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BINDING ARBITRATION - Practice and procedure

Friday, July 19, 2019 @ 6:30 AM  


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Appeal by the defendant, Posco Daewoo Corporation, from a procedural ruling in favour of the plaintiff Joint Venture. The plaintiff contracted with Edmonton to replace a bridge. The plaintiff subcontracted the supply of the structural steel to the defendant, a company based in the Republic of Korea. Their agreement included a mediation and arbitration dispute resolution clause that provided for Calgary as the venue, and Alberta as the governing law. Disputes arose, and the plaintiff served a Notice to Submit Disputes to Arbitration. The defendant took the position that the notice was invalid, as it purported to commence a domestic arbitration under the Arbitration Act rather than the International Commercial Arbitration Act. Approximately seven months later, the defendant served its own arbitration notice under the International Commercial Arbitration Act. The plaintiff was prepared to acquiesce to the international procedure, but the defendant maintained that the process was defective and refused to participate. The plaintiff became frustrated with the delay and filed an originating application, obtaining ex parte orders for the appointment of arbitrators, an order validating service, and the consolidation of the two arbitrations. The defendant's application to set aside the orders was refused. The defendant appealed.

HELD: Appeal allowed. The plaintiff's originating application was not served in accordance with the Rules of Court and The Hague Convention. No satisfactory explanation was provided for why the Joint Venture did not apply for an order for service ex juris. The order validating service should not have been granted without proof that service under The Hague Convention had either been accomplished or frustrated within the meaning of Article 15 of the Convention. Given all the substantive deficiencies in service, this was not an appropriate situation in which the Court might retroactively validate service despite the irregularities. The order validating service was set aside. Absent service, the orders appointing arbitrators and consolidating the two arbitrations could not stand. In the absence of proper service, it was not open to the Court to express opinions on the appointment of arbitrators, or consolidation of the arbitrations. The defendant's use of technical arguments as a delay tactic disentitled it to costs of the appeal.

Acciona Infrastructure Canada Inc. v. Posco Daewoo Corp., [2019] A.J. No. 778, Alberta Court of Appeal, F.F. Slatter, M.B. Bielby and T.W. Wakeling JJ.A., June 12, 2019. Digest No. TLD-July152019011