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Case 390: MAL 1(1)
Canada: Ontario Court (Rutherford J.)
February 1, 1996
Re Carter et al. and McLaughlin et al.
Original in English
Published in English: (1996), 27 O.R. (3d) 792 , O.J. No. 328
In 1993, the defendants, McLaughlin, moved to Ontario and sold their home in Minnesota to the applicants, Carter. The transaction was undertaken through a real estate listing agreement which included a provision to arbitrate any claim about the physical condition of the property. A claim arose and an arbitral award was subsequently made granting the Carters $9,049.50 for the cost of replacing the septic system servicing the property. The McLaughlins refused to pay and the Carters brought an application to enforce the award in Ontario.
The only issue was whether the arbitration agreement and the award were "commercial" within the meaning of the Model Law. Section 13 of Ontario's implementing legislation provided that, for the purpose of interpreting the Model Law, recourse may be had to, among other things, the Analytical Commentary contained in the Report of the Secretary General to the eighteenth session of the UNCITRAL. The Court considered this Commentary in arriving at the conclusion that the arbitration agreement between the parties and the resulting award were commercial within the meaning of the Model Law. While the sale of the home was unconnected to the regular business activity of either party, it was done in a business-like way, with the assistance of professional realtors and within a legal framework appropriate for a transaction involving a large sum of money. It had the earmarks of what goes on in trade and commerce except that the parties were not "commercial persons" or merchants in respect of the transaction. The Analytical Commentary indicated that the Commissioners drafting the Model Law anticipated that the word "commercial" would be given a broad interpretation so as to embrace matters arising from all relationships of a commercial nature and that the broad interpretation for the term "commercial" would mean inclusion of commercial relationships, irrespective of whether the parties are "commercial parties" or "merchants" under any given national law. The application for enforcement was granted.
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