A recent decision from the Ontario Court of Appeal has confirmed that an arbitrator has jurisdiction to resolve a dispute through a summary judgment motion. The decision confirms that an arbitrator’s discretion is delineated by the arbitration agreement reached between the parties.
In Optiva Inc. v. Tbaytel, the parties, Tbaytel (“Tbaytel”) and Optiva Inc. (“Optiva”), ended up in an $8.5 million contract dispute over the purchase of software and related services. The parties opted to resolve the matter by way of arbitration, per the contract’s terms. The parties agreed on the terms of the arbitration agreement, which included clauses that set out the arbitrator’s powers. The agreement included a provision that stated the arbitrator had “jurisdiction to consider and rule upon all motions during the arbitration, “including, without limitation, the power to … [make] rulings, directions and generally deal with any and all interlocutory matters and procedural questions relating to the issues within the Arbitration.”
During a case management meeting before the arbitrator, Tbaytel indicated that it intended to bring a summary judgment motion. Optiva responded by raising concern about the availability of the motion, but did not object further. After Tbaytel filed their Notice of Motion for Summary Judgement, Optiva took the position that the arbitrator did not have jurisdiction to consider a summary judgement motion absent the consent of both parties, which Optiva did not give.
The arbitrator ruled that Tbaytel could proceed by way of summary judgment, given the above-noted provision in the agreement. The arbitrator also relied on section 20 of the Ontario Arbitration Act (the “Act”), which states that an arbitrator may “determine the procedure to be followed in the arbitration, in accordance with this Act.” The motion proceeded, and the arbitrator held that Optiva had breached the contract and issued a partial award of $4,390,000.
Optiva commenced an application to set aside the arbitrator’s decision. The application was refused based on section 17 of the Act, which states that an arbitrator “may rule on its own jurisdiction to conduct the arbitration and may, in that connection, rule on objections concerning the existence or validity of the arbitration agreement.” The application judge also held that Optiva was seeking to appeal the decision on a question of law, which is precluded by section 45 of the Act.
Optiva was granted leave to appeal the application judge’s ruling to the Court of Appeal, where its appeal was based on three grounds: (1) the arbitration agreement was silent on the availability of a summary judgement procedure; (2) there was a right to an oral hearing under section 26 of the Act to present viva voce evidence and cross-examine witnesses, which was not given; and (3) the summary judgement procedure followed by the arbitrator resulted in unfairness to them.
Optiva’s arguments were rejected for the following reasons:
- The arbitration agreement gave the arbitrator power to hear “all motions during the Arbitration.” The arbitrator was, therefore, not precluded from resorting to a summary judgement procedure.
- Section 26 of the Act only allows for “hearings for the presentation of evidence and for oral argument.” The terms “hearing” and “presentation of evidence” are not defined in the Act and do not necessarily involve the presentation of viva voce evidence in the context of civil or administrative proceedings. While parties have a right to make oral arguments, there is no right to present evidence in any particular manner.
- Optiva had agreed that the arbitrator could determine the procedure governing the arbitration. It also provided no evidence that it was denied the opportunity to present evidence, or that it did not have a full and fair opportunity to challenge the case put forward by Tbaytel. Optiva, therefore, failed to establish that it was treated unfairly.
This decision confirms that when parties opt to resolve a dispute by way of arbitration, the arbitrator has jurisdiction to determine the matter at their discretion, unless the arbitration agreement forbids it. As such, parties would be wise to carefully consider the terms of the agreement if they want the dispute to be determined in a specific way.
About the Authors:
Daniel Waldman is Of Counsel in the firm’s Toronto office. He has a broad commercial litigation practice with an emphasis on real property litigation, including commercial leasing, commercial real estate, construction law, and debt collection. Daniel can be reached at 416-644-2838 or firstname.lastname@example.org. To read his full bio, please click here.