Does a Breach of Fiduciary Duty Fall Within an Arbitration Clause?

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In the recent decision, St. Pierre v. Chriscan Enterprises Ltd., the British Columbia Court of Appeal considered whether a claim by an owner against the project manager for breach of fiduciary duty fell within the wording of the arbitration clause in the project management.

The decision reflects the tendency in Canadian law to include any claim within an arbitration clause which arguably falls within it. In this case, the parties appeared to be at some pains to draft a narrow arbitration clause, yet the Court held that the clause applied to conduct quite outside the actual performance of the construction project - a secret profit allegedly earned by the project manager through a related company. It is hard to imagine an arbitration clause and a claim which are more disassociated, yet the Court held that the claim fell within the arbitration clause.

The lesson here is that an arbitration clause in a construction project should either be drawn to encompass "all claims" in dispute, or if the parties intend to limit the disputes which may be arbitrated then those limitations should be set out in explicit exclusionary language.

Arbitration agreement, fiduciary duty, contract, secret profits, disagreement, construction law

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Thomas Heintzman, Arbitration Place | Attorney Advertising

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