Executive Summary: Key Legal and Evidentiary Issues

• Dispute centers on whether a broadly worded arbitration clause in a commercial credit insurance policy is a “perfect” clause that ousts the Superior Court’s jurisdiction in favour of arbitration.
• Apparent conflict between an arbitration clause in the “Conditions” section and an exclusive jurisdiction clause in the “Policy Schedule” required contextual contractual interpretation.
• Factual record was very thin (no pre-trial examinations, essentially only the policy in evidence), limiting the Court to a superficial review under the competence-competence principle.
• Alleged abuse of the arbitration clause under article 1437 C.c.Q. turned on whether, in practice, a three-arbitrator panel with equal cost-sharing would be excessively burdensome for Fuze.
• The Court held that, in context, the policy’s arbitration clause governs most coverage disputes while the jurisdiction clause mainly identifies the seat and residual role of Quebec courts.
• Because the alleged abusiveness and the adhesion nature of the contract required a detailed factual inquiry, the Court left these issues to the arbitral tribunal and granted the declinatory exception with costs.

Factual background

Fuze Logistics Services Inc. is a transportation logistics service provider. Atradius Crédito y Caución, S.A. de Seguros y Reaseguros is a credit insurer that issued a trade credit insurance policy in favour of Fuze in October 2021. The policy was intended to cover losses arising when Fuze’s customers failed to pay insured receivables, subject to the monetary limits and conditions set out in the contract. In September 2025, Fuze commenced an action in the Quebec Superior Court against Atradius and its insurance broker, 3322653 Canada Inc. (Gerald Shtull & Associates). Fuze claimed CAD 693,715.80, alleging that Atradius had undertaken to indemnify it for non-payment by certain customers under the policy and had wrongfully refused to honour its obligations despite Fuze’s claims under the contract. The record before the Court on the procedural motion was notably sparse. Apart from the policy itself, there were no prior examinations, no affidavits and no additional exhibits. That scarcity of factual material framed how far the Court could go in assessing both the scope and the alleged abusiveness of the arbitration clause.

The insurance policy and key clauses at issue

The policy was structured as a set of integrated documents: an “Introduction,” a “Policy Schedule,” a “Schedule of Countries,” an “Overview of Conditions,” and a detailed “Conditions” section. The Introduction expressly stated that all of these components formed the complete contract, and the Overview section itself told the insured that it was only a summary and that the full wording was in the Conditions. Within this framework, two clauses sat at the heart of the dispute. First, the arbitration clause appeared in the latter part of the Conditions, in a section entitled “Miscellaneous,” under the sub-heading “Arbitration and Applicable Law.” It provided that “[a]ny dispute or controversy arising out of, in connection with, or relating to this policy shall be submitted to arbitration,” set out a three-arbitrator process, and stipulated that the decision of the majority of the panel would be final and binding. It also limited the arbitrators’ powers by excluding punitive, exemplary, special or consequential damages (including loss of revenue, income or profits), while allowing awards up to the insurer’s maximum policy liability. The clause further stated that arbitration would take place in the location specified in the “jurisdiction” entry of the Policy Schedule and that the parties would share the arbitration costs equally. Second, the jurisdiction clause appeared near the front of the policy in the Policy Schedule, which summarized key commercial terms. It stated that the parties “irrevocably and unconditionally attorn to the exclusive jurisdiction of the courts of the Province or Territory stipulated under the module ‘Applicable Law’ and all courts competent to hear appeals therefrom.” Immediately above this, the applicable law clause indicated that the governing law was that of the province or territory given in the insured’s address, together with the applicable laws of Canada. Fuze contended that this jurisdiction clause conferred exclusive jurisdiction on the Quebec courts, rendering the arbitration clause either ineffective or at least subordinate. Atradius argued that the two provisions were reconcilable and that the arbitration clause was a “perfect” arbitration agreement covering the present dispute.

Procedural posture and Fuze’s objections to arbitration

After being served with Fuze’s action, Atradius brought a declinatory exception, asking the Superior Court to decline jurisdiction and refer the dispute to arbitration pursuant to the policy. Fuze resisted the exception on several grounds. It argued that there was no “perfect” arbitration clause because the policy also contained an exclusive jurisdiction clause in favour of the courts, and that this conflict should be resolved by giving priority to the jurisdiction clause. Fuze said the arbitration clause and jurisdiction clause were irreconcilable, claimed that the issue was merely one of pure contractual interpretation suitable for the Court (rather than for an arbitrator under competence-competence), and invoked article 1432 C.c.Q. to resolve any ambiguity in favour of the adhering party. Finally, Fuze characterized the arbitration clause as abusive under article 1437 C.c.Q., relying in particular on case law in which a similar three-arbitrator clause had been found excessive for a small regional contractor because the arbitration costs essentially nullified the practical value of its claim.

