the co-mingling of the funds. In fact, she expressly referred to the fact that the funds invested by the Respondents, “as well as the other funds raised in the March 2018 offering flowed into the BMO investment account”. The Arbitrator confirmed in her Procedural Order No. 3 that the finding of co-mingling made in the Liability Award was not overlooked in the Damages Award. The fact that, despite the recognition of the co-mingling of the funds, the Arbitrator preferred the methodology of the Respondents’ expert does not constitute a breach of procedural fairness.

[104] The reasons given by the Arbitrator – both in the Damages Award and the Procedural Order No. 3 – for adopting a first-in, last-out methodology despite the co-mingling of the funds included that there was no evidence of the total amount actually raised from the offering and no evidence of the destination or use of any withdrawals. The Applicant has failed to show that the Arbitrator ignored or failed to take evidence into account when reaching this conclusion. The bank statements related to the BMO Account and the Applicant’s financial statements, without more, do not by themselves establish the destination and use of any withdrawals, or the total amount actually raised from the offering. I also note that no evidence was pointed to this Court supporting the “instruction” given to the Applicant’s expert that the funds that were withdrawn from the BMO Account did not earn a return.

[105] In light of the foregoing, I reject the Applicant’s submission that the Arbitrator reopened issues that were finally determined at the liability stage of the Arbitration and/or made new findings of fact in the Damages Award that were inconsistent with and contrary to the final findings of fact in the Liability Award. She did not ignore the co-mingling of the funds in the Damages Award and her findings regarding the lack of evidence were not contrary to her findings in the Liability Award. Given this conclusion, the application of the doctrine of issue estoppel does not arise.

[106] I also reject the Applicant’s fairness arguments based on section 130.1 of the Securities Act and its alleged impact on available remedies. The issue of whether the Respondents were restricted to the remedies available under the Securities Act was specifically argued before the Arbitrator and is addressed in the Damages Award. Again, the Applicant was able to present its case on this issue, and the fact that the Arbitrator did not accept its position does not constitute a breach of procedural fairness. I agree with the Respondents that since this Application is not an appeal, it is not for this Court to determine whether the Arbitrator erred in her interpretation of the Securities Act.

[107] It is clear from the Damages Award that the oppression provisions of the CBCA were the basis for the remedies that were ordered by the Arbitrator. Given that oppression was not pleaded in the alternative in the Notice to Arbitrate, there can be no fairness argument based on the pleadings.

[108] Accordingly, I find that the Applicant has not established any valid ground for setting aside the Damages Award for reasons of fairness or natural justice under Article 34(2)(a)(ii) of the Model Law.

b. Grounds to Set Aside the Award Under Article 34(2)(a)(iii) – Jurisdiction

[109] In my view, the Arbitrator did not exceed her jurisdiction under the arbitration agreement. She dealt with a dispute identified in the arbitration agreement. There is no suggestion that she exceeded her jurisdiction with respect to the Liability Award and the Damages Award merely addressed the remedies arising out of the Liability Award. Further, since I have found that the Arbitrator did not reopen liability issues at the damages stage, no issue arises regarding the Arbitrator being functus. I also note that a question of procedural fairness or natural justice is not a true question of jurisdiction because any breach of the duty of fairness only arises after the inquiry has lawfully begun: see Nasjjec v Nuyork, 2015 ONSC 4978 at paras. 42-46 and Abdul v. Ontario College of Pharmacists, 2018 ONCA 699 at para. 21.

[110] I disagree with the Applicant’s submission that the Damages Award affects non-parties to the arbitration. The Arbitrator did not make any order against non-parties. The order to pay was made against the Applicant only, who is distinct from its shareholders. As pointed out by the Respondents, monies paid to the Applicant belong to it and not to the shareholders. Further, I was not pointed to any evidence that any other investors have sought disgorgement of profits from the Applicant.

[111] Therefore, I conclude that the Applicant has not established any valid ground for setting aside the Damages Award for reasons of excess of jurisdiction under Article 34(2)(a)(iii) of the Model Law.

4. Costs Award

[112] Given that the Applicant is unsuccessful in its application to set aside the Damages Award, there is no basis for setting aside the Costs Award.

5. Costs of This Application

[113] The Respondents are the successful parties and are entitled to their costs.

[114] As noted by counsel, the parties’ costs outlines are very similar. The Respondents seek costs on a partial indemnity basis in the amount of $46,377.23. The Applicant’s costs outline reflects a similar amount of costs on a partial indemnity basis: $43,282.25.

[115] The fact that the parties’ costs outlines are similar supports the reasonableness of the costs sought by the Respondents. I note that the parties’ costs outlines show that more hours were spent by the Applicant’s lawyers than the Respondents’ lawyers. However, the Respondents’ lawyers have higher hourly rates. In my view, the hourly rate used for the most junior lawyer on the Respondents’ legal team is higher than what an unsuccessful party could reasonably expect, especially since she had been a member of the bar for less than one year at the time of the hearing. Accordingly, I find that it is appropriate to apply a small reduction to the costs sought by the Respondents to ensure the overall reasonableness of the costs award.

[116] Taking the foregoing into account, as well as the factors set out in Rule 57.01(1) of the Rules of Civil Procedure and the reasonable expectations of the parties, I find that the fair and reasonable award of costs in favour of the Respondents for the Application is on a partial indemnity basis in the all-inclusive amount of $42,000.00. In my view, this is an amount that the Applicant should reasonably have expected to pay in the event that it was unsuccessful on the Application. The costs are to be paid by the Applicant to the Respondents within 30 days.

D. Conclusion

[117] The Application is dismissed.

[118] The Applicant is ordered to pay to the Respondents costs on a partial indemnity basis in the all-inclusive amount of $42,000.00 within 30 days.

Vermette J. Released: May 31, 2023

Footnotes

[^1]: Article 21 of the Model Law states: “Unless otherwise agreed by the parties, the arbitral proceedings in respect of a particular dispute commence on the date on which a request for that dispute to be referred to arbitration is received by the respondent.” [^2]: “Investment Funds” is a defined term used by the Arbitrator to refer to the $1,050,000 invested in the capital of the Applicant by the Respondents [^3]: As discussed further below, it is my view that the Arbitrator did not make such a finding in the Damages Award. [^4]: I do not need to review the Arbitrator’s decision to apply the Arbitration Act for the purpose of the Applicant’s request for reconsideration. Article 5 of the Model Law, which I have found to be a mandatory provision, only applies to interventions of the court, not the arbitral tribunal. [^5]: Subsection 46(1)3 of the Arbitration Act provides that “[o]n a party’s application, the court may set aside an award on any of the following grounds: […] 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.” [^6]: I note that some of the arguments made by the Applicant may also fall under Article 34(2)(a)(iv), i.e., that the arbitral procedure was not in accordance with the agreement of the parties. These arguments are addressed below. The specific provision of the Model Law under which these arguments are considered does not change the Court’s analysis and conclusions.