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<strong>Arbitration</strong> <strong>Clauses</strong> –<br />

Is Court an Option<br />

Presented by:<br />

William L. Ryan, QC<br />

April 17, 2013<br />

Copyright © 2011 <strong>Stewart</strong> <strong>McKelvey</strong>. All rights reserved. Not to be copied or used in whole or in part without the express written consent of <strong>Stewart</strong> <strong>McKelvey</strong>


ARBITRATION CLAUSES<br />

Nova Scotia Commercial <strong>Arbitration</strong> Act<br />

• Short title<br />

• 1 This Act may be cited as the Commercial <strong>Arbitration</strong> Act. 1999, c.<br />

5, s. 1.<br />

• Purpose of Act<br />

• 2 The purpose of this Act is to revise and update the law respecting<br />

commercial arbitration and thereby encourage and promote the use<br />

of arbitration as an alternative to court proceedings in resolving<br />

disputes between parties to a contract. 1999, c. 5, s. 2.<br />

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ARBITRATION CLAUSES<br />

Nova Scotia Commercial <strong>Arbitration</strong> Act (Cont’d)<br />

• 3 (1) In this Act,<br />

• (a) "arbitration agreement" means, subject to subsections (2) and<br />

(3), an agreement or part of an agreement by which h two or more<br />

persons agree to submit a matter in dispute to arbitration;<br />

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ARBITRATION CLAUSES<br />

Nova Scotia Commercial <strong>Arbitration</strong> Act (Cont’d)<br />

• Application of Act<br />

• 4 (1) This Act applies to an arbitration conducted under an arbitration<br />

agreement or authorized or required pursuant to an enactment unless<br />

• (a) the application of this Act is excluded by an agreement of the parties<br />

or by law; or<br />

• (b)PartIIoftheInternational the International Commercial <strong>Arbitration</strong> Act applies to the<br />

