ATS Automation Tooling Systems Inc. v. Chubb Insurance Company of Canada

In Carriage of Goods by Sea, Stays of Proceedings on (Updated )

Précis: The Ontario Superior Court of Justice refused a motion to temporarily stay domestic proceedings where the same dispute was on-going and subject to final arbitral decision in India.

Facts: The plaintiffs ATS and IWK brought a motion to stay proceedings against Chubb Insurance pending an arbitration proceeding in India related to the claim. The claim arose after cargo shipped from Thailand to India by IWK and was found to be irreparably damaged upon arrival at the purchasers’ inland warehouse. The cargo was shipped by sea from Thailand to Chennai, India, and then inland by truck over 2,500km to Baddi, India, where the warehouse was located. The purchaser commenced arbitration in India for the damaged cargo stating that under the purchase and sale documents IWK was responsible for the cargo until it was delivered at the warehouse. ATS made a claim on the insurance policy and Chubb denied the claim on the basis that the damage occurred during inland transit, which was not covered by the policy. Chubb asserted that the CIF policy covered cargo damage occurring aboard the ship and until the goods were offloaded in India. ATS and IWK then brought an action against the defendant insurer in Ontario. The plaintiffs contended that the outcome of the India arbitration would determine the outcome of the Ontario action in terms of finding the goods were damaged prior to over-land shipment or that there was coverage for the entire journey. The defendant did not file a statement of defense in the Ontario action, instead opting for summary judgment motion to dismiss the claim. By judicial direction in November 2017, it was determined that the stay motion be scheduled first, and the summary judgment motion be scheduled if the stay was not granted.

Decision: Request for stay refused.

Held: The Court found that the outcome of the Foreign Arbitration, or the impact of that determination on the Ontario action, could be not be predicted. In the absence of no existing schedule for the arbitration hearing in India, or evidence to say there will be arbitration in India, it was clear the prejudice in delay would all be to Chubb, as having to wait for the outcome of the arbitration in which the insurer has no right of participation was akin to a denial of justice.