CANADA Trends and Developments Contributed by: Craig A B Ferris, Michael J Donaldson and Scott Lucyk, Lawson Lundell LLP
• the arbitration in question can be shown to materi - ally interfere with efficient and fair resolution of the oppression. The Court found each of these circumstances present. • The arbitration agreement had a nexus to the oppression: it arose from Barlas’ use of an out-of- territory accountant to conceal his scheme and was therefore tainted by his wrongdoing regardless of whether KPMG was complicit. • The broader engagement yielded no meaningful benefit to the Companies, such that preserving the arbitration agreement would not be inequita - ble. The agreement was a standard-form contract whose terms neither party consciously considered nor negotiated. • The Companies’ governance was decimated at the relevant time, stripping the contract of its character as a freely and informedly joined bargain. And pro - ceeding to arbitration would generate duplicative proceedings and impose undue, if not prohibitive, costs on the First Nation. • The Court placed a significant emphasis on the unique context of the case, which involved “big law” and “big accounting” vouching for Barlas and Barlas exploiting his position to steal millions from a remote Indigenous community. • The Court noted recent Canadian law that affirmed the United Nations Declaration on the Rights of Indigenous Peoples as “an interpretative lens” that informed the legal and social context in which the court crafted the remedy.
Taken together, these factors led the Court to con - clude that setting aside the arbitration agreement was in the interests of justice and an appropriate remedy for Barlas’ oppression. The arbitration community and parties may question whether this decision opens a new ground for attack - ing arbitration agreements. Arguably, that concern may be mitigated by the deci - sion’s heavily fact-specific nature. The court’s focus on the unique facts at play, including the particular social and legal considerations of the First Nation and the egregious acts of Barlas, reflects its hesitancy to set aside an arbitration agreement altogether. As the Court cautioned, the oppression remedy must not be popularised as a backdoor to avoid arbitration.
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