When businesses choose to arbitrate, they expect a faster, more private alternative to litigation. But, what happens when a party challenges the result? The recent decision in Inter Pipeline Ltd v Teine Energy Ltd, 2024 ABKB 740, sheds light on how Alberta courts manage enforcement, stay and confidentiality issues that can flow from the appeal of an arbitral award. The decision also serves as a reminder that parties to arbitration agreements are free to incorporate rules governing the arbitration process, including any remedies available to a party following the issuance of an arbitral award, into those agreements. 

Background

A dispute arose between Inter Pipeline Ltd (“IPL”), the operator of the Mid-Saskatchewan Pipeline System (“MSPS”), and Teine Energy Ltd (“Teine”), a crude oil shipper, with respect to the application of the “equalization” procedure under the agreement between the parties.  Specifically, Teine alleged that IPL did not follow the proper methodology in determining the compensation owed to Teine for changes in the quality of its crude oil that occurred while the oil was in transit on the MSPS. The parties arbitrated the dispute, resulting in a significant monetary award in Teine’s favour. Teine then applied to the Alberta Court of King’s Bench to enforce the award. In response, IPL applied for: (1) permission to appeal the award; (2) a stay of enforcement pending appeal application; and (3) a blanket sealing order over the court record.

Stay and enforcement applications

One key issue that the Court was required to address was the correct legal test for granting a stay of enforcement. 

IPL urged the Court to adopt a two-part test applied in a line of Ontario cases. The two-part test requires the applicant to show only that the appeal raises a genuine issue, that there is a comparative hardship if the stay is not granted and that the status quo should be maintained. Notably, unlike the tripartite test, this approach does not include a requirement to show irreparable harm. 

Teine, on the other hand, asked the Court to apply the traditional tripartite test from RJR-MacDonald Inc v Canada (AG) (“RJR”), which Alberta courts routinely apply when deciding whether to grant a stay. That test requires the applicant to show:

  1. There is a serious issue to be tried;
  2. They will suffer irreparable harm if enforcement proceeds; and
  3. The balance of convenience favors a stay.

Although not explicitly stated in the jurisprudence from Alberta and British Columbia, the use of the tripartite test stems from the presumption that the decision is correct, and that, as such, “a stay ought not to be granted easily.” The Court found this approach to be principled and consistent with both Alberta’s Arbitration Act and the approach taken by Alberta courts to stays of administrative and lower court decisions. 

By contrast, the Court found that Ontario’s “stay-friendly” approach was not principled, and appeared to be influenced by the automatic stay of enforcement rule under the Ontario Rules of Civil Procedure.  Thus, an Ontario judge might assume that a party was not entitled to benefit from a first-instance decision until all appeals had been exhausted. This is not the case in Alberta, where the Rules of Court do not provide for an automatic stay, and the default approach is that a judgment becomes enforceable from pronouncement unless a stay of enforcement is granted. 

Applying the tripartite test, the Court acknowledged that IPL’s appeal raised a serious issue, however, its claim of irreparable harm was limited to financial inconvenience, namely a reduced ability to reinvest capital if the award had to be paid immediately. This did not meet the threshold for irreparable harm since it was of a kind that monetary compensation could adequately remedy, particularly for a large and well-capitalized company like IPL.

On the balance of convenience, the Court found that both parties  were financially well-resourced and capable of absorbing the impact of enforcement. Thus, with no compelling reason to stay enforcement, the Court allowed  for the enforcement of the award.

In arriving at his decision, Justice Feasby also pointed out that parties who want to stay enforcement pending appeal could choose to include such a provision in their arbitration agreement. Thus, the absence of such a provision further weighed against IPL’s request.

Confidentiality and sealing order

IPL also sought a blanket sealing order over the court file, arguing that it contained sensitive business and third-party information. Teine agreed that some limited redactions were appropriate, but opposed a full sealing of the court file.

Here, the Court turned to the framework set out in Sherman Estate v Donovan (“Sherman Estate”), which requires a party to show:

  1. That court openness poses a serious risk to an important public interest;
  2. That a sealing order is necessary to prevent this risk (and redactions would not suffice); and
  3. That the benefits of the sealing order outweigh the harm to the principle of open courts.

Justice Feasby accepted that protecting the confidentiality expectations of third-parties could be a legitimate public interest, and ordered the redaction of third party confidential information.  However, IPL’s broader push for a blanket sealing order did not meet the high threshold required. The Court stressed that once a dispute enters the public court system, the open courts principle becomes the default. Parties do not get to extend arbitration privacy into court without meeting a high legal bar.  

The Court also permitted the parties to propose further targeted redactions where third-party confidentiality truly warranted it.

This decision makes clear that sealing orders are an exception, not the rule, even in the case of appeals of private arbitrations. Further, although the protection of privacy is important, absent significant concerns with respect to confidential third party information, it alone is not sufficient reason to grant a sealing order. 

Tips for drafters

This case offers some drafting tips for parties that have a specific interest in safeguarding the privacy of the arbitration or that wish to limit enforcement rights until appeals have been exhausted. Specifically:

  • If parties wish to avoid the automatic enforcement of an award in a domestic arbitration while an appeal is outstanding, they need to include that explicitly in the agreement to arbitrate, otherwise the party appealing the award will have to satisfy the tripartite test to stay enforcement.
  • If confidentiality is a priority, the agreement to arbitrate should set out how confidential information should be handled, and could even provide for a private appeal.

To the extent these protections align with the interests of the parties to an arbitration agreement, they can reduce uncertainty and cost, help avoid procedural disputes, and ultimately give parties more control over the resolution of their disputes.

Conclusion

This decision provides three key takeaways:

  • Arbitral awards will typically be enforced immediately unless compelling reasons exist to grant a stay. Parties that wish to stay enforcement in Alberta will be required to meet all three parts of the RJR-test, including the often difficult requirement of proving irreparable harm, which cannot simply be financial inconvenience.
  • Once parties resort to the courts to resolve post-award issues, the open courts presumption will apply, and a sealing order will only be granted where there is a serious risk to an important public interest, such as the protection of confidential third party information, and no reasonable alternative measures exist.
  • When drafting arbitration clauses, parties should consider issues around timing of enforcement and treatment of confidential information, and, if necessary, include specific provisions to address those issues.

In short, this case offers both legal clarity and practical guidance. For businesses that choose to arbitrate disputes, it highlights the importance of forward-looking contract design and a clear understanding of the legal landscape governing post-award enforcement and transparency.

Should you have any questions, or have a civil or commercial dispute, please do not hesitate to contact a member of Miller Thomson’s Construction Litigation Team.