Alberta Court of Appeal Provides Antidote to Consternation on Scope of Arbitration Clauses

The Alberta Court of Appeal in Arsopi v ARVOS GmbH provided welcome relief from the consternation caused by Orica Canada Inc v ARVOS GmbH [Orica], a 2024 Alberta Court of King's Bench decision which held that claims arising by operation of law, such as statutory claims under Alberta's Tort-Feasors Act (Alberta) (the TFA Claim) do not fall within the scope of an arbitration clause capturing "all disputes arising out of or in connection with" the underlying contract. The Court of Appeal has now confirmed that this language can extend to statutory claims.

For context, the defendant, ARVOS GmbH's (Arvos), acquired certain industrial equipment from Arsopi, a Portuguese manufacturer, pursuant to a purchase order that included an arbitration clause providing—in line with standard drafting practice—that “all disputes arising out of or in connection with the Contract” would be resolved by arbitration in Frankfurt am Main, Germany, under German law (the Arbitration Clause).  The defendants then sold the equipment to Orica, who then installed it in an ammonium nitrate plant in Alberta. Orica subsequently sued ARVOS in the Court of King's Bench of Alberta in connection with fabrication and assembly deficiencies. ARVOS issued a third-party notice to Arsopi as manufacturer of the equipment, advancing claims in contract and tort, along with the TFA Claim. 

On an application to stay ARVOS' third-party claims against Arsopi in favour of arbitration, the Court of King's Bench agreed to stay claims in contact and tort but declined to stay the TFA Claim. It found that the TFA Claim fell outside of the scope of the Arbitration Clause because it was a statutory claim governed by Canadian law premised on a cause of action between Orica and Arsopi.

On appeal, the Court of Appeal held:

1. A claim under Tort-Feasors Act is an independent action in its own right which belongs to ARVOS as the defendant tortfeasor seeking contribution from another tortfeasor, Arsopi. As such, the Arbitration Clause in the purchase order between Arvos and Arsopi was relevant.
2. The principles established over three decades ago in Kaverit Steel and Crane Ltd v Kone Corporation, 1992 ABCA 7 should have directed the Court of King's Bench to determine whether the scope of the Arbitration Clause captured the TFA Claim based on its relationship to the purchase order between ARVOS and Arsopi . Had the Court done so, it would have found that the TFA Claim arose "out of or in connection with" the subcontract.

Finally, the Court reaffirmed that commercial parties should be held to the rights and obligations created by their contracts, including any expressed intention to arbitrate disputes. On this basis, the Court of Appeal added the TFA Claim to the list of third-party claims stayed in Orica and referred the TFA Claim to arbitration.

Key Takeaways

• The Alberta Court of Appeal's decision is a welcome antidote to the commercial uncertainty introduced by Orica:the decision confirms that parties will be held to their agreement to arbitrate, even where that agreement is expressed in general terms and does not expressly capture the specific types of claims that may arise as the dispute develops.
• Commercial parties can now feel more comfortable that if they choose to arbitrate disputes using standard-language clauses, they will not be facing multiple parallel proceedings, with the attendant increased costs and risk of inconsistent results.