



COURT OF APPEAL
        FOR BRITISH COLUMBIA




Citation:



Instrumenttitehdas
                Kytola Oy v. Esko,









2004 BCCA
            25




Date: 20040115





Docket: CA030817

Between:

Instrumenttitehdas
      Kytola Oy

Appellant

(
Plaintiff
)

And

Esko Industries
      Ltd.

Respondent

(
Defendant
)












Before:



The Honourable
            Mr. Justice Braidwood





The Honourable
            Mr. Justice Mackenzie





The Honourable
            Mr. Justice Low




Oral Reasons for Judgment




R.J.C. Deane
B.A. Rebane



Counsel for the Appellant





K. Wright



Counsel for the Respondent





Place and
            Date:



Vancouver, British Columbia





January 15, 2004







[1]

BRAIDWOOD,
          J.A.
: We have heard a preliminary application
          as to whether or not two of the points advanced on this appeal can be
          heard by this Court on the basis they were not raised below, and, further,
          that if they had been raised below counsel would have conducted the matter
        in a different manner.

[2]

We
        accede to that argument and we will not, at this stage, hear the two
      points that are identified.  These reasons at this stage are very short
      and, depending on how the balance of the case is argued, this point will
      be elaborated
      further later.

(submissions by counsel)

[3]

LOW,
          J.A.
: This is an appeal from an order staying
          proceedings in this action for debt under s. 8(1) of the
International
          Commercial Arbitration Act
, R.S.B.C. 1996, pending arbitration
          in Finland under the law of that country.  The issue between the parties
          is whether the contract between them containing an arbitration clause
          was terminated pursuant to notice when the debt arose or whether the
          debt was incurred during a time extension of the contract.  If the
          latter is the case the arbitration clause would still be operative
          and the trial
        court would not have jurisdiction.

[4]

The
        chambers judge determined that because of conflicts in the evidence it
        was not clear that the contract was terminated and that the debt was
      not incurred pursuant to the contract containing the arbitration clause.  In
        so doing, he applied this Courts decision in
Gulf Canada Resources
        Ltd. v. Arochem International Ltd.
(1992), 66 B.C.L.R. (2d) 113
        (C.A.), a case that is directly on point.  The appellant did not seek
        a five judge panel to attempt to persuade this Court that the Gulf Canada
      case was wrongly decided and ought not to be followed.

[5]

I
        am not persuaded that either the evidence or the law leads to the clear
        conclusion that the contract containing the arbitration clause was not
        continuing when the debt in question was incurred.  Therefore I would
        not give effect to the substantive issue raised by the plaintiff appellant
      essentially for the reasons given by the chambers judge.

[6]

I
        would add one thing not mentioned by the chambers judge.  The issue here
        is whether the contract was terminated as of a certain date.  The arbitration
        clause in the contract provides for arbitration to resolve disputes or
        controversies arising out of or in connection with this contract including
        any question regarding its existence, validity or termination.  The
        use of the word termination in that provision suggests that an arbitrator
        in Finland must determine the issue of termination once raised before
        the
      trial court here can assume jurisdiction.

[7]

The
        chambers judge, in his oral reasons, ordered that the defendant respondent
        would recover costs of the action.  I expect that he misspoke.  The stay
        of proceedings did not determine the action.  If an arbitrator in Finland
        decides the termination issue against the respondent the action here
        will continue, therefore I would allow the appeal to the extent only
        of amending
        the order for costs to provide that the issue of costs in the stay application
        will be dealt with by the trial court following the conclusion of the
      arbitration.

[8]

Except
        for this minor amendment of the order under appeal I would dismiss the
      appeal.  I would award costs of the appeal to the respondent.

[9]

BRAIDWOOD,
        J.A.
: I agree.

[10]

MACKENZIE,
        J.A.
: I agree.

The Honourable
      Mr. Justice Braidwood

The Honourable
      Mr. Justice Low


