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Case 67: MAL 36(1)(a)(ii)
Canada: Saskatchewan Court of Appeal (Vancise, Wakeling and Gerwing JJ.A.)
17 September 1991
AAMCO Transmissions Inc. v. Kunz
Published in English: 97 Saskatchewan Reports, 5
The appellant terminated a franchise agreement with the respondent citing as reasons, inter alia, the respondent's failure to file business reports and to pay fees with the result that its indebtedness to the appellant had continued to increase at a rapid rate. The matter was submitted to arbitration in the U.S. pursuant to an arbitration clause, which however, contained a proviso excluding from arbitration matters arising from "... termination by AAMCO which is based in whole or in part upon the fraudulent acts of Franchisees or Franchisee's failure to deal honestly and fairly with any customer or Franchisees's failure to accurately report his gross receipts to AAMCO ...". The arbitral tribunal found in favour of the appellant, who subsequently sought to have the award recognized and declared enforceable by the courts in Canada.
The court of first instance refused to recognize the arbitral award. On appeal, at issue was whether the award dealt with a matter "not contemplated by or not falling within the terms of the submission to arbitration", or whether it contained "decisions on matters beyond the scope of the submission to arbitration" (article 36(1)(a)(ii) MAL). The appellant argued that the proviso mentioned above should be interpreted narrowly so as to cover only fraudulent or quasi-fraudulent actions and not termination for failure of the franchisee to file reports. The respondent argued that the dispute dealt with a matter which clearly was not contemplated by the parties or did not fall within the arbitration agreement.
The appellate court found that the failure of the respondent to file business reports
was explicitly mentioned in the arbitration clause as a non-arbitrable matter and
dismissed the appeal upholding the decision of the court of first instance.
Additional Information published in later CLOUT issue (on "9 February 2000"):
Abstract published in English: [1995] Model Arbitration Law Quarterly Reports, Vol. 1, issue 2, 49
Text of the court decision published in English: [1995] Model Arbitration Law Quarterly Reports, Vol. 1, issue 2, 52
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