2025 in Review for Canada (Part 1): Jurisprudential trends

Furthermore, in Ontario, the Superior Court issued an anti-suit injunction, enjoining the defendants from pursuing arbitration proceedings “against the plaintiffs or class members in Hong Kong or elsewhere” (Lochan v. Binance Holdings Limited).

However, perhaps the most interesting development in Canada has been the continued evolution of caselaw regarding the intersection of insolvency and arbitration, deference to arbitration and the appellate standard of review of awards, following three landmark arbitration-related SCC judgments (Vavilov, Uber and Petrowest). This post likewise highlights five recognition and enforcement judgments.

The epilogue of recent arbitration-related judgments of the Supreme Court of Canada

Peace River Hydro Partners v. Petrowest Corp.

The 2022 SCC judgment in Petrowest might be familiar to the readers of this blog since it examined the interplay between the worlds of arbitration and insolvency, ultimately giving prevalence to the latter. While recognizing that court proceedings should generally be stayed in favour of arbitration, the SCC in Petrowest, referencing s. 15(2) of the British Columbia Arbitration Act, refused to do so on grounds that the arbitration agreement had become “inoperative” by virtue of a party’s insolvency. In 2025, as in prior years, courts across the country have continued to balance between these two specialized practice areas, favouring an outcome that promotes efficiency and practicality.

For example, in Mayfield Investments Ltd. (Re), the Court of King’s Bench of Alberta was asked to rule on the validity of a notice of arbitration that a party (Stark) had sent to the receiver of its counterparty (Mayfield) months after the receivership order was granted and the sales and investment solicitation process (“SISP”) over Mayfield’s assets had been approved. Relying on Petrowest, the receiver sought a stay of arbitration. Though the Court stayed the arbitration, it did so not because it fully endorsed the receiver’s position but because: (i) no mandatory stay provision in the applicable provincial arbitration statute was engaged, and (ii) that outcome was practical. Considering that neither party invoked s. 7(1) of the Alberta Arbitration Act (“AA”), and that even if they had, the fourth requirement under that provision (that “the party applying for a stay does so before taking any step in the court proceedings”) would not be met, the Court noted that it did not need to proceed with the second part of the Petrowest analysis, “which is to determine whether, on a balance of probabilities, one or more of the statutory exceptions to the mandatory stay provision applies” (paras. 30-48). Yet, it proceeded to distinguish the arbitration statute at issue in Petrowest from s. 7(2) of the Alberta AA (which omits the “inoperative” exception), and to interpret s. 243(1)(c) of the Bankruptcy and Insolvency Act as permitting the Court “to do not only what justice dictates but what practicality demands.” The Court, thus, concluded that practicality demanded a stay of arbitration because there was a “significant need to ensure an efficient and orderly disposition of Mayfield’s assets within the context of the Receivership proceedings” (paras. 49-55). In the Court’s view, it would be “unfair, disruptive and prejudicial to the Receivership to allow Stark’s proposed arbitration to derail the SISP at this stage” (para. 58). 

In Mercy Falls BC Inc. (Re), the Supreme Court of British Columbia (the province’s first instance court) similarly ordered that all matters, even those that would ordinarily be within the jurisdiction of an arbitral tribunal, be resolved in proceedings under the Companies’ Creditors Arrangement Act (“CCAA”). According to the Court, “notwithstanding the existence of an arbitration clause, the court has jurisdiction under s. 11 of the CCAA to order that the matter proceed by way of expedited litigation if doing so will better serve the remedial objectives of the CCAA” (para. 31). While recognizing that “arbitration can be faster and more efficient in resolving commercial disputes,” that was not the situation in this case (para. 33).

In Arrangement relative à 9550-1714 Québec inc., however, the Superior Court of Québec concluded that it was more beneficial to allow the arbitration, which had already been well underway, to proceed not only because (i) the technical prerequisites for arbitration were met, and (ii) no statutory exception preventing a stay of judicial proceedings in favour of arbitration was established, but also because that outcome satisfied the imperatives of “efficiency and consistency” (paras. 13-19). Referring to Petrowest, the Court acknowledged the inherently fact-specific exercise and the “balancing [of] the parties’ contractual autonomy with the broader public interest in ensuring an efficient and orderly liquidation or restructuring for the benefit of all stakeholders” that must inform any decision on the appropriate course of action (paras. 36-37). According to the Court, it is only “in clear cases – where a statutory exception applies, or where the continuation of the arbitration would effectively compromise the orderly and efficient conduct of the insolvency proceedings – [that] a matter [should] be diverted from arbitration” (para. 39). As such, the Court unambiguously confirmed that “the refusal to enforce an arbitration clause must […] be viewed as the exception, even in the context of CCAA proceedings” (para. 43).

