CANADA Trends and Developments Contributed by: Craig A B Ferris, Michael J Donaldson and Scott Lucyk, Lawson Lundell LLP
tion in China, Liu had claimed duress. The tribunal found Liu’s evidence insufficient to support his duress claim and rejected it. In the Ontario proceedings, the Court characterised Liu’s advancement of the duress argument as an “attempt to relitigate” the tribunal’s finding of no duress. The Court understood the tribu - nal’s rejection of Liu’s duress argument to be a matter of fact. The defence of public policy is meant to be invoked against laws, not facts. As Liu did not launch “an attack on the laws of China”, he did not properly invoke the public policy defence. Feicheng Mining’s application was granted and the Court ruled that the award against Liu was enforce - able in Ontario. An Arbitration Agreement may be Set Aside as a Remedy for Oppression TSA CORPORATION et al v KPMG LLP , 2026 NWTSC 2, is a case emerging from the misconduct of Ron Barlas (“Barlas”), the former CEO of a Northwest Ter - ritories’ First Nation’s development companies. He became CEO of the Łutsël K’éDene First Nation’s (the “First Nation”) development corporations (the “Com - panies”) in 2014. Barlas allegedly used his position to misappropriate millions of dollars from the Companies for his own benefit, including by entering into agreements which funnelled millions of dollars into companies owned by him or his family members. The court noted damages exceeded CAD10 million. As part of his scheme, Barlas replaced the Compa - nies’ former accountant with KPMG. The agreement between KPMG and the Companies included a stand - ard-form arbitration agreement. The First Nation brought an action against KPMG for negligence, breach of contract, breach of fiduciary duty and knowing assistance of breach of fiduciary duty (the “derivative action”) and a separate proceed - ing against KPMG for oppression (the “oppression action”). In TSA Corporation, the Supreme Court of the North - west Territories considered three overlapping motions:
• KPMG’s application to stay the derivative action; • KPMG’s application to stay the oppression action; and • the receiver’s application to set aside the arbitra - tion agreement. The Court broadly sided with KPMG on the first two applications, finding all but a portion of derivative Action was covered by the arbitration agreement, and staying the Oppression Action as an attempt to “end- run” around it. The Court’s decision on the receiver’s application rendered its conclusions on the first two applications largely academic: it sided with the receiver and set aside the arbitration agreement as a remedy for Bar - las’ oppression. In reaching this conclusion, the Court first considered whether it had the authority to set aside an arbitration agreement as a remedy for corporate oppression and concluded it did, noting both case law and explicit statutory authority to set aside contracts. In the Court’s words: “the question in this case is not whether arbitration agreements can be set aside, but whether this is a proper case to deploy this excep - tional power as a form of oppression relief.” The arbitration agreement was set aside The Court found that it was an appropriate case to exercise the “exceptional” power to set aside the arbi - tration agreement. It declined to articulate a test for when an arbitration agreement would be set aside as a remedy for oppression, but provided a list of factors which militated in its favour: • the arbitration agreement had some nexus to the oppression; • the broader deal in which the arbitration agreement is found yielded minimal or generic benefit to the subject company; • there was minimal conscious consideration or negotiation of the arbitration agreement; • the company’s governance in and around the entering of the broader agreement was compro - mised; and
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