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Case 367: MAL 8, 16(3)
Canada: Ontario Superior Court of Justice (Stinson J.)
29 July 1999
NetSys Technology Group AB v. Open Text Corp.
Original in English
Published in English: [1999] O.J. No. 3134, 1 B.L.R. (3d) 307
NetSys is a Swedish corporation that provides internet-related services to customers in Scandinavia. Open Text is an Ontario corporation that develops, owns, licenses, and sells computer software products and programs for creating, hosting and using searchable indexes on the internet. At a meeting held in Switzerland in 1997, the parties entered into a series of written agreements. These included provisions for arbitration to resolve disputes relating to the construction, interpretation or application of the agreements. Arbitration was to take place at the Arbitration and Mediation Institute of Ontario, in accordance with its rules.
After the agreements broke down, NetSys began court proceedings in Ontario against Open Text who then instituted arbitral proceedings. NetSys objected that some of the matters brought to arbitration were not within the scope of the arbitration agreement, while Open Text sought a stay of all court proceedings.
In resisting the stay, NetSys argued that since Open Text was claiming that the agreements were null and void in the arbitration claim, it could not rely on article 8 of the MAL and force arbitration. The Court rejected this argument. It relied on article 16 of the MAL to conclude that the arbitrator was competent to determine the validity of the contract and that this competence was independent of the validity of the arbitration agreement which was contemplated in article 8. Since neither party was claiming that the arbitration agreement was invalid, referral to arbitration was not prohibited.
On the question of the scope of the arbitration clause, the Court considered whether it should remit the issue to the arbitral tribunal as provided by article 16(3) of the MAL. In concluding that it should, the Court noted that the adoption of the MAL in Ontario signalled a significant trend to circumscribe judicial intervention in arbitral proceedings. The Court thus ordered a stay of judicial proceedings to remain in force until the final disposition of the jurisdictional issue by the arbitral tribunal, whether as a preliminary decision or in the final award.
UNITED NATIONS COMMISSION ON INTERNATIONAL TRADE LAW
CASE LAW ON UNCITRAL TEXTS (CLOUT)
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