Alberta Court Finds Non-Party Bound To Arbitrate When Enforcing Contractual Warranties

In Husky Oil Operations Limited v. Technip Stone & Webster Process Technology Inc, and Technip USA Inc., 2023 ABKB 545, the Alberta Court of King's Bench found that a beneficiary of contractual warranties may be bound to arbitrate disputes arising from those contractual warranties, even though not a party to that contract.

The Court determined that third-party beneficiaries of a contract can choose to enforce their rights, but that by taking up these contractual rights they also take up the associated contractual burdens. As a result, by failing to arbitrate within the contractual time period, the beneficiary's right to dispute the warranties had expired.

Background

The plaintiff, Husky Oil Operations Limited (Husky), was the project owner. There was a contract between the general contractor and Technip Stone & Webster Process Technology Inc. (Technip), a subcontractor (the Contract). Husky was the beneficiary of contractual warranties provided by Technip set