Caught by the Clause? The Expanding Reach of Arbitration Clauses in Construction Contracts

Introduction

In Arsopi v. ARVOS GmbH, 2026 ABCA 49, the Alberta Court of Appeal considered whether a contribution and indemnity claim brought under Alberta's Tort-Feasors Act, RSA 2000, c T-5, could proceed in the Alberta courts despite an arbitration agreement between the parties. 

The decision provides useful guidance on how Alberta courts may approach arbitration clauses in construction disputes involving multiple parties and overlapping claims.

Background

Orica Australia Pty Ltd (“Orica”) contracted ARVOS GmbH ("ARVOS")  to design and manufacture equipment. ARVOS entered into a subcontract with Arsopi-Industrial Metalurgicas Arlindo S. Pinho, LDS ( collectively, “Arsopi”) for the fabrication of industrial equipment. The subcontract contained a broad arbitration clause, which provided:

"All disputes arising out of or in connection with the Contract shall be finally settled under the Rules of Arbitration of the International Chamber of Commerce by three arbitrators appointed in accordance with the said Rules of Arbitration. The place of arbitration shall be in Frankfurt am Main, Germany."

After the equipment was installed, Orica commenced an action against ARVOS relating to alleged deficiencies in the equipment. ARVOS subsequently brought a third-party claim against Arsopi asserting claims in contract and tort, as well as a claim for contribution and indemnity under Alberta's Tort-Feasors Act. Relying on the contractual arbitration clause, Arsopi applied to stay the third-party claim in favour of arbitration.

Chambers Justice Decision

In Orica Canada Inc. v. ARVOS GmbH, 2024 ABKB 97, the Chambers Justice considered whether a third-party claim commenced by ARVOS against Arsopi should be stayed in favour of arbitration.

At the hearing of the application, the third-party claim was divided into three categories:

• A tort claim between ARVOS and Arsopi;
• A breach of contract claim arising from the subcontract; and
• A contribution and indemnity claim under Alberta's Tort-Feasors Act (the "TFA Claim").

The Chambers Justice concluded that the tort and contract claims fell within the parties' arbitration agreement and were therefore required to proceed through arbitration. However, the Chambers Justice declined to stay the TFA Claim.

The Chambers Justice found that the TFA Claim arose by operation of Alberta's Tort-Feasors Act and was premised on an alleged cause of action between Orica and Arsopi. Because Orica was not a party to the arbitration agreement, the Chambers Justice concluded that the TFA Claim fell outside the scope of the arbitration clause and therefore could proceed before the Alberta courts.

The Court of Appeal Decision

Disagreeing with the Chambers Justice's characterization of the TFA Claim, the Court of Appeal allowed the appeal. The Court of Appeal emphasized that a contribution and indemnity claim under the Tort-Feasors Act belongs to the defendant seeking contribution, not to the plaintiff who commenced the underlying action.

The Court relied on Kaverit Steel and Crane Ltd v Kone Corporation, 1992 ABCA 7, which recognized that arbitration clauses using similar broad language are not necessarily limited to pure breach of contract claims. The analysis requires the Court to look at the substance of the dispute and its relationship to the underlying agreement.

Applying that approach, the Court found that the TFA Claim was sufficiently connected to the subcontract between ARVOS and Arsopi. Although the claim arose under the Tort-Feasors Act, the contractual relationship between the parties formed part of the factual and legal foundation of the dispute. 

The Court therefore concluded that the TFA Claim fell within the scope of the arbitration clause and should be stayed in favour of arbitration. The Court reasoned that the parties had agreed to arbitrate “all disputes arising out of or in connection with the Contract,” language broad enough to capture disputes connected to the subcontract and not limited to rights and obligations found within the four corners of the subcontract.

As a result, ARVOS could still seek contribution from Arsopi, but the dispute had to be resolved through arbitration rather than in the Alberta courts.

Takeaways

In the construction context, where disputes often involve multiple parties and overlapping obligations, careful drafting of arbitration provisions can play an important role in determining how and where future disputes will be resolved.

Broadly worded arbitration clauses may be found to apply to a wider range of disputes connected to the parties' contractual relationship than the parties originally anticipated. Parties should carefully consider the language used in arbitration provisions, and seek legal advice to ensure those clauses operate in the manner intended.

If you have questions about this decision, or any other construction law matters, please connect with the authors or our Construction Group.