Peace River Hydro Partners, et al. v. Petrowest Corporation, et al.

(British Columbia) (Civil) (By Leave)


Bankruptcy and Insolvency — Receivership — Commercial law — Contracts — Arbitration agreements — Receiver and trustee-in-bankruptcy of debtor companies claims contracting parties owe amounts to debtor companies — Receiver commences action — Agreements in issue contain mandatory arbitration clauses — Contracting parties seek stay of proceedings and arbitration — Whether receiver bound by arbitration clauses — Whether doctrine of separability allows receivers to disclaim arbitration clauses within agreements while pursuing rights under same agreements — Arbitration Act, RSBC 1996, c. 55, s. 15.


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The parties entered into a partnership agreement and a guarantee and cross-indemnity agreement. The partnership, Peace River Hydro Partners, commenced work. It subcontracted some work to Petrowest Corporation and its affiliates pursuant to purchase orders and it entered into a subcontract agreement with Petrowest Civil Services LP. Petrowest Corporation and its affiliates became insolvent. Ernst and Young Inc. was appointed as their receiver. Ernst & Young Inc. assigned Petrowest Corporations’s affiliates into bankruptcy and thereafter acted as both a trustee in bankruptcy and a receiver. Petrowest Corporation and its affiliates commenced a civil claim alleging amounts are owed to them under the general partnership agreement, the guarantee and cross-indemnity agreement, the purchase orders, and the subcontract agreement. These agreements contain arbitration clauses. The appellants applied under s. 15 of the Arbitration Act, RSBC 1996, c. 55, to stay the proceedings so that the matters could be referred to arbitration. The Supreme Court of British Columbia dismissed the application. The Court of Appeal dismissed an appeal.

Lower Court Rulings

December 20, 2019
Supreme Court of British Columbia

S189418, 2019 BCSC 2221
Declaration of entitlement to disclaim arbitration agreements
November 30, 2020
Court of Appeal for British Columbia (Vancouver)

CA46638, 2020 BCCA 339
Appeal dismissed