Arbitration clauses

Many sophisticated contracts contain arbitration provisions. Those provisions are mandatory and the courts will not permit any recourse to the court where the provisions apply.

But, as today's decision in Patel v. Kanbay International Inc., 2008 ONCA 867 makes clear, if the arbitration provision does not explicitly apply it will not bar recourse to the court:

[13]          The issues at stake here do not arise from a transaction like the supply of electric energy, or the transportation of liquefied gas via pipeline. They arise from a wrongful dismissal dispute and a tort action for negligent misrepresentation. The question of the value of the respondent's share entitlement arises only in the course of determining whether he received a negligent misrepresentation about that value. The question of waiver arises only in the context of that tort claim and the respondent's wrongful dismissal dispute. Neither question arises in a dispute over a commercial transaction. In the context of this case, the term "commercial" does not apply and the issues cannot be said to require a "commercial" arbitration for their resolution. For that reason the ICAA and the Model Law are not engaged.
James Morton
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