SCC In Recent Petrowest Decision Says Arbitration And Insolvency Not As Different As They May Seem

On November 10, 2022, the Supreme Court of Canada (SCC) released its much awaited decision in Peace River Hydro Partners v. Petrowest Corp. (Petrowest). As we have discussed in previous blog posts including a recent piece on the Ontario Court of Appeal's decision in Mundo Media Ltd. (Re), Canadian courts have been faced with the tension between arbitration, a consensual method of dispute resolution where parties can customize their process and select their own decision-maker, and insolvency, where disputes involving the debtor are involuntarily consolidated in a single insolvency proceeding. In Petrowest, the SCC provided further clarity on circumstances in which the single-proceeding insolvency model will render an arbitration agreement "inoperative". More specifically, the SCC refused to stay the civil lawsuit of a receiver in favour of multiple arbitration agreements. Instead the arbitration agreements were deemed to be inoperative to facilitate the insolvency