Canada / 02 July 2008 / Canada, Court of Queen's Bench of Alberta / Bad Ass Coffee Company of Hawaii Inc. v. Bad Ass Enterprises Inc., Attitude Coffee Corporation and Ron Plucer / 0501 12165
| Country | Canada |
| Court | Canada, Court of Queen's Bench of Alberta |
| Date | 02 July 2008 |
| Parties | Bad Ass Coffee Company of Hawaii Inc. v. Bad Ass Enterprises Inc., Attitude Coffee Corporation and Ron Plucer |
| Case number | 0501 12165 |
| Applicable NYC Provisions | V | V(1) | V(1)(c) | V(2) | V(2)(b) |
| Source |
2008 ABQB 404 | online: CanLII |
| Languages | English |
| Summary | Bad Ass Coffee Company of Hawaii Inc. ("BAH") and Bad Ass Enterprises Inc. ("Enterprises") concluded several agreements under a franchise arrangement, through which Enterprises became developers of franchise operations and distributors of Bad Ass brand coffee products in Alberta. A director of Enterprises signed personal guarantees for payment under these agreements. However, these guarantees were not notarized, in violation of the Guarantees Acknowledgment Act of Alberta ("GAA"). A dispute arose out of three agreements, each of which contained clauses providing for arbitration in Utah. BAH filed a request for arbitration, but Enterprises objected to the proceedings. BAH filed a petition with the U.S. District Court for the District of Utah for an order compelling arbitration of the dispute. The Court ordered that the arbitration should proceed. After participating in the pre-hearing conference, Enterprises sought to withdraw from the proceedings as it objected to the jurisdiction of the tribunal and declared that they would not participate in the arbitration hearing. The sole arbitrator then decided the case in favor of BAH. After BAH obtained confirmation of the award through a judgment by the Utah District Court, it successfully applied for enforcement of this judgment in Alberta. Enterprises appealed against this judgment, arguing that (i) the enforcement of the award would violate public policy in Alberta because the guarantees were void under the GAA, and (ii) enforcement should be denied pursuant to Article V(1)(c) because the award exceeded the scope of submission to arbitration by addressing various fees charged by the franchisor that the parties' agreement specifically excluded from arbitration. The Alberta Court of Queen's Bench dismissed the appeal. According to the Court, the purpose of the GAA is to protect unsophisticated borrowers from unexpected debts. While it considered that this purpose is "a fundamental value" of Alberta, it should be applied against the background of the concrete facts of each case. The director of Enterprises was a businessman who was very familiar with financial instruments and knew what obligation he was undertaking, and therefore the breach of the GAA would not support a public policy defense. The Court considered that this conclusion would also be reached by applying Article V(2)(b) NYC. The Court rejected Enterprises' defense to enforcement based on Article V(1)(c), noting that the dispute involved the complete breakdown of the parties' business relationships, and not specific fees, and therefore the arbitrators had not exceeded their jurisdiction. |
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Attachment (1)
 Original Language Adobe Acrobat PDF |
