Acciona Infrastructure Canada Inc v Posco Daewoo Corporation (Daewoo), 2017 ABQB 707

Court of Queen’s Bench of Alberta Citation: Acciona Infrastructure Canada Inc v Posco Daewoo Corporation (Daewoo), 2017 ABQB 707 Date: 20171120 Docket: 1701 07216 Registry: Calgary Between: Acciona Infrastructure Canada Inc. and Mastec Canada Inc., operating as Acciona/Pacer Joint Venture (“APJV”) Plaintiff/Respondent - and - Posco Daewoo Corporation (“Daewoo”) Defendant/Applicant _______________________________________________________ Reasons for Judgment of the Honourable Mr. Justice A.D.

Macleod _______________________________________________________ [ 1 ] The purpose of the Alberta Rules of Court (ARC) is as stated in r 1.2 “to provide a means by which claims can be fairly and justly resolved in or by a court process in a timely and cost effective way”. In other words, the rules provide us with the tools by which we deliver justice to the parties before the Court. To the extent possible, those tools should serve the ends of justice and should be interpreted in such a way that timely justice is served and not denied.

This policy forms part of the context in which this application must be considered. This is an application by Posco Daewoo Corporation to set aside three orders of this court granted on July 5 and July 20, 2017. [ 2 ] Also forming part of the context are the facts which include the following. [ 3 ] Acciona/Pacer Joint Venture (“APJV”) contracted with the City of Edmonton to carry out the construction of the Walterdale Bridge in Edmonton, Alberta. APJV in turn subcontracted with Posco Daewoo Corporation (“Daewoo”) for the fabrication and supply of

the structural steel required for the bridge. As part of the Subcontract the parties expressly agreed that: (

a) All disputes arising from the Subcontract would be resolved by arbitration in accordance with the Alberta Arbitration Act , RSA 2000, c A-43. (

b) The Subcontract would be governed by and interpreted in accordance with the laws of the province of Alberta and the applicable federal laws of Canada. [ 4 ] On November 17, 2016 APJV issued a Notice to Submit Disputes to Arbitration that makes reference to the Arbitration Act and specifically ss 23, 34, 36, 41, 42 and 43 of that Act. [ 5 ] Daewoo retained counsel, Bae, Kim & Lee LLC, in Seoul, Korea who in turn retained Rose LLP in Calgary.

Counsel took the position that the Arbitration Notice incorrectly referred to the Arbitration Act as opposed to the Alberta International Commercial Arbitration Act , RSA 2000, c I-5. Thus, it argued, the Arbitration Notice was defective. Furthermore, Daewoo through its’ counsel refused to cooperate in appointing an arbitrator of any kind under the international act after APJV’s counsel, Gowlings, informed them that they were prepared to abide by the international act.

As a result, the arbitration process stalled. [ 6 ] Although Bae, Kim & Lee had instructed APJV’s counsel to forward all communication intended for Posco Daewoo in relation to the arbitration to their attention, it also refused to accept service on behalf of Daewoo. [ 7 ] On June 6, 2017 Daewoo served on counsel for APJV its Notice of Arbitration of the same date seeking arbitration of a number of issues arising out of the Subcontract and relying upon the same provisions of the Subcontract which had been the subject of APJV’s earlier Arbitration Notice.

It also acknowledged that the Subcontract referred to the Arbitration Act of Alberta but pointed out that pursuant to s 2 (1) of the Arbitration Act that Act did not apply to the arbitration if

part 2 of the international act applies. It may well be that the international act does apply and counsel for APJV conceded as much during the application before me and during conversations with counsel for Daewoo. [ 8 ] Just prior to Daewoo issuing its own Arbitration Notice, APJV, through its counsel, served originating application materials on counsel for Daewoo because Daewoo was not doing anything to further the arbitration commenced by APJV.

At the time of this application, it appeared that Daewoo may rely upon some limitation argument which might be prejudiced by taking any position other than that the original Arbitration Notice issued by APJV was invalid. [ 9 ] APJV also attempted to serve Daewoo by means of the Hague Convention on the Service Abroad of Judicial and Extra- Judicial documents in Civil or Commercial Matters (The Hague Convention).

The orders seeking to be set aside consist of orders pronounced July 5, 2017 including: (a.) An order validating service of the originating application in the within action on the Applicant and an order granting the relief sought in the originating application, ie. Appointing arbitrators in an arbitration reportedly commenced by APJV. (b.) An order pronounced July 20, 2017 consolidating the arbitrations. [ 10 ] The basis for the application is that APJV has not complied with the ARC and specifically the service ex-juris requirements set out in r 11.25.

