Quebec Court of Appeal dismisses motion for referral to arbitration as untimely.
Facts
This case arises in the context of a class action proceeding. Vidéotron appealed from a judgment refusing its request to modify the composition of the class to exclude persons who had entered a contract containing an arbitration clause (the Motion).
On April 23, 2018, Caféier-Boustifo filed an application for authorization to institute a class action against Télébec, Bell Canada, Vidéotron and Cogeco Connexion Inc. in relation to allegedly abusive contract termination clauses in telecommunications services contracts.
Before the hearing on the authorization to institute the class action, both Bell and Cogeco filed motions for declinatory exception (preliminary motions) on the basis that their contracts contained arbitration clauses. The Superior Court granted the motions and declined jurisdiction over them and their clients.
At the time, unlike Bell and Cogeco, the Télébec and Vidéotron contracts did not include an arbitration clause. On October 3, 2018, Vidéotron amended its contracts to include an arbitration clause. However, it did not file a declinatory exception motion at that time.
The class action was eventually authorized against Télébec and Vidéotron, and Boustifo filed its motion to institute its proceeding on January 28, 2021. After a case management conference, in which Vidéotron announced its intent to ask for a modification of the class, Vidéotron filed its Motion on December 8, 2021.
On January 27, 2022, the Superior Court of Quebec dismissed the Motion on the grounds that it was untimely. The Court observed that Vidéotron could have presented its Motion as soon as it amended its contracts to add an arbitration clause. Vidéotron offered no explanation to justify its failure to comply with the 45-day time limit, set out in Article 622 of the Quebec Code of Civil Procedure (CCP), for referral to arbitration after the filing of the motion to institute proceedings.
Decision
The Court of Appeal rejected all grounds of appeal. Although the Motion related to the modification of the class, the Court considered it as a motion challenging the court's rationae materiae jurisdiction.
The Court confirmed that the Motion could have been presented as early as the hearing contesting the class action authorization. Considering that it was presented only after the class action was authorized, and after the filing of the motion to institute proceedings, Vidéotron should have complied with the 45-day delay set out in Article 622 of the CCP.
Although the absence of jurisdiction can generally be raised at any stage of the proceedings, Article 622 provides that where the jurisdiction arises from an arbitration agreement, the court is only obliged to decline jurisdiction if the motion for referral is raised within 45 days of the motion to institute proceedings (or within 90 days where the dispute has a foreign element), unless it finds that the arbitration agreement is null and void.
Although the time limit in Article 622 of the CCP is not absolute, any extension must be justified, and the Court found that Vidéotron failed to meet that burden.
Analysis
This case emphasizes the need to file motions invoking lack of jurisdiction rationae materiae (in this case because of the existence of an arbitration clause) at the earliest opportunity.
The Court of Appeal cited cases establishing that this is a matter of public order as it prevents a case from being wrongly brought before the court. Thus, in the context of a class action proceeding, this type of motion could be presented at the authorization stage. This is consistent with case law in other provinces wherein a stay in favour of arbitration is generally invoked in the context of the class certification motion. If not done at this stage, the time limit set out in Article 622 of the CCP applies based on the statutory interpretation principle that the legislator has not spoken for no reason.
A party may be relieved from this default limitation if proper justifications and explanations are provided to the court's satisfaction. Clearly, these explanations are not for a court to infer and must be specifically made out. That was not the case in this matter.
While this case was specific to class actions in Quebec, there is a risk, in all jurisdictions and for many types of claim, that a party might be deemed to have waived its right to arbitrate a dispute if it does not promptly seek a stay of court proceedings brought in breach of an arbitration agreement. As such, a party wishing to rely on its right to have any dispute resolved through arbitration should seek a stay of court proceedings promptly and before taking any substantive step in the court proceedings.
Vidéotron c 9238-0831 Québec Inc (Caféier-Boustifo), 2023 QCCA 110