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The Court of Appeal found that the application judge did not err in determining that the limitation period on the clause did not start to run until one of the parties communicated that there would be no negotiations to try to resolve the issue

Ontario

,

Canada

Limitation period in arbitration clause did not start to run until parties communicated negotiations would not occur In Maisonneuve v. Clark, 2022 ONCA 113, the personal appellant and personal respondent were cousins who had been in business together as shareholders in a number of companies. In 2016 they referred some business disputes that arose between them to arbitration. The parties were able to reach an agreement on all issues except one. The settlement agreement provided that if the parties were unable to resolve the excluded issue, it would be referred to the arbitrator for resolution.In 2017, the parties became involved in litigation regarding whether the settlement agreement was valid. In January 2018, during negotiations, the appellant’s lawyer took the position that there would be no negotiations with respect to the excluded issue. In June 2019, the respondent wrote seeking to initiate the arbitration process. The appellant refused on the basis that it was time-barred.The application judge determined that the two-year limitation period began to run in January 2018, when the communications between the parties made it clear that negotiations would not occur, and arbitration of the excluded issue was appropriate.The Court of Appeal upheld the application judge’s decision, finding that her decision was based on the specific wording of the arbitration clause and the circumstances in which it was negotiated. Parties are free to agree to arbitration clauses that make no reference to the possibility of informal agreements or that are more specific about the steps or timing leading to arbitration. This decision, therefore, creates no risk of leading to uncertainty with respect to the application of limitation periods to arbitration clauses in general.

April 14, 2022
Maisonneuve v. Clark, 2022 ONCA 113