CANADA Law and Practice Contributed by: Craig A.B. Ferris KC, Michael J. Donaldson KC and Scott Lucyk, Lawson Lundell LLP
5.2 Circumstances for Court Intervention A court can intervene in matters relating to arbitral jurisdiction in the following circumstances. First, a party may bring an application before the court to stay an action and refer the matter to arbitration under Article 8 of the Model Law ( Husky Food Import- ers v JH Whittaker & Sons , 2022 ONSC 1679, aff’d 2023 ONCA 260). Generally speaking, the courts will refer jurisdictional issues to the arbitral tribunal in the first instance. A court may depart from this general rule only if the fol - lowing criteria are met: • the jurisdictional challenge relates solely to a ques - tion of law or a question of mixed fact and law, where the questions of fact require only superficial consideration of the documentary evidence in the record; • the challenge is not a delaying tactic; and • the court is satisfied that the challenge will not unduly impair the conduct of the arbitration pro - ceeding ( Dell Computer Corp v Union des consom- mateurs , 2007 SCC 34; Uber Technologies Inc v Heller , 2020 SCC 16). As discussed in 5.1 Challenges to Jurisdiction , the Supreme Court of Canada recently established a new exception on access to justice grounds and addressed whether insolvency proceedings can ren - der an arbitration agreement “inoperative”. Second, following the issuance of an arbitral award, a party may bring an application to set it aside pursuant to Article 34 of the Model Law. Third, the court can address jurisdiction on applica - tions to recognise and enforce an award pursuant to Consistent with Article 16 of the Model Law, jurisdic - tion must be challenged no later than the submission of the statement of defence. The circumstances when a court may intervene are set out in 5.1 Challenges to Jurisdiction and 5.2 Circumstances for Court Inter- vention . Article 36 of the Model Law. 5.3 Timing of Challenge
5.4 Standard of Judicial Review for Jurisdiction/Admissibility Generally speaking, courts in Canada take a deferen - tial approach to the review of arbitral awards. There has historically been a divergence in Canada on whether the review by a court of a jurisdictional deci - sion of an international arbitration tribunal attracts: (i) the deferential “reasonableness” standard; or (ii) the “correctness standard”, which provides no deference to an arbitral award. For example, a correctness standard was applied in a line of Ontario decisions ( United Mexican States v Car- gill , 2011 ONCA 622, leave ref’d [2012] SCCA No 528 (SCC), and The Russian Federation v Luxtona Limited , 2021 ONSC 4604 (Div Ct), aff’d 2023 ONCA 393). In contrast, a reasonableness standard was applied in another line of cases ( ACE Bermuda Insurance Ltd v Allianz Insurance Company of Canada , 2005 ABQB 975 and lululemon athletica Canada inc v Industrial Color Productions Inc , 2021 BCSC 15; note that on appeal, the BC Court of Appeal found the judge erred and should have applied the correctness standard, but upheld the judge’s decision that the arbitrator had jurisdiction: 2021 BCCA 428). When applying to set aside an award on jurisdictional grounds, the parties may be able to submit fresh evi - dence that was not before the arbitrator ( Russian Fed- eration v Luxtona Limited , 2023 ONCA 393). 5.5 Breach of Arbitration Agreement As discussed in 3.2 Arbitrability , consistent with the Model Law, Canadian courts will enforce an arbitration agreement unless it is void, inoperative or incapable of being enforced. Where a party commences court proceedings in breach of an arbitration agreement, the other party may seek a stay of the court action consistent with Article 8 of the Model Law. In such cases, the courts will typically refer the matter to arbitration. 5.6 Jurisdiction Over Third Parties Generally speaking, only parties to an arbitration agreement will be bound by its terms. As the Supreme Court of Canada has recognised, mutual consent is
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