Québec court decision illustrates strength of arbitration in Québec

The Québec Superior Court issued a July 18, 2017 decision in Greenkey Ltd. v. Trovac Industries Ltd., 2017 QCCS 3270 reasserting Québec’s courts’ full support of arbitration. The decision granted a motion to homologate the final award and a dismissed a motion to annul the award resulting from an arbitration conducted pursuant to the Canadian Commercial Arbitration Centre (“CCAC”) rules.

Québec’s lex arbitri makes no distinction between international commercial arbitrations or domestic arbitrations, applying the criteria for annulment familiar to lawyers experienced with the 1958 Convention on the Recognition and Enforcement of Foreign Arbitral Awards or New York Convention.

The unsuccessful Respondent had challenged the award on numerous grounds, namely:

– excess of jurisdiction;
– breach of public order because the arbitrator acted as amiable compositeur;
– arbitrator ignored the law which rendered the award contrary to public order;
– the award was unjust and intolerable, contrary to public order;
– the arbitrator exceeded her jurisdiction by deciding beyond the terms of the contact; and,
– breach of rules of natural justice, including the rule of audi alteram partem regarding an arbitrator-requested expertise.

Though Respondent articulated several grounds, the motion’s judge, Mr. Justice Michel A. Pinsonnault, identified a single ‘cornerstone or common denominator’ for them: Respondent argued that the damage calculation and award were based on gross profits instead of net profits.

Respondent had the misfortune of attempting to challenge one of Québec’s best rated arbitrators, Madam Justice Louise Otis, in an arbitration conducted under the rules of the well-known CCAC and before a judge well-versed in Québec’s strong lex arbitri.  Mr. Justice Pinsonnault dealt with each of Respondent’s arguments and dismissed each in an unambiguous and decisive manner, stopping just short of declaring Respondent’s procedure abusive. 

Mr. Justice Pinsonnault held that the nature and the multiplicity of the grounds invoked by Respondent to justify ‘at any cost’ the annulment of the award led one to believe that Respondent was pursuing a form of appeal of the award, inviting the court to weigh in on the merits of the dispute. Mr. Justice Pinsonnault refused to do so.

Mr. Justice Pinsonnault adopted and applied the reasoning in a recent Québec Superior Court decision, reasons in English, in Government of The Dominican Republic v. Geci Española 2017 QCCS 2619 when summing up a Québec court’s role when asked to homologate an arbitral award:

[14] Courts have no jurisdiction to hear disputes covered by an arbitration agreement. They also cannot enquire into the merits of a dispute which was arbitrated and must not engage in a retrial of the dispute.

[15] On a Motion to homologate or to annul an arbitration award, the analysis of the Court must be limited to the key prerequisites to the homologation or annulment of an arbitration award, which are enumerated in article 646 of the Code of Civil Procedure.

Article 648 of Québec’s Code of Civil Procedure (“C.C.P.”) provides that an arbitration award may only be challenged by way of an application for its annulment. Such an application is subject to the same rules in article 646 C.C.P. governing an application for the homologation of an arbitration award, with the necessary modifications.

Article 646 C.C.P. contains the following rules familiar to those practicing in international commercial arbitration. The court in Québec cannot refuse to homologate an arbitration award unless it is proved that:

(1) one of the parties did not have the capacity to enter into the arbitration agreement;
(2) the arbitration agreement is invalid under the law chosen by the parties or, failing any indication in that regard, under Québec law;
(3) the procedure for the appointment of an arbitrator or the applicable arbitration procedure was not observed;
(4) the party against which the award is invoked was not given proper notice of the appointment of an arbitrator or of the arbitration proceedings, or it was for another reason impossible for that party to present its case; or,
(5) the award pertains to a dispute not referred to in or covered by the arbitration agreement, or contains a conclusion on matters beyond the scope of the agreement, in which case only the irregular provision is not homologated if it can be dissociated from the rest.

Article 646 C.C.P. adds that a Québec court cannot refuse to homologate the award on its own initiative unless it notes that the subject matter of the dispute is not one that may be settled by arbitration in Québec or that the award is contrary to public order.

The decision illustrates the strength of arbitration in Québec, from the quality of the arbitrators such as Madam Justice Otis, the support of the CCAC as an experienced administering institution and its rules, the clarity of the C.C.P. as lex arbitri and the support of judges knowledgeable about the role of the courts in arbitration.