In this Application, the Third Party Defendants, (“Arsopi”), sought a Stay or, in the alternative, a dismissal of the Third Party Claim filed against them by ARVOS, under the International Commercial Arbitration Act, RSA 2000, c I-5. ARVOS, primarily operating in Germany, had initiated claims against Arsopi, a Portuguese entity, stemming from a contract governed by German law, which included an arbitration clause. Arsopi contended that the claims fell within the scope of this arbitration agreement, necessitating a referral to arbitration and a Stay of the Third Party Claim. While not plead in its Application, Arsopi urged the Court to strike the Third Party Claim in whole or in part.

The Court considered the evidence presented, including expert testimony on German law regarding the arbitration clause, and found the clause to be valid, broad, and encompassing of the disputes in question. Despite this, the Court identified one claim (“TFA Claim”) arising purely under Canadian law and not subject to the arbitration agreement, thus remaining within the Court's jurisdiction.

The Court also examined the applicability of German limitations law, acknowledging that the claims, if arbitrated in Germany, would likely be barred by limitations periods. However, the Court found that this factor did not invalidate the arbitration agreement itself, which remained operative and enforceable.

Arsopi's late-stage request to strike the claims, rather than stay them due to alleged limitations issues, was denied due to procedural fairness and lack of proper notice to ARVOS. Specifically, Arsopi did not appropriately signal this intent in its Application, failing to invoke Rule 3.68, which pertains to striking out a claim for not disclosing a reasonable cause of action or for being otherwise abusive of the Court process.

Furthermore, Arsopi did not adequately plead the Limitations Act, RSA 2000, c T-5 (“Limitations Act”) or address limitations law. The Court noted that the procedural oversight was significant as Rule 13.6(3) and the Limitations Act require explicit pleading of a limitations defence, ensuring parties are not taken by surprise.

Consequently, the Court directed the parties to arbitration for the respective claims pursuant to the arbitration clause, while the TFA Claim was left to be resolved in Court.