arbitration.<br />

• (2) Where there is a conflict between this Act and another enactment<br />

that authorizes or requires the arbitration, the other enactment prevails.<br />

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ARBITRATION CLAUSES<br />

Nova Scotia Commercial <strong>Arbitration</strong> Act (Cont’d)<br />

• (3) This Act does not apply to an arbitration authorized or required<br />

pursuant to any of the following:<br />

• (a) the Trade Union Act;<br />

• (b) a collective agreement under the Trade Union Act;<br />

• (c) any enactment set out in the regulations.<br />

• (4) This Act binds Her Majesty in right of the Province. 1999, c. 5, s.<br />

4.<br />

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ARBITRATION CLAUSES<br />

Nova Scotia Commercial <strong>Arbitration</strong> Act (Cont’d)<br />

• <strong>Arbitration</strong> agreement<br />

• 7 (1) An arbitration agreement is not required to be in writing.<br />

• (2) An agreement requiring or having the effect of requiring that a<br />

matter in dispute be adjudicated by arbitration before the matter may be<br />

dealt with by a court has the same effect as an arbitration agreement.<br />

• (3) An arbitration agreement may only be rescinded in accordance with<br />

the law of contract. 1999, c. 5, s. 7.<br />

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ARBITRATION CLAUSES<br />

Nova Scotia Commercial <strong>Arbitration</strong> Act (Cont’d)<br />

• Restriction on power of court to intervene<br />

• 8 No court may intervene in matters governed by this Act, except for<br />

the following purposes as provided by this Act:<br />

• (a) to assist the arbitration process;<br />

• (b) to ensure that an arbitration is carried out in accordance with the<br />

arbitration agreement;<br />

• (c) to prevent manifestly unfair or unequal treatment of a party to an<br />

arbitration agreement;<br />

• (d) to enforce awards. a 1999, c. 5, s. 8.<br />

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ARBITRATION CLAUSES<br />

Nova Scotia Commercial <strong>Arbitration</strong> Act (Cont’d)<br />

• Stay<br />

• 9 (1) Where a party to an arbitration agreement commences a<br />

proceeding in a court in respect of a matter in dispute to be submitted to<br />

arbitration under the agreement, the court shall, on the motion of<br />

another party to the arbitration agreement, stay the proceeding.<br />

• Powers of court<br />

• 10 (1) The powers of the court with respect to the detention,<br />

preservation and inspection of property, interim injunctions and the<br />

appointment of receivers are the same in arbitration as in court actions.<br />

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ARBITRATION CLAUSES<br />

Nova Scotia Commercial <strong>Arbitration</strong> Act (Cont’d)<br />

• Court-appointed member and chair<br />

• 12 (1) The court may appoint the arbitral tribunal, on the application<br />

of a party, if<br />

• (a) the arbitration agreement provides no procedure for appointment<br />

of the arbitral tribunal; or<br />

• (b) the person with power to appoint the arbitral tribunal has not<br />

done so within the time provided in the agreement or after a party<br />

has given the person seven days' notice to do so, whichever is later.<br />

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ARBITRATION CLAUSES<br />

Nova Scotia Commercial <strong>Arbitration</strong> Act (Cont’d)<br />

• Duties of arbitrator<br />

• 13 (1) An arbitrator shall be independent of the parties and impartial as<br />

between the parties.<br />

• (2) Before accepting an appointment as an arbitrator, a person shall<br />

disclose to all parties to the arbitration any circumstances of which that<br />

person is aware that may give rise to a reasonable apprehension of<br />

bias.<br />

• (3) An arbitrator who, during an arbitration, becomes aware of<br />

circumstances that may give rise to a reasonable apprehension of bias<br />

shall promptly disclose the circumstances to all the parties. 1999, c. 5,<br />

s. 13.<br />

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ARBITRATION CLAUSES<br />

Nova Scotia Commercial <strong>Arbitration</strong> Act (Cont’d)<br />

• Further powers of tribunal<br />

• 20 (1) On the request of a party, an arbitral tribunal may make an<br />

order for the detention, preservation or inspection of property and<br />

documents that are the subject of the arbitration or as to which a<br />

question may arise in the arbitration and may order a party to<br />

provide security in that connection.<br />

• (2) The court may enforce the order of an arbitral tribunal made<br />

pursuant to subsection (1) as if the order were a similar order made<br />

by the court in an action. 1999, c. 5, s. 20.<br />

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ARBITRATION CLAUSES<br />

Nova Scotia Commercial <strong>Arbitration</strong> Act (Cont’d)<br />

• Rights of parties<br />

• 21 (1) An arbitral tribunal shall treat the parties equally and fairly.<br />

• (2) Each party shall be given an opportunity to present a case and to<br />

respond to the case presented by the other parties. 1999, c. 5, s. 21.<br />

• Procedure<br />

• 22 (1) An arbitral tribunal may determine the procedure to be followed<br />

in the arbitration.<br />

• (2) An arbitral tribunal that is composed of more than one arbitrator may<br />

delegate the determination of questions of procedure to the chair of the<br />

arbitral tribunal. 1999, c. 5, s. 22.<br />

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ARBITRATION CLAUSES<br />

Nova Scotia Commercial <strong>Arbitration</strong> Act (Cont’d)<br />

• Evidence<br />

• 23 (1) An arbitral tribunal is not bound by the rules of evidence or<br />

any other law applicable to judicial i proceedings and has power to<br />

determine the admissibility, relevance and weight of any evidence.<br />

• (2) An arbitral tribunal may determine the manner in which evidence<br />

is to be admitted. 1999, c. 5, s. 23.<br />

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ARBITRATION CLAUSES<br />

Nova Scotia Commercial <strong>Arbitration</strong> Act (Cont’d)<br />

• Duties and powers on making award<br />

• 34 An arbitral tribunal shall decide a matter in dispute in accordance<br />

with the law, including equity, and may order specific performance,<br />

injunctions and other equitable remedies. 1999, c. 5, s. 34.<br />

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ARBITRATION CLAUSES<br />

Nova Scotia Commercial <strong>Arbitration</strong> Act (Cont’d)<br />

• Applicable law<br />

• 35 (1) In deciding a matter in dispute, an arbitral tribunal shall apply<br />

the law of a jurisdiction designated by the parties or, where none is<br />

designated, the law of the jurisdiction the arbitral tribunal considers<br />

appropriate in the circumstances.<br />

• (2) A designation by the parties of the law of the jurisdiction refers to<br />

