When Do Actions (or Inaction) Speak Louder Than Words? Justmark Industries Inc. v. Infinitus (China) Ltd., 2022 ONSC 5495

• Published date: 18 November 2022
• Subject Matter: Litigation, Mediation & Arbitration, Arbitration & Dispute Resolution
• Law Firm: McCarthy Tétrault LLP
• Author: The International Arbitration Blog, Andrew Kalamut and Shanelle Dover

Why this Case Matters

In Justmark Industries Inc. v. Infinitus (China) Ltd., 2022 ONSC 5495 the Ontario Superior Court of Justice found that in the context of the Model Law, acting in a manner that is inconsistent with an arbitration clause does not in and of itself constitute sufficient waiver of the right to arbitrate.

This case demonstrates that where a binding arbitration clause exists, the Court will not simply render the clause inoperative under Article 8(1) of the Model Law based on the actions of a party, absent an intentional waiver of that right and full knowledge of relinquishing that right.¹

Background

The moving party, Infinitus (China) Company Ltd. ("Infinitus"), moved to stay the respondent, Justmark Industries Inc.'s (formerly Canomega Industries Inc.; "Justmark") action for breach of contract due to the existence of an arbitration clause in their contract. The arbitration clause required that any disputes arising from the contract be arbitrated in Hong Kong by the Arbitration Committee of the International Trade Council under the law of the United Kingdom.²

Justmark argued that the arbitration agreement was inoperative because Infinitus waived arbitration through its conduct that was inconsistent with the right to arbitrate. This conduct included Infinitus' unresponsiveness to Justmark's offers to arbitrate the dispute, failing which, Justmark would commence litigation. Infinitus argued that the arbitration clause stood.

The Ontario Superior Court's Determination on the Stay

The Court's analysis of the issue started with the principle that the threshold to avoid arbitration is high. Subject to Article 8(1) of the Model Law, a court shall refer disputing parties subject to an arbitration agreement to arbitration unless it finds that the agreement is null and void, inoperative or incapable of being performed.³

Justmark argued that Infinitus had waived its right to arbitrate, thus rendering the arbitration agreement inoperative. The Court disagreed. In doing so, it relied on the Supreme Court of Canada's...