Précis: The British Columbia Court of Appeal held that multi-party arbitration relating to three marine design and construction contracts could not be commenced by a single notice to arbitrate.
Facts: South Coast British Columbia Transportation Authourity (“TransLink”) gave a notice to arbitrate pursuant to the Arbitration Act, R.S.B.C. 1996, c. 55 in April 2011, seeking to arbitrate four contracts under one arbitrator, without consent of the responding parties BMT Fleet Technology Ltd., International Marine Consultants Ltd., and Victoria Shipyards Ltd. The notice contained details of the alleged deficiencies in the performance of the contacts by the three companies. In this appeal only three of the contracts were in question, which related to the design and construction of TransLink’s SeaBus service. The three contracts each dealt with different aspects of the SeaBus’ design and construction, and each contract contained an arbitration clause under the B.C. Arbitration Act. The contracts stated that if no exception is made to the application of the Rules of the British Columbia International Commercial Arbitration Centre, then the parties have agreed to conduct arbitration under the Centre’s Rules. The TransLink-Victoria Shipyards contract differed from the other two in that it allowed for arbitration only under the agreement’s force majeure clause and specified arbitration before a three-person panel. In May 2011, the Centre wrote to TransLink informing them that three Notices to Arbitrate must be filed with the Centre, instead of only one, as there were three different contracts and none of which were related to each other. TransLink failed to file separate notices. TransLink filed a petition in the Supreme Court of British Columbia in August 2016 and in September 2017 obtained a declaration that arbitration was commenced in April 2011 and a single arbitrator was appointed. BMT and IMC appealed the BCSC Order, arguing in the Court of Appeal that the court below failed to notice s. 21 of the Arbitration Act which permits multi-party arbitration only if all parties agree to the appointment of one arbitrator and agree to steps taken to consolidate the disputes.
Decision: Appeal allowed, Order set aside.
Held:The Court of Appeal found that the essence of the arbitration clause is comprised of both consent and privacy. TransLink sought a different procedure than one contemplated by the contracts, the arbitration clauses and the Arbitration Act. The Court of Appeal found that the BCSC judge did not address s. 21 of the Arbitration Act in light of the facts at bar and whether consolidation without consent fundamentally changed the character of the arbitration from that which was contractually agreed. The Court of Appeal decided this case based on multi-party admiralty arbitration cases, notably the Eastern Saga [1984] 2 Lloyd’s Rep. 373 and the Smaro [1999] 1 Lloyd’s Rep. 225, to hold that arbitration may address only the contract giving rise to the dispute. TransLink’s notice called on the respondents to engage in arbitration before a single arbitrator which was not known to the Arbitration Act, and only under s. 21 of that act would TransLink have been able to commence the type of arbitration contemplated in its April 2011 notice.