In one of the first decisions to enforce the arbitration rules of the Grain and Feed Trade Association (GAFTA), the B.C. Supreme Court has stayed a civil claim seeking damages in a contractual dispute regarding the quality of green lentils which were shipped from Canada to Iran. The defendant argued that any dispute as to the quality of the goods ought to be first brought to arbitration under GAFTA rules, which the defendant said were incorporated into the sales contracts. The plaintiff took the position that the rules were not clearly incorporated, and the Supreme Court should first determine whether a binding arbitration agreement existed.
The Supreme Court sided with the defendant, holding that the plaintiff’s position was contrary to the “competence-competence” principle which confirms the authority of arbitrators to determine their own jurisdiction. Justice Milman held that any determination as to whether the GAFTA arbitration provisions were successfully incorporated into the sales contracts ought to be made by arbitrators who have specialized expertise in the industry, and accordingly stayed the proceedings under the International Commercial Arbitration Act.
Mark Underhill and David Wu acted for the defendant. Arvay Finlay LLP has experience in commercial arbitration matters, including stay and appeal proceedings under the Arbitration Act and the International Commercial Arbitration Act.
The full judgment can be found here.