When Does A Party's Conduct Impact Its Ability To Enforce An Arbitration Agreement And Stay A Court Proceeding?

In CSI Toronto Car Systems Installation Ltd. v. Pittasoft Co., Ltd., 2021 ONSC 5117 ("Pittasoft"), Justice Sharma of the Ontario Superior Court of Justice refused to grant a stay of proceedings in favour of arbitration due to the conduct of the defendant, which estopped them from enforcing their arbitration agreement.

Why This Decision Matters 

A party cannot rely on an arbitration clause "as if its prior conduct had not occurred."¹ Here, Pittasoft, the defendants in this action, began a claim in Korea against the plaintiff, CSI Toronto Car Systems Installation Ltd ("CSI"). The court invoked estoppel by conduct principles from both local and foreign jurisprudence to support its finding that a party's conduct may preclude its ability to enforce an arbitration clause to its benefit later.