CANADA Law and Practice Contributed by: Craig A B Ferris, Michael J Donaldson and Scott Lucyk, Lawson Lundell LLP
6. Preliminary and Interim Relief 6.1 Types of Relief
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 the foundation of private dispute resolution ( TELUS Communications Inc v Wellman , 2019 SCC 19). However, non-signatories/third parties may be sub - ject to an arbitration agreement by operation of the law, including subsidiaries, assignees, trustees and other parties that claim through or under a party to the arbitration agreement ( Peace River Hydro Partners v Petrowest Corp , 2022 SCC 4). Canadian courts have also recognised the following situations where a non-signatory may be subject to an arbitration agreement: • an agency relationship exists between a party and a non-signatory; • the corporate veil between subsidiary and parent companies can be pierced; • an arbitration agreement is incorporated by refer - ence or by hyperlink into a contract; and • a non-party is bound by an estoppel ( DNM Sys- tems v Lock - Block Canada Ltd , 2015 BCSC 2014). Non-signatory beneficiaries will generally not be bound by an arbitration agreement in the absence of clear and explicit language binding them as a third- party to the agreement ( Husky Oil Operations Limited v Technip Stone & Webster Process Technology Inc ., 2024 ABCA 369).
Except for Quebec, Ontario and British Columbia, Article 17 of the Model Law (1985 version) applies in Canada. It affords an arbitral tribunal discretion to order any party to take such interim measures of pro - tection as it may consider necessary. In Quebec, an arbitrator’s jurisdiction to grant interim measures is codified in Article 638 of the Code of Civil Procedure. In Ontario and British Columbia, the 2006 version of Article 17 of the Model Law applies, meaning that interim measures can be issued to: • maintain or restore the status quo pending deter - mination of the dispute; • take action that would prevent or refrain from tak - ing action that is likely to cause, current or immi - nent harm or prejudice to the arbitration process itself; • provide a means of preserving assets out of which a subsequent award may be satisfied; or • preserve evidence that may be relevant and mate - rial to the resolution of the dispute. • Unlike the 1985 version of the Model Law, the 2006 version contemplates the issuance of preliminary orders. Article 17 of the 2006 version of the Model Law permits a party to apply without notice for an interim measure and a preliminary order directing a party not to frus - trate the purpose of the interim measure requested. The arbitral tribunal may grant the preliminary order without notice where disclosure of the request for the interim measure to the affected party risks frustrating its purpose. 6.2 Role of Courts Court intervention is limited under Article 5 of the Model Law. However, Article 9 of the Model Law pro - vides that it is not incompatible with an arbitration agreement for a party to request an interim measure of protection from a court. In Quebec, Article 638 of the Code of Civil Procedure permits a party to ask the court to homologate an arbitrator’s provisional meas -
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