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Summary Judgement in Arbitration: Optiva v. Tbaytel

Where an arbitration agreement gives the arbitrator the jurisdiction to “consider and rule upon all motions during the Arbitration including, without limitation, the power to [make] rulings, directions and generally deal with any and all interlocutory matters and procedural questions relating to the issues within the Arbitration”, the arbitrator has the jurisdiction to decide the issues before him or her by way of summary judgment over the objection of one of the parties.

The Ontario Court of Appeal confirmed an arbitrator’s decision to that effect in Optiva Inc. v. Tbaytel, 2022 ONCA 646. In so finding, the court confirmed that the advantages flowing from a properly invoked summary judgment process have equal application in the arbitration and the civil trial context.

Tbaytel, an independent provider of telecommunication services, decided to update its systems and agreed to purchase a new software package from Optiva for about $8.5 million. After alleging various breaches by Optiva, Tbaytel terminated the contract and, as per the dispute resolution provisions of that contract, the parties executed an arbitration agreement and appointed an arbitrator. The arbitration agreement contained the following language:

8.1 Without limiting the jurisdiction of the Arbitrator under the Arbitration Act, but subject to the Parties’ agreement, including the dispute resolution provisions, the Arbitrator’s jurisdiction shall include jurisdiction to consider and rule upon all motions during the Arbitration including, without limitation, the power to:
8.1.1 interpret Procedural Orders issued;
8.1.2 provide directions to enforce Procedural Orders or rule on the consequences of a failure to comply with Procedural Orders;
. . .
8.1.4 determine any question of law or equity arising in or with respect to within the Arbitration;
8.1.5 determine any question of fact or mixed fact and law;
8.1.6 order production of Documents that are not privileged and that are in the possession, control or power of a Party;
8.1.7 give directions for, or order, the preparation and disclosure of lists of Documents for inspection or otherwise;
8.1.8 give directions, or rule upon, refusals or objections arising from oral discovery;
8.1.9 make orders regarding confidentiality or other conditions regarding any Document or class of Documents or other information produced or exchanged within the Arbitration;
8.1.10 give directions to control the proceedings, including setting time limits, and limiting the number of witnesses, including expert witnesses, that a Party may call, where it is just under the circumstances;
8.1.11 determine the order and manner in which any witnesses shall be examined;
8.1.12 make rulings, directions and generally deal with any and all interlocutory matters and procedural questions relating to the issues within the Arbitration;
8.1.13 interpret the Parties’ agreements, including the Dispute Resolution Provision, and the Arbitration Act.

During a case management meeting convened by the arbitrator, counsel for Tbaytel indicated that Tbaytel intended to bring a summary judgment motion in respect of at least some of its claims against Optiva, arguing that several admissions made by Optiva executives established many of the material facts and eliminated the need for detailed expert evidence and documentary productions.

In the same case management meeting, counsel for Optiva raised “a concern” about the availability of a summary judgment motion in the arbitration, but made no objection to the fixing of a timetable for the preparation and filing of the necessary material. The arbitrator issued a procedural order stating in part:

“I accept that a motion for summary judgment to be launched by the Claimant Tbaytel may obviate or reduce the significant time and cost of expansive documentary production that might be required in this arbitration.”

The arbitrator set out a timetable for the perfection and hearing of the summary judgment motion, which included the filing of pleadings, affidavits, documents, cross-examinations, if requested, and facta.

Tbaytel filed a notice of motion for summary judgment and its supporting material as required under the timetable. Optiva did the same. In its written submissions, Optiva took the position that the arbitrator had no jurisdiction to consider a summary judgment motion, absent the consent of both parties. Optiva did not consent.

After inviting further submissions from the parties, the arbitrator held that he had jurisdiction to proceed on a summary judgment basis pursuant to section 20 of the Arbitration Act (“The arbitral tribunal may determine the procedure to be followed in the arbitration, in accordance with this Act”), section 8.1 of the arbitration agreement, and the lack of any exceptions or exclusions.

The arbitrator heard the motion over two days and granted summary judgment on some of the claims advanced by Tbaytel, affirming Tbaytel’s right to terminate the agreement and recover monies it had paid to Optiva as well as other related damages.

Optiva moved in the Superior Court for an order setting aside the arbitrator’s award pursuant to ss. 17 and 46 of the Arbitration Act, 1991. 

Optiva argued that an arbitrator is required to hold a hearing if requested and that a summary judgment motion is not a hearing, as oral testimony was not permitted. Secondly, it was argued that by proceeding by way of summary judgment, Optiva was not given an opportunity to present its case or to respond to Tbaytel’s case, contrary to s. 46(1) of the Arbitration Act, 1991.

