Arbitration Or Insolvency Court? A Québec Ruling On Resolving Disputes In CCAA Proceedings

The tension between upholding arbitration agreements and pursuing the efficiency of the single proceeding model remains one of the defining challenges in modern restructuring law. Further to our previous article on the lasting impact of the Petrowest decision on subsequent case law, including the Mercy Falls decision, courts have shown increased willingness to bring arbitration disputes within Bankruptcy and Insolvency Act and Companies' Creditors Arrangement Act (the "CCAA") insolvency proceedings in pursuit of the single proceeding model. However, just 45 days after the Mercy Falls decision was released, the Québec Superior Court (the "Court") issued a decision that appears to provide an outer limit on how Petrowest may be applied to override arbitration clauses.