They argue that r 11.25 is a complete code for service of documents outside Canada and the impugned orders are therefore nullities. [ 11 ] In addition to the Subcontract, the parties had entered into a Stand Still Agreement dated March 16, 2016. The

preamble to the agreement references the dispute between the parties arising out of the Subcontract, provides for the discussion of these issues in good faith with a view to settling, and, failing that, that the matter “shall be settled in accordance with the terms and conditions of the Subcontract Agreement”. [ 12 ] Paragraph 6 of that agreement stated “This Agreement is governed by the laws of Canada and Alberta, and each of the Parties irrevocably and unconditionally submits and attorns to the exclusive jurisdiction of the Courts of the Province of Alberta to determine all issues, whether in law or in equity, arising from this Agreement”.

Paragraph 12 states “Any written notice required to be given by a Party by this Agreement may be made to the respective addresses for notices in the subcontract.” [ 13 ] In addition to the service referred to above under the Hague Convention, all of the originating notice documentation was served in a timely way upon the law firms retained by Daewoo notwithstanding their refusal to admit formal service. Ruling [ 14 ] For the following reasons I rule that this Court has jurisdiction over Daewoo by virtue of the agreements signed by the Parties no matter which act applies.

As such it was unnecessary to comply with r 11.25 relating to service out of the jurisdiction. Accordingly, it was entirely appropriate for this Court to validate service under r 11.27. Similarly, the two Arbitration Notices were properly consolidated. As to the choice of arbitrators I am informed by counsel that should the validating of service and the consolidation orders be upheld, the parties agree to appoint one member of the arbitration panel each and have those two members appoint a Chair.

Jurisdiction [ 15 ] The arguments of Daewoo are that this Court has no jurisdiction because service has not been effected under r 11.25 and further that the Arbitration Notice issued by APJV was not a proceeding under the International Commercial Arbitration Act and thus a valid arbitration does not exist.

[ 16 ] I will deal with the latter argument first because in my view it is without merit. APJV’s Arbitration Notice was issued as contemplated by the Subcontract. It may be that the effect of both the Arbitration Act and the International Commercial Arbitration Act is that the latter prevails, but that is the result of applying the legislation to the existing facts. In my view it does not make the notice issued by APJV a nullity. But in any event, that is not my decision to make.

That will be up to the Arbitration Panel which under the legislation and case law has the right to determine all issues including those relating to its jurisdiction: Epcor Power LP v Petrobank Energy and Resources Ltd, 2010 ABCA 378 . Therefore, there must be an arbitration to at least determine that issue and that argument fails. [ 17 ] Furthermore, in my opinion, the Parties attorned to the jurisdiction of this Court. [ 18 ] The Parties agreed in the Subcontract that any dispute would go to arbitration in Calgary.

Further, they agreed that arbitration must be conducted under either the Arbitration Act as chosen by the Parties to the Subcontract or under the International Commercial Arbitration Act because of the effect of the legislation. The only Court which can exercise the functions which are the subject matter of the orders under attack is the Alberta Court of Queen’s Bench.

Furthermore, under the Stand Still Agreement the attornment to this Court’s jurisdiction is very specific. [ 19 ] One of the main purposes of r 11.25 is that this Court, prior to service, can make a preliminary determination as to whether it is appropriate for this Court to take jurisdiction over the proposed Defendant and satisfy itself that there is a real and substantial connection between Alberta and the facts on which the claim in the action is based.

This concern does not exist where the parties to an arbitration clause or agreement have already agreed to submit to this Court’s jurisdiction. [ 20 ] Daewoo argues that the Stand Still Agreement applies only to that agreement and not to the Subcontract. But the Stand Still Agreement relates to the disputes arising under the Subcontract and it effectively amends the Subcontract.

The Stand Still Agreement, like other agreements of its sort, is designed to provide a breathing space between the time of the disputes arising and their formal resolution by providing for settlement discussions and then for a bridge from those discussions, if unsuccessful, to the dispute resolution process which in this case was arbitration.

Accordingly, the Parties agreed that if the matter did not settle, the Parties will resort to the arbitration process referred to in the Subcontract and the Parties specifically attorned to this Court’s jurisdiction for that purpose. [ 21 ] Alternatively, the Subcontract itself provides for arbitration in Calgary, Alberta and under the International Commercial Arbitration Act this Court has exclusive jurisdiction to deal with matters of consolidation and appointment of arbitrators if the parties cannot agree. [ 22 ] Accordingly, the application is dismissed and the orders of July 5 and July 20, 2017 are affirmed. [ 23 ] APJV shall have its costs.

Heard on the 18 th day of October, 2017. Dated at the City of Calgary, Alberta this 20 th day of November, 2017. A.D. Macleod J.C.Q.B.A. Appearances: Warren Foley and Christopher Abtosway for the Plaintiff/Respondent Phillip J. Scheibel for the Defendant/Applicant