Canadian litigants battle over scope of arbitration clauses seeking juridical advantages

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Igor Ellyn, Senior Partner of Ellyn Law LLP Business Litigation and Arbitration Lawyers, Toronto, Canada, reviews the Ontario cases involving arbitration clauses.

In Canadian courts, arbitration agreements are broadly interpreted and if a dispute could arguably fall within the scope of an arbitration clause, the court should refer the parties to arbitration. At the very least, the court should permit the arbitrator to determine whether the claim falls within the scope of the arbitration clause.

Further, the UNCITRAL Model Law in the Ontario International Commercial Arbitrations Act requires the court to refer a matter to arbitration where an action is brought in a matter which is the subject of an arbitration agreement. In local arbitrations, the Arbitration Act requires a court to stay the action of a party to an arbitration agreement except in the limited circumstances.

In spite of this apparent judicial and legislative clarity, there is a plethora of litigation over the scope of arbitration clauses because arbitration clauses tend to be drafted either to maximize the drafter’s juridical advantage or as a hard-fought compromise between parties of equal bargaining power.

The cases reviewed here are just the tip of the iceberg but they make for an interesting review of an important aspect of business litigation and arbitration law. The author is available to provide further insights at iellyn@ellynlaw.com.

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