Your arbitration clause may be broader than you anticipated. In Arsopi v ARVOS GmbH (“Arsopi“),[1] the Alberta Court of Appeal (the “Court”) confirmed that a clause covering “all disputes arising out of or in connection with” a contract can capture statutory indemnity claims under the Tort-Feasors Act, even if those claims were never contemplated at the time of contracting.
For construction companies and in-house counsel, Arsopi serves as a reminder to carefully consider dispute resolution clauses and their broader implications for project disputes, knowing parties will be held to the bargains they negotiate.
Background
The respondent, ARVOS GmbH (“ARVOS”), had contracted with another party, Orica Australia Pty Ltd. (“Orica”) for the design of certain equipment that was eventually installed in a plant in Alberta.[2] ARVOS had entered into a subcontract with the appellant, Arsopi, to manufacture the equipment.[3] The subcontract between ARVOS and Arsopi included, by reference, an arbitration clause which stipulated that “[a]ll disputes arising out of or in connection with” the contract had to be arbitrated under German law.[4]
Orica’s Canadian entity later initiated a negligence claim against ARVOS, and ARVOS proceeded to commence a third-party claim against Arsopi (the “Third Party Claim”) consisting of:
- a tort claim between ARVOS and Arsopi (the “Tort Claim”);
- a Tort-Feasors Act (“TFA“)indemnity claim as between Orica and Arsopi (the “TFA Claim”); and
- a breach of contract claim between ARVOS and Arsopi (the “Contract Claim”).[5]
The chambers judge’s ruling
One of the issues before the chambers judge was whether the entirety of the Third Party Claim had to be stayed pursuant to section 10 of the International Commercial Arbitration Act (the “ICAA“).
The chambers judge ultimately concluded that while the Tort Claim and Contract Claim were subject to the German arbitration clause and therefore had to be stayed, the TFA Claim was rooted in a cause of action between Orica and Arsopi, and therefore did not fall within the scope of the arbitration clause.[6] Arsopi appealed this decision, arguing that the TFA Claim was also subject to the arbitration clause.
What did the Alberta Court of Appeal decide?
The Court began by stating that the chambers judge had erred in characterizing the TFA Claim as being between Orica and Arsopi.[7] In the Court’s view, the TFA Claim was a right that belonged to ARVOS because:
- A plaintiff’s claim is distinct from the rights and remedies afforded to a defendant tortfeasor under section 3(1)(c) of the TFA.[8] The purpose of this statutory provision is to allow for one defendant tortfeasor to claim indemnification or contribution from another tortfeasor (including a third party).[9]
- In a TFA claim, the burden of proof is on the defendant tortfeasor to prove that the third-party tortfeasor is liable for the damages that the plaintiff has claimed.[10] The plaintiff does not have the burden of proving that the third party tortfeasor is liable to it – its action lies against the defendant tortfeasor, not the third party.[11]
- The right to contribution under the TFA only becomes available to a defendant tortfeasor when it pays more than its fair share of damages.[12]
- While a TFA claim may be joined with the main claim due to reasons of convenience, it is ultimately not dependent on a plaintiff’s claim.[13]
Finding that the TFA Claimwas not a claim between Orica and Arsopi, the Court then turned to the question of whether the TFA Claimwas governed by the arbitration clause, or whether it was too distant from the subcontract between ARVOS and Arsopi.
The Court’s test: “Arising out of or in connection with”
The Court referred to the Kaverit Steel and Crane Ltd v Kone Corporation (“Kaverit“) decision,[14] in which it was determined that an arbitration clause applying to “[a]ny dispute arising out of or in connection” with an agreement captured any disputes that were rooted in the contract itself.[15] The court in Kaverit further noted that the arbitration clause was not limited to breach of contract claims; tort claims could also be included.[16]
Applying the principles enunciated in Kaverit, the Court found that determining whether a particular claim falls within the scope of an arbitration clause requires a contextual consideration of the claim being advanced and its relation to the terms of the contract.[17]
In this case, the arbitration clause in the subcontract between ARVOS and Arsopi was worded broadly enough to encompass the TFA Claim, as the existence of the subcontract was a necessary element in determining the TFA Claim.[18]
As a result, the TFA Claim was stayed pursuant to section 10 of the ICAA.[19]
Practical takeaways for contract drafting
Arbitration clauses are not subject to special rules of interpretation and will be considered like other provisions of an agreement, in accordance with ordinary principles of contractual interpretation. If parties intend to refer only specific categories of disputes to arbitration, specific wording must be included in the arbitration clauses to support that interpretation. General, or all-encompassing language will encourage broad interpretation, with potentially unintended consequences affecting the ability to ensure that all relevant parties are obliged to participate in the same proceedings when issues arise on a project.,
If you are negotiating construction contracts, managing disputes under existing contracts, or concerned about how Arsopi may affect your current arrangements, contact a lawyer from our Construction and Infrastructure Group to discuss your exposure and ensure your arbitration clauses reflect your actual risk allocation preferences.
[1] 2026 ABCA 49 [Arsopi].
[2] Ibid at para 5. For a more fulsome discussion of the chambers decision, please see our previously-written piece here.
[3] Ibid at para 6; Orica Canada Inc v ARVOS GmbH, 2024 ABKB 97 at para 26 [Orica].
[4] Ibid.
[5] Orica, supra note 2 at para 12.
[6] Ibid at paras 67–68.
[7] Arsopi Appeal, supra note 1 at para 35.
[8] Ibid at para 37.
[9] Ibid at paras 37–38.
[10] Ibid at para 39.
[11] Ibid.
[12] Ibid.
[13] Ibid at paras 41–42.
[14] Ibid at para 48 citing 1992 ABCA 7 [Kaverit].
[15] Kaverit, supra note 14 at paras 30, 38.
[16] Ibid at paras 25–26, 30.
[17] Arsopi, supra note 1 at para 52.
[18] Ibid at paras 54, 56.
[19] Ibid at para 58.
