Ontario Superior Court ordered disclosure by a non-party in support of arbitration.

Facts

Royal & Sun Alliance Insurance (“RSA”) was in an arbitration against another insurer concerning a priority dispute relating to a motor vehicle accident. A central issue in the arbitration, on which there was conflicting evidence, was determining the ownership of the vehicle involved in the accident.

RSA sought the production of the investigation file of the Ontario Provincial Police (“OPP”) in order to establish the vehicle owner. The arbitrator ordered OPP to release its investigation file. OPP refused to produce it absent a court order, correctly noting that an arbitrator has no jurisdiction over third parties and cannot compel third parties to an arbitration, such as OPP, to produce documents.

Instead, OPP requested that RSA obtain a court order requiring it to produce its investigation file. OPP further indicated it would not object to such a court order if it included certain standard terms. 

Decision

The Court noted the uncontroversial principle that arbitrators obtain their authority from the contracting parties’ arbitration agreement and cannot generally order relief that would bind third parties.

However, the Ontario Arbitration Act, 1991 (the “Act”), allows courts to intervene in the arbitration process for specific, limited reasons. Section 6.1 of the Act empowers the Court to assist in the “conducting of arbitrations”. Additionally, subsection 29(4) provides that, upon a party's application, "the court may make orders and give directions with respect to the taking of evidence for an arbitration as if it were a court proceeding."

The central issue before the Court was whether subsection 29(4) of the Act provides sufficient scope for the Court to order third-party disclosure in advance of an arbitration hearing. The Court concluded that it did.

The Court noted that subsection 29(1) of the Act provides that the parties may serve a summons issued by the arbitral tribunal requiring a person to attend and give evidence at the arbitration. This notice, which under subsection 29(2) has the same power as a court summons, is a notable exception to the general rule that arbitral tribunals cannot exercise authority over non-parties; however, it only applies to attendance at the arbitration hearing itself, and not to pre-hearing procedures.

Subsection 29(4), in contrast, empowers the Court to issue orders concerning the taking of evidence "for an arbitration as if it were a court proceeding." The Court concluded that this provision covers situations where court intervention is sought to facilitate pre-hearing disclosure. However, the Court highlighted that the word “may” in section 29(4) of the Act ultimately meant that the Court retained discretion as to whether to grant the assistance sought.

The Court concluded that granting the order was appropriate. The evidence sought was highly relevant to the arbitration, the requested relief against OPP was not burdensome (and moreover, OPP did not oppose the relief), and the assistance aligned with the legislative goal of resolving priority disputes efficiently through arbitration.

Analysis

The private nature of arbitration has its benefits (e.g., privacy), but this privity of contract (to arbitrate) also has its drawbacks, including the lack of jurisdiction over third parties. Those limitations have been mitigated through arbitration legislation, such as the Act, which enables a party or the arbitral tribunal itself to seek court assistance (including the court’s powers to compel third parties) in the conduct of an arbitration. The Act also allows the arbitral tribunal to issue a summons to any witness to appear at the arbitration hearing to give evidence. However, this does not extend to pre-hearing examinations or documentary disclosure, as this case demonstrates.

Without this judicial armoury of the court to assist tribunals with the conduct of arbitrations, a tribunal’s ability to properly determine disputes would be significantly weakened, undermining arbitration as an attractive alternative dispute resolution process. As the Court made clear, to make arbitrations effective, it is appropriate for courts to provide assistance where necessary.

However, as the Court also made clear in its discussion of the word “may”, as used in subsection 29(4) of the Act, that in exercising its powers to support the taking of evidence for arbitrations, the Court acts as gatekeeper to the taking of evidence from third parties and will not simply rubber stamp a tribunal’s order. This is proper for at least two reasons:

  • First, the third party will have likely had no opportunity to argue the appropriateness or scope of any order of a tribunal being sought to be imposed against it, prior to the court proceedings.
  • Second, the Court is still exercising its own power of compulsion over a third party to a dispute, and it needs to satisfy itself that the exercise of this power is appropriate in all the circumstances.

Finally, this decision needs to be contrasted with the decision of the Ontario Superior Court in Link 427 General Partnership v His Majesty the King, 2023 ONSC 2433 (covered in our 2023 annual review). In that case, the Court refused an application to “enforce” an order of an arbitral tribunal made against non-parties to attend examinations for discovery.

As noted in last year’s publication,

“Section 29(4) does not say the court can enforce an arbitral tribunal’s order that a third-party participate in discovery. Rather, it empowers the court to ‘make orders and give directions’ about the taking of evidence for an arbitration. The appropriate course of action would have been for the Arbitrator, or Link 427, to seek the court’s assistance and ask the court to make such an order.”

Indeed, the Court in the present case also highlighted this distinction. As such, the language of any application made to the Court is likely to be critical. Parties should be mindful that they are asking the Court to make its own order in support of arbitration (albeit one which might mirror an existing order of the tribunal), they are not asking the Court to simply enforce a tribunal’s order.

Royal and Sun Alliance Insurance v. Ontario Provincial Police, 2024 ONSC 5505