CIVIL PROCEDURE - Disposition without trial - Stay of action - Enforcement

Law360 Canada (June 2, 2023, 6:02 AM EDT) -- Appeal by Husky Food Importers & Distributors Ltd. (Husky) from an order to stay an action in Ontario for breach of a commercial distribution agreement against JH Whittaker & Sons Limited (JH), a New Zealand company that manufactured chocolates. The parties entered into an initial distribution arrangement under which Husky would import, distribute and market JH’s products in Canada. They sought to negotiate a formal, long-term, exclusive distribution agreement and exchanged revised drafts. The main body of the distribution agreement contained an arbitration clause that provided that the distribution agreement and all disputes arising from or related to the distribution agreement should be governed by the laws of New Zealand. A dispute arose between the parties about the re-routing of two shipments of products ordered by Husky from JH. Husky commenced its Ontario action. It pleaded that after a lengthy negotiation process, Husky and JH reached agreement on all the material terms as of May 15, 2020. Husky alleged JH breached that agreement. JH moved to stay Husky’s action pursuant to s. 9 of the International Commercial Arbitration Act (ICAA). In opposing JH’s stay motion, Husky submitted that it never agreed to arbitrate disputes that might arise under the distribution agreement with JH. On appeal, Husky contended that the motion judge erred in holding that a court should grant a stay under art. 8 of the UNCITRAL Model Law where it was “arguable” that an arbitration agreement existed. In short, the moving party for a stay must first prove the existence of an arbitration agreement on a balance of probabilities before a court could proceed to consider the other factors in the stay analysis. Then, the moving party must prove that the motion judge made a palpable and overriding error in holding that arguably there was an agreement to arbitrate between the parties....
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