The Supreme Court of Canada rules in Peace River Hydro Partners v. Petrowest Corp. that an arbitration agreement does not trump a lawsuit.

The Supreme Court unanimously dismissed the appeal. The Court said, an arbitration agreement can be considered inoperative “if enforcing it would compromise the orderly and efficient resolution of the receivership”. This analysis is highly fact-specific.

In this case, there were multiple and overlapping arbitration agreements. This would have involved the receiver participating in and funding at least four different arbitrations with seven different sets of parties. Paying for these processes would have come from the assets of Petrowest and its affiliates. This would only hurt the creditors and run contrary to the objectives of the Bankruptcy and Insolvency Act. The majority found that settling the matter with one lawsuit would be faster and cheaper, which was in the interest of the receivership.

Citation: Peace River Hydro Partners v. Petrowest Corp., 2022 SCC 41
Judgement dated November 10, 2022.

Disclaimer: This is my understanding of this case law and is for general information purpose only. It does not constitute legal or other professional advice or an opinion of any kind.