ContractsProf Blog

Editor: Myanna Dellinger
University of South Dakota School of Law

Sunday, December 11, 2005

Arbitration and Fraudulent Misrepresentation

Quebec_flag It's a rare contract case where a creative lawyer can't plead fraudulent misrepresentation as a claim.  Where an international sales agreement has a broad arbitration clause, are fraudulent misrepresentation clauses within its scope?  Yes, said the Quebec Superior Court in a recent decision.  Lawyer Antonin I. Pribetic of Ontario's Steinberg Morton Frymer LLP takes a critical look in Case Comment on Sonox Sia c. Albury Grain Sales Inc.  Here's the abstract:

The interplay of the applicability and enforceability of an arbitration clause in the context of a fraudulent mispresentation claim was recently considered by the Quebec Superior Court in Sonox Sia c. Albury Grain Sales Inc. Regrettably, as is so often the case in Canadian jurisprudence, the Quebec Superior court failed to refer to any CISG caselaw or scholarly commentary on the defendant's motion challenging jurisdiction.  Specifically, the court failed to refer to the impact of the allegation of fraud vis-a-vis the validity exclusion under Article 4(a) of the CISG.  Relying on the strict wording of the arbitration clause is less than satisfactory in international sales contract cases, particularly since fraudulent misrepresentations are rarely within the reasonable expectation of the parties when entering into a contract.  Whether or not the fraud vitiated the contract was an issue deferred to the arbitrator.  Nevertheless, the Sonox decision is noteworthy on the scope and applicability of arbitration clauses for international sale of goods contracts where the CISG is designated as the choice of law by the contracting parties.

[Frank Snyder]

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