the substantive law of that jurisdiction and not to the conflict of laws<br />

rules of that jurisdiction, unless the parties expressly indicate that<br />

the designation includes those conflict of laws rules. 1999, c. 5, s.<br />

35.<br />

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ARBITRATION CLAUSES<br />

Nova Scotia Commercial <strong>Arbitration</strong> Act (Cont’d)<br />

• Prerequisite to right to appeal<br />

• 48 (1) Unless the parties otherwise agree, there is no appeal of an<br />

award.<br />

• (2) Where an arbitration agreement so provides, a party may appeal<br />

an award to the court on a question of law, on a question of fact or<br />

on a question of mixed law and fact. 1999, c. 5, s. 48.<br />

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ARBITRATION CLAUSES<br />

Nova Scotia Commercial <strong>Arbitration</strong> Act (Cont’d)<br />

• Setting aside by court.<br />

• 49 (1) On the application of a party, the court may set aside an<br />

award on any of the following grounds:<br />

• (a) a party entered into the arbitration agreement while under a legal<br />

incapacity;<br />

• (b) the arbitration agreement is invalid or has ceased to exist;<br />

• (c) the award deals with a matter in dispute that the arbitration<br />

agreement does not cover or contains a decision on a matter in<br />

dispute that is beyond the scope of the agreement;<br />

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ARBITRATION CLAUSES<br />

Nova Scotia Commercial <strong>Arbitration</strong> Act (Cont’d)<br />

• (d) the composition of the arbitral tribunal was not in accordance with<br />

the arbitration agreement or, where the agreement did not deal with the<br />

matter, was not in accordance with this Act;<br />

• (e) the subject-matter of the arbitration i is not capable of being the<br />

subject of arbitration pursuant to the law of the Province;<br />

• (f) the applicant was treated manifestly unfairly and unequally, was not<br />

given an opportunity to present a case or to respond to the case of<br />

another party or was not given proper notice of the arbitration or of the<br />

appointment of an arbitrator;<br />

• (g) the procedures followed in the arbitration did not comply with this<br />

Act or the arbitration agreement;<br />

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ARBITRATION CLAUSES<br />

Nova Scotia Commercial <strong>Arbitration</strong> Act (Cont’d)<br />

• (h) an arbitrator committed a corrupt or fraudulent act or there is a<br />

reasonable apprehension of bias;<br />

• (i) the award was obtained dby fraud.<br />

• (2) Where clause (1)(c) applies and it is reasonable to separate the<br />

decisions on matters covered by the arbitration agreement from the<br />

impugned decisions, the court shall set aside the impugned<br />

decisions and allow the other decisions to stand.<br />

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ARBITRATION CLAUSES<br />

Nova Scotia Commercial <strong>Arbitration</strong> Act (Cont’d)<br />

• (3) The court shall not set aside an award on grounds referred to in<br />

clause (1)(c) if the applicant has agreed to the inclusion of the matters<br />

in dispute, waived the right to object to its inclusion or agreed that the<br />

arbitral tribunal has power to decide what matters in dispute have been<br />

referred to it.<br />

• (4) The court shall not set aside an award of grounds referred to in<br />

clause (1)(h) if the applicant had an opportunity to challenge the<br />

arbitrator on those grounds pursuant to Section 15 before the award<br />

was made and did not do so or if those grounds were the subject of an<br />

unsuccessful challenge.<br />

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ARBITRATION CLAUSES<br />

Nova Scotia Commercial <strong>Arbitration</strong> Act (Cont’d)<br />

• (5) The court shall not set aside an award on a ground to which the<br />

applicant is deemed, pursuant to Section 6, to have waived the right<br />

to object.<br />

• (6) Where the ground alleged for setting aside the award could have<br />

been raised as an objection to the jurisdiction of the arbitral tribunal<br />

to conduct the arbitration, the court may set the award aside on that<br />

ground if the court considers the failure of the applicant to make an<br />

objection in accordance with Section 19 justified.<br />

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ARBITRATION CLAUSES<br />

Nova Scotia Commercial <strong>Arbitration</strong> Act (Cont’d)<br />

• (7) When the court sets aside an award pursuant to this Section, the<br />

