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Case 388: MAL 8
Canada: Ontario Court of Justice (Kiteley J.)
March 31, 1998.
Temiskaming Hospital v. Integrated Medical Networks, Inc.
Original in English
Published in English: (1998) 59 O.T.C. 48, 46 B.L.R. (2d) 101, O.J. No. 1309
Temiskaming is a public hospital which operates in New Liskeard, Ontario. Integrated Medical Networks, Inc. ('Integrated') is a company incorporated pursuant to the laws of the State of Delaware. Its place of business is in Texas. IMN is a limited liability company organized pursuant to the laws of the State of Texas and carrying on business in Texas.
IMN guaranteed the obligations of Integrated pursuant to three contracts. In November, 1995, Integrated and Temiskaming entered into three contracts which provided that Integrated would supply computer hardware and software services to Temiskaming. The contracts included two sections, one entitled "Remedies" and the other "Dispute Resolution". The former detailed specific default events which would entitle one party to begin court proceedings against the other. The latter referred all disputes to arbitration in Texas in accordance with the rules of the American Arbitration Association.
In August, 1997, the plaintiff instituted proceedings in Ontario, claiming damages for breach of contract and misrepresentation and a declaration that the plaintiff was entitled to treat itself as discharged from its contracts with Integrated. The defendant responded with a motion to stay in accordance with art. 8 of the MAL.
The Court dismissed the motion. While the Court recognized the policy favouring arbitration in Ontario, it held that the primary issue was to determine whether the dispute in question was subject to arbitration according to the terms of the contract. The Court held that the contract was not ambiguous in allowing court proceedings for specifically listed default events while retaining arbitration for all other disputes. In this case, the Court found that the claims fell within the specified events of default and that the arbitration clause did not apply. Since art. 8 MAL required that there be a dispute subject to arbitration, the Court was obliged to make that determination prior to any reference to arbitration.
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