February 23, 2023
This is why the November 2022 Supreme Court decision concerning Peace River Hydro Partner vs. Petrowest Corp. has attracted the attention of law firms across Canada. It’s a rare case where an arbitration agreement has been declared “inoperative” and set aside in favour of insolvency proceedings. The standoff between arbitration and insolvency represents what Osler LLP litigation partner Lauren Tomasich and associate Sarah Firestoneas “tension between arbitration, a consensual method of dispute resolution where parties can customize their process and select their own decision-maker, and insolvency, where disputes involving the debtor are involuntarily consolidated in a single insolvency proceeding.
by Anthony Daimsis, “The purpose of separability is to uncouple the arbitration agreement’s validity from the underlying contract’s validity, thereby safeguarding arbitral authority and reinforcing party autonomy as expressed in the parties’ original agreement to arbitrate. On one hand, “Arbitration law is typically marked by party autonomy, whereas insolvency law has close judicial oversight.”“This decision really emphasizes the shared interests between the two regimes rather than their differences,” they write. “More specifically, the advantages of efficiency, expediency, procedural flexibility and decision-makers with specialized expertise all highlight that perhaps the regimes are not so different after all.
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