The application judge refused to set aside the arbitrator’s order and dismissed Optiva’s application for leave to appeal. The Court of Appeal granted leave to appeal from the application judge’s order but dismissed the appeal.

Section 17 of the Arbitration Act

The Court of Appeal first dealt with the argument that s. 17(8) of the Act required Optiva to apply to the Superior Court within 30 days of the arbitrator’s decision to proceed by way of summary judgment motion. Section 17(1) and s. 17(8) provide as follows:

“An arbitral tribunal may rule on its own jurisdiction to conduct the arbitration…
(8) If the arbitral tribunal rules on an objection as a preliminary question, a party may, within thirty days after receiving notice of the ruling, make an application to the court to decide the matter.”

The Court of Appeal held that s. 17 had no application, since rulings on “jurisdiction” under s. 17 were limited to rulings on the arbitrator’s jurisdiction to entertain the subject matter of the dispute, not his or her jurisdiction to make rulings on the procedure to be followed in the arbitration. There was no question that the arbitrator had jurisdiction over the dispute before him, so s. 17(1) was not triggered. That outcome was mandated by the earlier Court of Appeal decision in Inforica Inc. v. CGI Information Systems and Management Consultants Inc., 2009 ONCA 642.

Jurisdiction to Proceed by Way of Summary Judgment

Optiva made three submissions in support of its position that the arbitrator could not proceed by way of summary judgment motion. 

  1. The arbitration agreement was silent on the availability of a summary judgment procedure, and the power to proceed by summary judgment, in the absence of the consent of both parties, could not be inferred from the silence in the agreement. 
  2. Regardless of the terms of the arbitration agreement, the Act, and in particular s. 26, gave Optiva the right to an oral hearing at which it could present its evidence viva voce and cross-examine the witnesses offered by Tbaytel. 
  3. The summary judgment procedure followed by the arbitrator resulted in unfairness to Optiva, warranting the setting aside of the award under s. 46(1)6 of the Act.

While the court agreed that there was no specific reference to a summary judgment procedure in the arbitration agreement, it did not follow that the agreement was silent on the arbitrator’s authority to decide on the procedures to be followed in the course of the arbitration:

“In light of the broad powers given to the arbitrator, it was open to the arbitrator to interpret his powers, not by looking for a specific grant of authority in respect of any particular procedure, but instead by looking for language that would remove a specific procedure from among the options available to the arbitrator. Had the parties wished to exclude resort to a summary judgment procedure, or to give either party a veto over the use of that procedure, they would have said so in the agreement. Instead, the parties chose to leave decisions with respect to the manner in which the arbitration would be conducted to the arbitrator.”

Optiva’s s. 26 argument was also rejected. That section provides that “the arbitral tribunal may conduct the arbitration on the basis of documents or may hold hearings for the presentation of evidence and for oral argument; however, the tribunal shall hold a hearing if a party requests it” [emphasis added]. The court held that while that section gave a party the right to make oral argument, it did not give the party a right to present its evidence in a particular manner. The arbitrator chose a method routinely and effectively used in civil litigation involving issues and evidence like those raised in this proceeding, and he had the right to do so under the arbitration agreement.

The fairness argument failed because there was simply no evidence that Optiva had been denied the opportunity to present any evidence that it wanted to present before the arbitrator, nor was there any evidence that Optiva did not have a full and fair opportunity to challenge the case put forward by Tbaytel.

Finally, Optiva advanced an argument that the arbitrator based his decision on a theory not advanced by the parties. That argument was based on the fact that the arbitrator referred to a passage from a case other than the passage pinpointed by the party that had relied on the case. The Court of Appeal rejected that argument. The case in question was before the arbitrator, and Tbaytel had relied on it in support of its interpretation of a limitation of liability clause. Optiva had a full opportunity to address anything of relevance in the case, and neither the arbitrator nor counsel were limited to reading only the paragraphs pinpointed by Tbaytel in written argument. The arbitrator did not introduce a new untested theory of liability in his reasons by his reference to the case, but simply accepted Tbaytel’s position, advanced throughout the proceedings, and even if the arbitrator’s reference to a passage from the case had introduced something new to the argument, it was an overstatement to describe the arbitrator’s reference as the introduction of a new theory of liability. 

Having rejected all of Optiva’s arguments, the Court of Appeal dismissed the appeal and upheld the arbitrator’s award.