It is common to find that, in certain commercial contracts and agreements, the parties decide to withdraw from the general jurisdiction of ordinary courts (in Quebec, generally, the Superior Court or the Court of Quebec) in favour of an arbitration panel.
Resorting to an Arbitration Panel: A Costly Alternative
Although this may have the advantage of being a private and speedy process in which the arbitrator(s) of the panel focus almost exclusively on the case at hand, we should also mention that this is a process which is usually very expensive and difficult to sustain by the parties or perhaps by one of the parties.
For this reason, and once a dispute becomes litigious, it is common for one of the parties to try to invalidate or render inapplicable the arbitration clause.
That said, the general rule is that questions regarding the panel’s jurisdiction are decided by the panel itself. However, we should mention that, in order for the panel to resolve such issues, it must first be formed, and that sometimes implies significant costs.
In consideration of the nature of the arbitration process, which can be convoluted, the Supreme Court, in 2007, opened the door to the possibility that questions of jurisdiction be resolved by the ordinary courts directly, whenever appropriate.
Indeed, it is, under certain conditions, possible to deviate from the general rule and allow a judge to decide on questions of the arbitration panel’s jurisdiction immediately without referring the issue back to the arbitration tribunal. Such is the case when the jurisdictional challenge to the panel's jurisdiction raises only questions of law or, mixed questions of law and fact, that are not complicated.
Although the application of the process described above is essentially one of judicial discretion, the courts are now, in certain cases, able to reduce the costs for the parties and possibly make the procedures taken in a file more appropriate and proportionate to the stakes at issue.
Me Harry Karavitis, Attorney-at-Law
Alepin Gauthier avocats inc.