Consolidation of Arbitration Proceedings
By Timothy Froese and Sierra Bilyk
It is not uncommon for parties in long-term commercial relationships to become involved in multiple related arbitrations. If so, the parties may consolidate the arbitrations into a single proceeding for the sake of consistency and efficiency. But when is consolidation appropriate? And what happens if the parties do not agree? Depending on the governing legislation, the court may intervene. That was the issue in the Pricaspian case where the Alberta Court of Queen’s Bench held it had the jurisdiction to order consolidation under the Alberta International Commercial Arbitration Act, even over the objections of one of the parties.
Parties in long-term commercial relationships may find themselves in multiple disputes over time. Several arbitration proceedings may take place at the same time, particularly if the governing agreement refers all disputes to arbitration. If the disputes are related in some way, this can easily lead to a tangled web of overlapping proceedings. In some cases it may be advantageous to streamline dispute resolution by consolidating multiple arbitrations into a single proceeding. But when is consolidation appropriate? And what happens if the parties do not agree to consolidate?
Multiple arbitrated disputes may arise when there are ongoing contractual relationships, such as leases, service contracts or joint ventures, or a series of different but related contracts. If these disputes involve the same entities, are related in some way (for example, if they arise from the same transaction or consider similar factual allegations or contractual provisions) and are at roughly the same stage, then consolidation may eliminate duplication and benefit all parties. If not appropriate for consolidation, some efficiencies may still be gained by having the arbitrations heard concurrently or consecutively by the same arbitrator.
Consolidation of can be addressed in the governing agreement (if any) or the arbitration terms and procedures. The governing agreement may expressly provide that multiple arbitrations can or shall be consolidated.
If the parties agree to consolidate, then this may be as simple as a joint application to the arbitrator. If the parties do not agree, one party (or multiple parties) may consider applying to the court for a consolidation order. But unlike litigation, in which the court has the power to control its own processes, the power of the court to intervene in a commercial arbitration is circumscribed by any agreement between the parties and the legislation governing arbitrations in that jurisdiction.
In Canada, most provinces have at least two arbitration statutes: legislation that adopts the UNCITRAL Model Law on International Commercial Arbitration (e.g. an International Commercial Arbitration Act), and legislation that regulates domestic arbitrations (e.g. an Arbitration Act). Differences between these statutes can affect the power of a court to order consolidation.
Domestic arbitration legislation typically states that the court may order consolidation on application of “all of the parties”. This has been interpreted to mean a joint application or an application by one party with the consent of all other parties. In contrast, international arbitration legislation often states that the court may order consolidation on application of “the parties”. The difference? Statutory interpretation principles, including those set out in provincial Interpretation Acts, may provide that words in the plural also include the singular; therefore, an application of “the parties,” can mean an application of “the party”. Thus, in some jurisdictions, the court may order a consolidation in international arbitrations on the application of only one party, even where one or more of the other parties do not agree.
This was part of the analysis recently followed by the Alberta Court of Queen’s Bench in Pricaspian Development Corp. v BG International Ltd.[1] (“Pricaspian”) in determining that it had jurisdiction to consolidate multiple international arbitration proceedings despite opposition by one of the parties. However, the Court in Pricaspian declined to consolidate the arbitration proceedings, as it found it was not a proper case for consolidation based on the relevant factors.
Factors To Consider When Applying for Consolidation of Arbitration Proceedings
A court may consider the following factors when determining whether to order consolidation of multiple arbitration proceedings:
- Does the arbitration agreement address consolidation?
If so, this may decide the matter.
- Does a court have jurisdiction to order consolidation?
This requires application of the law of the contract and the governing arbitral statute. As discussed above, in domestic arbitrations it is likely that the court can order consolidation only if all parties consent. In Pricaspian the Court held it could order consolidation in international arbitrations on the application of only one party. This may not be so clear in other jurisdictions however, such as Ontario where the courts have yet to consider whether they have the jurisdiction to order consolidation under the Ontario International Commercial Arbitration Act, or in British Columbia where the BC International Commercial Arbitration Act expressly requires the consent of all of the parties.[2]
- Should consolidation be ordered?
If a court has the necessary jurisdiction, it should consider the following factors in determining whether to exercise its discretion to order consolidation:
- the arbitrations have a common question of law or fact;
- the arbitrations arise out of the same transaction or occurrence;
- the issues in the multiple arbitrations are identical;
- there are common claims, disputes, and relationships between the parties;
- consolidation will save time and resources;
- one party will be seriously prejudiced by having multiple arbitrations heard together;
- one proceeding is at a more advanced stage than the other; and
- consolidation will delay the hearing of one proceeding which will cause serious prejudice to one party.
These factors are intended to promote efficiency while avoiding prejudice to any party. Even if a court is not involved, parties involved in multiple arbitrations may consider similar factors when deciding whether to agree to consolidate into a single proceeding.
[1] 2016 ABQB 611. [2] RSBC 1996, c 233, s. 27(2). Section 27(2) states, “…the Supreme Court may, on application by one party with the consent of all the other parties…order the arbitrations to be consolidated…”
Timothy W. Froese is a senior litigation associate with McCarthy Tétrault LLP in Calgary, with a practice focused on corporate commercial litigation and dispute resolution. He is a member of the Law Societies of Alberta and Saskatchewan. http://mccarthy.ca/lawyer_detail.aspx?id=8054
Sierra Bilyk received her Juris Doctorate from Queen’s University, Faculty of Law in 2016. She is currently an Articling Student in McCarthy Tétrault’s Calgary office and will be called to the Alberta Bar in October, 2017. http://www.mccarthy.ca/students/students/meet-our-students_3CFA5BCF1E37488F8B4A83E9A593C2BB.htm