As the above cases demonstrate, it is not the case that insolvency law always trumps arbitration law. While courts follow the two-step framework established in Petrowest, the outcome in each case will be facts-driven.

Uber Technologies inc. v. Heller

The 2020 judgment in Uber that, at the time launched shockwaves through the international and domestic Canadian arbitration community (see, e.g. here, here and here), appears to have had a spin-off before the country’s federal courts in the matter commenced by one Mr. Lin. Mr. Lin alleged that through its “Uber Eats” internet platform, Uber engaged in “the practice of representing a price for its food delivery service that is not attainable due to additional fees charged, contrary to the prohibition on ‘drip pricing’ contained in section 52 of the Competition Act.” Contrary to the 2020 majority decision of the SCC, which found the arbitration clause to be improvident and thus declined to refer the matter to arbitration, in Lin v. Uber Canada Inc., the Federal Court of Appeal (“FCA”) upheld the Federal Court’s decision to stay court proceedings in favour of arbitration.

At issue in this appeal was whether the appellant has demonstrated, on a balance of probabilities, the existence of a statutory exception preventing the court from referring his action to an arbitrator (para. 15). The appellant’s arguments were three-fold: (i) provincial consumer protection operates to preclude the enforcement of Uber’s arbitration clause; (ii) the arbitration clause is “incapable of being performed” as the ADR Institute of Canada (“ADRIC”), the arbitral institution designated to decide disputes arising out of the Uber contract, does not adjudicate class proceedings; (iii) Uber’s arbitration clause is void as it is unconscionable (para. 20).  

None of these arguments persuaded the FCA. In response to Mr. Lin’s first argument and his invocation of the Ontario Consumer Protection Act, the FCA noted that said legislation expressly stated that an arbitration clause was invalid “insofar as it prevents a consumer from exercising a right to commence an action in the [Ontario] Superior Court of Justice” (para. 27). Considering that Mr. Lin had commenced his action under the federal Competition Act, in Federal Court, the Ontario consumer protection legislation was irrelevant (paras. 30-32).

With respect to Mr. Lin’s second argument, FCA noted that Mr. Lin was welcome to have his personal claim under the Competition Act arbitrated by ADRIC and cautioned that “class proceedings are procedural vehicles that neither modify nor create substantive rights” (paras. 45-46). Accepting Mr. Lin’s argument would, in FCA’s view, allow “any plaintiff [to] avoid any arbitration clause merely by filing a proposed class proceeding” (para. 46).

On the issue of unconscionability, the FCA acknowledged the material differences that the Federal Court found between Mr. Lin’s situation and that of the plaintiff in Uber. These differences included the following: (a) there was no vulnerability on Mr. Lin’s part nor unfairness within a contract or its terms; and (b) Mr. Lin was not dependent on Uber in the same manner as the plaintiff in Uber depended on the company for his livelihood (paras. 79-80). The FCA thereafter underscored that “a party seeking to avoid an arbitration agreement must establish both that there was an inequality of bargaining power and that this resulted in an improvident bargain,” both of which Mr. Lin failed to do (para. 89).

The FCA’s decision serves to show how inherently fact-specific the SCC majority’s holding in Uber was and how limited its impact on matters outside of that specific context is.

Canada v. Vavilov

Finally, readers might recall the 2019 judgment rendered in the context of judicial review of an administrative body’s decision - Vavilov. As previously discussed on this blog (see, e.g., here, here and here), this judgment prompted a debate on whether it modified the standard of review applicable to appeals of domestic arbitration awards from reasonableness to correctness (for questions of law). Whereas first instance courts across the country have since come to different conclusions (as mentioned here), decisions at the appellate level have been scarce, with only the Court of Appeal for the Northwest Territories holding that Vavilov’s framework applied to appeals of domestic commercial awards. The Court of Appeal of Manitoba in Buffalo Point First Nation v. Buffalo Point Cottage Owners Association Inc. concluded the opposite last year. Among other reasons, the Court based its conclusion on the fact that Vavilov neither expressly nor impliedly overturned prior SCC rulings that established the applicable standard (notably Sattva and Teal Cedar, the former of which was previously discussed on this blog). Furthermore, the Court underscored that commercial arbitration awards are not administrative decisions but rather exist “under a tightly defined regime specifically tailored to the objectives of commercial arbitrations.” As such, in the Court's view, the deferential reasonableness standard continued to apply (see paras. 1, 44-51). 

