Justin Bieber is making news again, but this time it is not because of a hit song or his usual antics. In the recent Quebec Superior Court decision in 9302-7654 Quebec Inc v Bieber (2017 QCCS 1100), the Canadian pop star's lawyers successfully convinced the court that a party promoter's claims of defamation and breach of contract were subject to an arbitration clause entered into between the Canadian promoter and the pop star's US-based agent. The court held that there was a sufficient agency relationship to make any personal claims against Bieber subject to international arbitration pursuant to that agreement.
Bieber is a Canadian pop artist and one of the most widely followed public figures across almost every major social media platform. Plaintiff Team Productions is an event promoter based in Montreal. Team Productions was in charge of organising a 2015 event at a Montreal beach club that would feature an appearance by Bieber. The event was to celebrate the 18th birthday of celebrity Kylie Jenner.
Team Productions entered into a contract with California booking agency Mr Smith Entertainment Inc to have Bieber appear at the event and promote it on his social media platforms. The contract included an arbitration clause which stated: "Arbitration, all disputes arising under, concerning relating to or touching on this agreement will be submitted to binding arbitration in Los Angeles, California before a single arbitrator for prompt resolution."
A similar, but not identical, contract was reached between Mr Smith and BT Touring LLC – a company acting on behalf of Bieber – for services of Justin Bieber. The choice of law and arbitration clauses were identical to the first agreement.
A dispute concerning the alleged lack of promotion from Team Productions eventually led to Bieber's unilateral cancellation of his appearance. On the morning of the event, Bieber tweeted to his 80 million Twitter followers: "Montreal due to the promoter of today's event breaking his contract and lying I will not be able to attend today's event. I'm sorry". (The Quebec court left it unanswered whether this tweet was the impetus for his subsequent hit song "Sorry".)
Team Productions then filed suit against Bieber personally, claiming the message to be false and defamatory. It claimed:
- C$650,000 in lost earnings;
- damage to its reputation; and
- punitive damages.
Bieber responded by relying on the arbitration clause signed by his agency, Mr Smith.
Relying on a series of Supreme Court decisions, the Quebec Superior Court first reiterated that the Quebec Civil Code and the Code of Civil Procedure recognise that the court must decline jurisdiction if the parties had agreed to arbitrate the dispute. It also reiterated that where an arbitration clause exists, any challenges to the arbitrator's jurisdiction must initially be referred to the arbitrator, thereby upholding the well-established competence-competence principle. If the application to the court requires a review of evidence, the court has no discretion and shall refer the matter to arbitration. A court will have the exceptional opportunity to consider the applicability of the arbitration clause to the dispute only where:
- the application concerns only a question of law; or
- a superficial examination of the documents can answer a factual question.
In this case, the court considered that a minimal amount of factual enquiry was required and therefore it could answer the question of jurisdiction.
The court then considered Team Productions' argument that its lack of a direct contractual relationship with Bieber led to an absence of legal relationship between them as regards the arbitration clause.
The court affirmed that while Bieber did not personally sign the first agreement, Mr Smith was acting as his agent, which therefore created a legal relationship between the parties. The first contract – the purpose of which was to engage the artist – expressly provided that Mr Smith was acting on behalf of Bieber. Bieber then confirmed this agency relationship by signing the second contract with Mr Smith. In addition, this second contract provided that all obligations fell on the artist and Mr Smith could not be held liable for any breaches that may occur. As such, Mr Smith's contract with Team Productions could be relied on by Bieber and the arbitration clause was binding on all parties.
The court then turned to the second question of whether Bieber's tweet and the claim for defamation fell within the scope of the arbitration clause. It held that the clause used broad and inclusive wording, and that arbitration clauses must receive a liberal interpretation under Quebec law, which is consistent with the case law across all Canadian provinces. The court went on to distinguish the present case from other similar cases where defamation lawsuits could not be qualified as originating from a contractual relationship. Although the essence of the claim rested on defamation, in this instance the court found that there was a sufficient connection between the arbitration clause and the tweet as it was linked to the breach of contract and sent on the morning of the event. It also referred to a non-disparagement clause contained in the contract.
On that basis, the court held that Bieber and Team Productions were bound by the arbitration clause signed by Bieber's agency and therefore referred the dispute to arbitration in California.
Bieber's foray into the Quebec courts on issues of international arbitration law and practice provides another example of Canadian courts' continued deference to, and assistance of, the arbitral process. The case confirms that the competence-competence principle is alive and well in Quebec, as it is in the rest of Canada, and that courts will take a broad view of the scope of arbitration provisions.
Bieber's tale also sets out some of the factors that Canadian courts will consider when deciding whether a sufficient agency relationship exists in order to bind a third party to an arbitration agreement. These include:
- whether the capacity as agent is sufficiently disclosed;
- the nature of the agreement;
- the fulfilment of some of the contract's obligations by the third party; and
- any subsequent acknowledgement by the third party of the agency relationship.
Drafters of arbitration agreements who seek to bind third parties via an agency relationship – whether for an international pop star or not – should attempt to ensure that the contract containing the arbitration agreement takes these factors into account.
For further information on this topic please contact Daniel Grodinsky at Borden Ladner Gervais LLP's Montreal office by telephone (+1 514 879 1212) or email ([email protected]). Alternatively, contact Craig R Chiasson at Borden Ladner Gervais LLP's Vancouver office by telephone (+1 604 687 5744) or email ([email protected]). The Borden Ladner Gervais LLP website can be accessed at www.blg.com.