Canadian Court rules arbitration clause ‘inoperative’ based on the conduct of the party seeking a stay of court proceedings

In a judgment handed down on 21 July 2021, the Superior Court of Justice – Ontario (“the Court”) refused an application to stay proceedings in terms of Article 8(1) of the UNCITRAL Model Law on International Commercial Arbitration (as adopted in Ontario, Canada) on the basis that the parties’ arbitration clause was ‘inoperative’ due to the conduct of the party seeking the stay.

The decision is important because it speaks directly to one of the most vexing issues in international (commercial) arbitration: the proper relationship between courts and the arbitration process. It also highlights how easily domestic laws can be brought to bear on a matter explicitly covered by international arbitration laws.