court may remove an arbitrator or the arbitral tribunal and may give<br />

directions concerning the conduct of the arbitration.<br />

• (8) Instead of setting aside an award pursuant to this Section, the<br />

court may remit the award to the arbitral tribunal and give directions<br />

concerning the conduct of the arbitration. 1999, c. 5, s. 49.<br />

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ARBITRATION CLAUSES<br />

Nova Scotia Commercial <strong>Arbitration</strong> Act (Cont’d)<br />

• Costs of an arbitration<br />

• 56 (1) An arbitral tribunal may award the costs of an arbitration.<br />

• (2) The arbitral tribunal may award all or part of the costs of an<br />

arbitration on a solicitor-client basis, a party-and-party basis or any<br />

other basis.<br />

• (3) The costs of an arbitration consist of the legal expenses of the<br />

parties, the fees and expenses of the arbitral tribunal and any other<br />

expenses related to the arbitration.<br />

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ARBITRATION CLAUSES<br />

Federal Commercial <strong>Arbitration</strong> Act<br />

• 2. In this Act,<br />

• “Code”<br />

• “Code” means the Commercial <strong>Arbitration</strong> Code, based on the<br />

model law adopted by the United Nations Commission on<br />

International Trade Law on June 21, 1985, as set out in the<br />

schedule;<br />

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ARBITRATION CLAUSES<br />

Federal Commercial <strong>Arbitration</strong> Act (Cont’d)<br />

• Law in force<br />

• 5. (1) Subject to this section, the Code has the force of law in<br />

Canada.<br />

• Binding on Her Majesty<br />

• 10. This Act is binding on Her Majesty in right of Canada<br />

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ARBITRATION CLAUSES<br />

Federal Commercial <strong>Arbitration</strong> Act (Cont’d)<br />

• Article 5<br />

• Extent of Court Intervention<br />

• In matters governed by this Code, no court shall intervene except<br />

where so provided in this Code.<br />

• Article 6<br />

• Court or Other Authority for Certain Functions of <strong>Arbitration</strong><br />

Assistance and Supervision<br />

• The functions referred to in articles 11(3), 11(4), 13(3), 14, 16(3) and<br />

34(2) shall be performed by the Federal Court or any superior, county<br />

or district court.<br />

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ARBITRATION CLAUSES<br />

Federal Commercial <strong>Arbitration</strong> Act (Cont’d)<br />

• CHAPTER II. ARBITRATION AGREEMENT<br />

• Article 7<br />

• Definition and Form of <strong>Arbitration</strong> Agreement<br />

• (1) “<strong>Arbitration</strong> agreement” is an agreement by the parties to submit<br />

to arbitration all or certain disputes which have arisen or which may<br />

arise between them in respect of a defined legal relationship,<br />

whether contractual or not. An arbitration agreement may be in the<br />

form of an arbitration clause in a contract or in the form of a<br />

separate agreement.<br />

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ARBITRATION CLAUSES<br />

Federal Commercial <strong>Arbitration</strong> Act (Cont’d)<br />

• (2) The arbitration agreement shall be in writing. An agreement is in<br />

writing if it is contained in a document signed by the parties or in an<br />

exchange of letters, telex, telegrams or other means of<br />

telecommunication which provide a record of the agreement, or in<br />

an exchange of statements of claim and defence in which the<br />

existence of an agreement is alleged by one party and not denied by<br />

another. The reference in a contract to a document containing an<br />

arbitration clause constitutes an arbitration agreement provided that<br />

the contract is in writing and the reference is such as to make that<br />

clause part of the contract.<br />

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ARBITRATION CLAUSES<br />

Federal Commercial <strong>Arbitration</strong> Act (Cont’d)<br />

• Article 8<br />

• <strong>Arbitration</strong> Agreement and Substantive Claim before Court<br />

• (1) A court before which an action is brought in a matter which is the subject<br />

of an arbitration agreement shall, if a party so requests not later than when<br />

submitting his first statement on the substance of the dispute, refer the<br />

parties to arbitration unless it finds that the agreement is null and void,<br />

inoperative or incapable of being performed.<br />

• (2) Where an action referred to in paragraph (1) of this article has been<br />

