The Court Of Appeal Affirms That The Competence-Competence Principle Applies To Ontario’s Arbitration Act, 1991

In a decision that will preserve consistency in Ontario's arbitration law and practice, the Court of Appeal has affirmed that the competence-competence principle, already well-established in private international law, also applies to Ontario's domestic arbitration statute. The principle, which gives precedence to an arbitral tribunal to determine its own jurisdiction, is incorporated into Ontario's International Commercial Arbitration Act, which adopts the UNCITRAL Model Law on International Commercial Arbitration (the "Model Law"). In Ontario Medical Association v. Willis Canada Inc., the Court of Appeal held that it also underlies sections 7 and 17 of Ontario's domestic Arbitration Act, 1991.

Facts

Willis and Aviva entered into a written agreement (the "Broker/Agent Agreement") pursuant to which Willis would broker Aviva insurance coverage to members of the Ontario Medical Association ("OMA"). The Broker/Agent Agreement contained an arbitration clause. The OMA was not a signatory to the Broker/Agent Agreement, but was a party to an addendum to the agreement (the "Addendum"). The preamble to the Addendum stated that the OMA joined exclusively for the purpose of clause 3 of the Addendum, which addressed fees the OMA was to receive from Aviva under the Broker/Agent Agreement and the Addendum.

The OMA subsequently commenced an action against Aviva and Willis, alleging that Aviva had defaulted on the fees owed to it under the Broker/Agent Agreement and the Addendum.

Aviva moved for an order staying the action pursuant to s. 7(1) of the Arbitration Act, 1991, which provides that a court in which a proceeding has been commenced must stay the proceeding where the parties are subject to an arbitration agreement. The OMA took the position that it was not a party to the Broker/Agent Agreement and was therefore not subject to the arbitration clause contained in that agreement.

Decision Below

The motions judge, Justice Newbould, granted the stay. He concluded that there was an arguable case that the OMA was a party to the arbitration agreement, but declined to make a final determination on the issue. Implicitly applying the competence-competence principle, Justice Newbould held that whether the OMA and its claim are subject to the arbitration agreement should properly be left to the arbitrator appointed under the Broker/Agent Agreement.

Decision of the Court of Appeal

On appeal, the OMA sought to distinguish the Ontario authorities adopting the...