Ontario Superior Court confirms that arbitral tribunals lack jurisdiction to order third-party discovery, such that an order must be sought from the Court.
Facts
Link 427 brought a motion before the Arbitrator to require two non-party former Crown employees to attend examinations for discovery. The parties had incorporated the Ontario Rules of Civil Procedure into their arbitration agreement.
The Arbitrator granted the motion. Link 427 then moved before the Ontario Superior Court of Justice to enforce the Arbitrator's order. It purported to do this under subsection 29(4) of the Arbitration Act, 1991 (the Act), which empowers the Court to make orders and give directions with respect to the taking of evidence for an arbitration.
Decision
The Court refused to enforce the Arbitrator's procedural order. Citing well-established jurisprudence, the Court held that the Arbitrator did not have the jurisdiction to make an order to compel third-party discovery. The two former Crown employees were strangers to the arbitration agreement and thus they were not bound by its terms, so the Arbitrator had no jurisdiction over them. Since the Arbitrator had no jurisdiction to make the order, the Court declined to enforce it against the non-party former employees.
Analysis
The Court's decision is a reminder that an arbitral tribunal has no inherent jurisdiction, and thus cannot compel a non-party to do anything unless the Act says otherwise. Even where the parties incorporate court rules into their arbitration agreement (as the parties did in this case), those provisions granting a court power over non-parties do not enlarge an arbitral tribunal's jurisdiction, which is based entirely on the parties' consent to arbitrate. Further, subsection 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.
This was the approach taken and validated by the Alberta Court of Appeal in Jardine Lloyd Thompson Canada Inc v SJO Catlin, 2006 ABCA 18. In that case, the Court of Appeal concluded that under Alberta's International Commercial Arbitration Act, an arbitral tribunal could seek assistance from the court to obtain discovery evidence from third parties, even though it could not itself compel a non-party to submit to examinations for discovery. Although that case was decided in the international context, its reasoning applies with full force to arbitrations under the Act and other provincial domestic arbitration statutes.
This case is a reminder that if a party to an arbitration wishes to obtain an order over a third party as part of the arbitration process, it needs to apply to a court for such an order under the court's powers to support arbitrations. As noted, subsection 29(4) permits either the arbitral tribunal or a party to request the court's assistance in taking evidence. As a practical matter, it is generally wise for a party wishing to obtain the court's assistance to seek the arbitral tribunal's blessing to make such an application.
At the end of the day, the arbitral tribunal controls its process. The tribunal could, in principle, prevent a party from using any third-party discovery evidence it obtains. Furthermore, any application for court assistance in support of an arbitration will be strengthened by the fact that the order sought has the tribunal's blessing. It is thus best practice to ensure that the party seeking the court's assistance and the arbitral tribunal are on the same page.
Link 427 General Partnership v His Majesty the King, 2023 ONSC 2433