brought, arbitral proceedings may nevertheless be commenced or<br />

continued, and an award may be made, while the issue is pending before<br />

the court.<br />

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ARBITRATION CLAUSES<br />

Federal Commercial <strong>Arbitration</strong> Act (Cont’d)<br />

• Article 9<br />

• <strong>Arbitration</strong> Agreement and Interim Measures by Court<br />

• It is not incompatible with an arbitration agreement for a party to<br />

request, before or during arbitral proceedings, from a court an<br />

interim measure of protection and for a court to grant such measure.<br />

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ARBITRATION CLAUSES<br />

Attorney General of Canada v. Marineserve.MG Inc. et<br />

al, 2002 NSSC 147<br />

• Section 13.01 Negotiation and Mediation<br />

• In the event of a dispute between the parties arising out of this<br />

Agreement, the parties agree to use the following procedure prior to<br />

pursuing any other legal remedy:<br />

• (a) promptly following the onset of the dispute, a meeting shall be<br />

held between the parties, attended by senior individuals with<br />

decision-making authority, to attempt, in good faith, to negotiate a<br />

resolution; and<br />

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ARBITRATION CLAUSES<br />

Attorney General of Canada v. Marineserve.MG Inc. et al, 2002<br />

NSSC 147 (Cont’d)<br />

• (b) if within ten (10) days after this meeting the parties have failed to<br />

resolve the dispute, they agree to submit the dispute to mediation<br />

and to equally bear the costs of that mediation:<br />

• (i) the parties will jointly select a mediator. If after then (10) days, the<br />

parties are unable to agree upon the choice of mediator, then a<br />

mediator will be chose by the President of the Nova Scotia<br />

Barristers’ Society; and<br />

• (ii) the parties agree to participate, in good faith, in the mediation<br />

process for a period of two (2) days or less.<br />

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ARBITRATION CLAUSES<br />

Attorney General of Canada v. Marineserve.MG Inc. et al, 2002<br />

NSSC 147 (Cont’d)<br />

• Section 13.02 <strong>Arbitration</strong><br />

• If the parties do not resolve all of the issues in dispute through mediation, then<br />

within ten (10) days from the date of the mediator’s report, the parties agree to<br />

submit any claim or dispute arising out of or in connection with this Agreement,<br />

other than any claim or dispute pertaining to a question of public law, to binding<br />

arbitration pursuant to the federal Commercial <strong>Arbitration</strong> Act. The party<br />

requesting such arbitration shall do so by notice to the other party. The costs of<br />

the arbitration and fees of the arbitrator(s) shall be borne equally by the parties.<br />

The arbitration shall take place in Digby, Nova Scotia before a single arbitrator<br />

to be chosen by the parties. If the parties cannot agree on the choice of<br />

arbitrator within ten (10) days of the notice to submit to arbitration, then the<br />

parties shall each choose an arbitrator who in turn will select a third.<br />

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ARBITRATION CLAUSES<br />

Attorney General of Canada v. Marineserve.MG Inc. et al, 2002<br />

NSSC 147 (Cont’d)<br />

• The parties may determine the procedure to be followed by the<br />

arbitrator(s) in conducting the proceedings, or may request the<br />

arbitrator(s) to do so. The arbitrator(s) shall issue a written award<br />

within thirty (30) days of completion of the hearing. The award shall<br />

be in such form that it may be entered for judgment in any court<br />

having jurisdiction.<br />

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ARBITRATION CLAUSES<br />

Attorney General of Canada v. Marineserve.MG Inc. et al, 2002<br />

NSSC 147 (Cont’d)<br />

• [29] When parties choose an alternate dispute mechanism, such as<br />

arbitration, it is because they recognize such as being more suited,<br />

less demanding of resources and expenses and likely to produce a<br />

result in a far more timely fashion than resorting to court action. In<br />

litigation, the parties must compete with other members of the public<br />

for utilization of limited judicial resources which often provides<br />

substantial delay, particularly for matters that are likely to be trials of<br />

some length.<br />

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QUESTIONS<br />

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These materials are intended to provide brief informational<br />

summaries only of legal developments and topics of general<br />

interest. The materials should not be relied upon as a<br />

substitute for consultation with a lawyer with respect to the<br />

reader’s specific circumstances. Each legal or regulatory<br />

situation is different and requires review of the relevant facts<br />

and applicable law. If you have specific questions related to<br />

these materials or their application to you, you are<br />

encouraged to consult a member of our firm to discuss your<br />

needs for specific legal advice relating to the particular<br />

circumstances of your situation. Due to the rapidly changing<br />

nature of the law, <strong>Stewart</strong> <strong>McKelvey</strong> is not responsible for<br />

informing i you of future legal l developments.<br />

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