Highlights from recognition and enforcement proceedings

Five decisions from Ontario and Québec merit a special mention. The Ontario Superior Court of Justice, for example, had to consider the impact of Dubai government’s Decree No. (34) of 2021 Concerning the Dubai International Arbitration Centre in the context of an application for an order recognizing and enforcing an arbitration award. Notably, in InFrontier AF LP v. Rahmani, because the arbitration had been conducted under the DIAC Arbitration Rules, despite the parties’ agreement requiring that the arbitration be held in Dubai International Financial Centre under the Rules of Arbitration of the DIFC-LCIA, the respondent invoked Art. V(1)(d), among other grounds. According to the respondent, “the tribunal procedure was not in accordance with the agreement of the parties” because (i) the arbitration was not conducted under the DIFC-LCIA Arbitration Rules, and (ii) the arbitrator was not appointed pursuant to those rules (para. 19). In the Court’s view:

[47] By force of the Decree, the DIAC Arbitration Rules, once they were effective on March 21, 2022, became an amended version of the DIFC-LCIA Arbitration Rules and, therefore, as provided for in the Preamble, the parties to the Loan Agreement are taken to have agreed that any arbitration between them shall be conducted in accordance with the DIAC Arbitration Rules.

[48] After the Decree, the parties to the Loan Agreement were free to agree that instead of the DIAC Arbitration Rules (which had become the “amended version” of the DIFC-LCIA Arbitration Rules), the original version of the DIFC-LCIA Arbitration Rules, or any other set of arbitration rules, would apply to an arbitration under the Loan Agreement. This is provided for in the DIFC Arbitration Law, at Article 26(1), which provides that “[s]ubject to the provisions of this Law, the parties are free to agree on the procedure to be followed by the Arbitral Tribunal in conducting the proceedings”.

Since the parties made no such agreement after the Decree, the Court declined to refuse to recognize and enforce the award.

In The United Mexican States v. Gordon G. Burr, the Ontario Superior Court of Justice likewise upheld the award. Here, Mexico argued that the tribunal violated its right to be heard when it denied its request for production of certain, allegedly “key”, documents (para. 3). Recognizing that “awards in international arbitrations are typically the product of years of work, exhaustive arguments, vast expenditures of time, money and other resources by the parties, witnesses and the tribunal, and are usually decided, as here, by panels whose members possess impeccable qualifications to determine the issues before them,” the Court underscored it “should not lightly interfere in the results of such an extensive exercise” (paras. 77-78). According to the Court, the tribunal “in fact exercised its discretion in denying some documentary requests and granting others, and appropriately cited issues of relevance, materiality, and proportionality in making those determinations” (para. 86).

In Québec, the Superior Court in Medicell Pharmaceutical (S) Pte Ltd. c. Pharmascience Inc. annulled an award due to improper tribunal constitution. Essentially, the arbitrator had been appointed by one party, the other (annulling) party did not appear in the arbitration, the arbitrator proceeded to an ex parte hearing and ultimately ruled in favour of the party that appointed him. The annulling party claimed that, “since there was no mutual agreement on the [arbitrator's] appointment as required by Art. 624, and since the Court did not appoint him pursuant to Art. 625, he was not properly appointed and therefore had no jurisdiction to issue the Award” (para. 38). Additionally, the annulling party argued that, in contravention of the principle of competence-competence, the issue of the purported arbitrator’s appointment was not debated before him nor did he address the issue in the award (paras. 50-52). The Court accepted both arguments. Furthermore, the Court noted that the alleged urgency did not justify a party disrespecting the agreed-upon appointment process, since Art. 623 of the Code of Civil Procedure provides for recourse to courts if provisional measures are needed before the arbitrator’s appointment (para. 54). 

The same court was also presented with an annulment application on infra petita grounds in EDT GCV Civil c. Société de transport de Montréal, which arose out of an arbitration between the contractor and its subcontractors, on the one hand, and the owner of the construction project, on the other. Similar to the Singapore Court of Appeal in two recent decisions, however, the Court declined to annul the award (paras. 2-6). According to the Superior Court, the tribunal did not refuse to exercise its jurisdiction; rather, it exercised its jurisdiction (even though that was not explicitly apparent from the award's reasons). According to the Court, the tribunal exercised its jurisdiction by analyzing the legal links between the six parties to the arbitration, before concluding that the plaintiff’s claim on behalf of the subcontractors was inadmissible (paras. 24-30). 

In Specter Aviation limited c. Laprade – a case previously discussed on this blog, the Superior Court likewise recognized the award as no grounds for refusing recognition had been made out. The judgment is noteworthy however also because the party opposing recognition and enforcement was punished monetarily pursuant to Art. 342 of the Code of Civil Procedure for having inappropriately used artificial intelligence (i.e. for having cited non-existent legal authorities).

* The views expressed herein are those of the authors and do not necessarily reflect the views of Woods LLP or its partners.

This post is part of Kluwer Arbitration Blog's 2025 in Review series.  Other posts in the series can be seen here.