Ontario Reviews Enforcement Of A Foreign Arbitral Award

• Jurisdiction: United States,Federal
• Law Firm: Gowling WLG
• Subject Matter: Litigation, Mediation & Arbitration, Arbitration & Dispute Resolution
• Author: Ricki T. Johnston and Mark Crane
• Published date: 14 April 2023

The Ontario Superior Court of Justice considered the principles governing the enforcement of a foreign arbitral award under Ontario's International Commercial Arbitration Act, 2017 (the "ICAA"), the Convention on the Enforcement of Foreign Arbitral Awards (the "Convention") and the Model Law on International Commercial Arbitration (the "Model Law") in a dispute between the United States based corporations, Costco Wholesale Corporation and TicketOps Corporation; which dispute also involved related litigation between Costco's Canadian entity and various parties within Canada.

In considering whether an award secured by Costco against TicketOps in the United States could be enforced, the Court confirmed the test to refuse such enforcement was narrow and if the reason for doing so was for procedural fairness or natural justice, the conduct of the arbitrator in granting the original award must be "sufficiently serious to offend our most basic notions of morality or justice." The Court upheld the decision of the arbitrator and was unconvinced by arguments of a lack of procedural fairness and perceived bias.

Background

Costco and TicketOps were parties to a contractual relationship whereby Costco offered its online customers sales of tickets to events issued by various third party vendors and distributed through TicketOps. That relationship was governed by a Master Tickets and Program Agreement (the "MTPA"), an Amended and Restated Ticket/Gift Card Program and a Hosting Agreement (collectively the "Ticket Agreement"). After purchase by a Costco customer of an event ticket advertised on Costco.ca, TicketOps issued the ticket to that Costco customer. Once tickets had been purchased through Costco.ca from TicketOps, TicketOps was required to pay the third party vendors of those tickets to secure them for the Costco customers. On the basis that these tickets were secured from the third party vendors by TicketOps on behalf of its customers, Costco paid TicketOps every 25 days for the tickets purchased through its website.

Given significant financial pressures on its industry arising as a result of Covid 19, TicketOps stopped paying its third party vendors for tickets it had distributed including through Costco.ca. It failed to remit payment to the third party vendors despite having received payment from Costco in the ordinary course. Litigation in various forums arose in both Canada and the United States as a result of the failure of TicketOps to pay the third party vendors and Costco sought recovery of the amounts it had paid TicketOps for the purpose of refunding either the Costco customers who had paid for but not received event tickets or, alternatively, the unpaid third party vendors.

The Ticket Agreement contained an arbitration clause whereby Costco and TicketOps agreed disputes under the Ticket Agreement would be referred to an arbitrator and pursuant...