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Case 383: MAL 1(2), 5, 8, 16

Canada: Ontario District Court (Mandel D.C.J.)

October 27, 1989

Deco Automotive Inc. v. G.P.A. Gesellschaft Fur Pressenautomation MbH

Original in English

Published in English: (1989) O.J. No. 1805

Comments: Branson (2000) 1 Arb. Int'l 37-38; Patterson (1993) 10 J. Int'l Arb. 29-43.

The plaintiff (Deco) purchased an automated transfer system produced by the defendant (GPA), a German corporation. The system was delivered in the Fall of 1986. Differences between the parties were not resolved and on May 9, 1988 GPA issued a claim at the I.C.C. Court of Arbitration for DM 452,230.745 for the balance owing in respect of the transfer systems.

The parties had originally agreed to this arbitration but Deco subsequently claimed that the agreement had involved fraud by GPA and thereafter challenged the jurisdiction of the I.C.C. and commenced proceedings in Ontario against GPA. GPA responded with a motion to stay the action in Ontario. The motion was argued on two bases : first that the parties had agreed to arbitrate any differences in their original contract and that there was an arbitration at that time pending before the I.C.C.; and secondly, that Ontario was not the convenient forum to try the dispute.

The judge concluded that the subject matter of the action commenced by Deco which included damages for misrepresentation (fraudulent or otherwise), breach of contract, inherently defective equipment and negligent performance of contract were not covered by an arbitration clause. Despite the fact that the I.C.C. arbitrator was already seized of the jurisdictional issue, the Court refused to wait for its decision, holding that art. 16 of the MAL did not apply. This conclusion was based on the territorial limitation in art. 1(2) and the fact that art. 5 and art. 16 are not listed as exceptions to this territorial limitation. Since the I.C.C. arbitration was taking place in London, England, the Ontario court concluded that the question of the stay was to be decided solely in accordance with the common law and not according to principles expressed in the MAL. Since the Court concluded that there was no agreement to arbitrate included in the agreement between the parties, he refused to order a stay of proceedings despite the existence of the arbitral proceedings at the I.C.C.

From the UNITED NATIONS Document: "General Assembly: Distr. GENERAL: A/CN.9/SER.C/ABSTRACTS/34: of, 12 June 2001. Original : ENGLISH."

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