Interpretation of the arbitration clause and jurisdiction clause

The judge began by setting out the well-established principles governing applications to refer disputes to arbitration. Where parties have concluded a “perfect” arbitration agreement—an undertaking in advance to submit disputes to arbitration, with a final and binding award—courts must refer disputes within its scope to arbitration unless the agreement is null. Clauses of this kind are to be interpreted broadly and liberally to foster stability and predictability in commercial arrangements, and the arbitrator’s mandate extends to all matters connected with the dispute. However, arbitration is an exception to the ordinary recourse to the courts, so the parties’ intention to arbitrate must still be discernible from the contract. A clause is “perfect” where it is mandatory, not merely facultative, and excludes parallel resort to the ordinary courts for the disputes it covers. Looking first at the arbitration clause in isolation, the Court found it met these criteria. It used imperative language (“shall be submitted to arbitration”), covered any dispute arising out of or relating to the policy, provided for a final and binding award and was not couched as an optional mechanism. Fuze itself acknowledged that its present claim did not fall within the categories of damages expressly excluded from the arbitrators’ remit. Standing alone, therefore, the clause was a textbook example of a perfect arbitration provision.

Reconciling ambiguity: structure, specificity and effect

The apparent ambiguity arose because the jurisdiction clause, read alone, might suggest that the ordinary courts have exclusive jurisdiction. The Court resolved this by applying standard rules of contractual interpretation and by reading the contract as a whole. The policy documents made clear that the Conditions section contained the full, detailed wording of the cover and that the Policy Schedule was a summary of key terms. The Court emphasized that no single component, including the Schedule, could be read in isolation or given automatic precedence, especially where the Conditions provided the specific operational details of the parties’ rights and obligations. From a structural and logical standpoint, the arbitration clause was more specific than the jurisdiction clause: it carefully defined the category of disputes to be arbitrated, the tribunal’s composition, excluded damage categories and the seat of arbitration. By contrast, the jurisdiction clause was framed at a higher level of generality and did not mention arbitration at all. Importantly, the arbitration clause itself expressly referred back to the jurisdiction entry in the Policy Schedule to identify where the arbitration would take place. The Court inferred that the jurisdiction clause’s main function, in this integrated scheme, was to designate the courts whose territory would serve as the arbitral seat and to identify which courts would hear matters excluded from arbitration and any judicial review of arbitral awards. On this reading, the two clauses were not contradictory. The arbitration clause governed the bulk of coverage disputes like Fuze’s present claim, while the jurisdiction clause preserved the exclusive competence of the provincial courts for matters such as punitive or exemplary damages, loss of profits, and appeals or review of arbitral decisions. Adopting Fuze’s interpretation would effectively erase the arbitration clause from the contract, contrary to the Civil Code principle that clauses should be interpreted so as to give them effect rather than render them nugatory. Because the ambiguity could be resolved through these interpretive tools, the Court held that article 1432 C.c.Q. (which resolves doubts in favour of the adhering party in contracts of adhesion) did not come into play, regardless of whether the policy should ultimately be characterized as a contract of adhesion.

Alleged abusiveness of the arbitration clause

Fuze also attacked the arbitration clause as abusive within the meaning of article 1437 C.c.Q., pointing to its requirement for a three-member arbitral panel and equal cost sharing, and drawing parallels to recent case law where such a clause was held to be excessively burdensome for a small contractor litigating a relatively modest claim. The Court framed the abuse analysis as a mixed question of fact and law: determining whether a clause is “excessive and unreasonable” must consider both its wording and its concrete practical impact on the particular contracting party. Sometimes, a clause may be so onerous on its face that abusiveness can be found on a superficial examination; in other cases, a thorough factual record is needed, including evidence of the parties’ situation and the complexity or duration of the dispute. In this case, the Court distinguished the prior decision on which Fuze relied. There, the contractor was a small regional company, the amount in dispute was about $253,000, the clause required three arbitrators in Montreal with no fast-track or scaling based on claim size, and the claim was factually complex and unlikely to be resolved in a short hearing. Taken together, those features meant that the cost of arbitration would likely consume most or all of the claim, effectively depriving the contractor of a meaningful remedy. By contrast, the current record revealed very little about Fuze’s size or financial capacity and contained no evidence that it was a small regional enterprise. The amount claimed (approximately $693,715.80) was substantially higher than in the earlier case, and Fuze’s own pleadings suggested a dispute driven largely by interpretation of coverage conditions and time-limit exclusions, not an intrinsically long or fact-heavy hearing. On a superficial view, the Court could not simply assume that arbitration costs would be so disproportionate as to nullify Fuze’s claim in practice. It stressed that an arbitration clause of this kind is not abusive “in itself” simply because it calls for three arbitrators and equal cost-sharing; its abusiveness, if any, depends on how it operates in the concrete circumstances of the parties and the dispute. Given the thin evidentiary record, the Court concluded that only a detailed factual inquiry could decide whether the clause is abusive, and that the competence-competence principle required that this inquiry be conducted by the arbitral tribunal in the first instance.

Competence-competence and contract of adhesion issues

The Court also dealt briefly with who should decide whether the policy is a contract of adhesion and what consequences that characterization might have. Atradius did not concede that the policy was an adhesion contract, and there was no evidence about whether the terms, including the arbitration clause, were negotiable in practice. While the text of a form insurance policy may suggest limited negotiability, the mere form was not enough to make a definitive factual finding, especially where Fuze had been represented by a broker. The Court reiterated that questions about the adhesion nature of the contract and the potential application of protective rules (including article 1437 C.c.Q.) are themselves fact-intensive. Under the competence-competence doctrine, such issues should be put before the arbitral tribunal where the challenge to jurisdiction or validity cannot be resolved purely as a matter of law or on a very superficial examination of the documentary record. Accordingly, the judge refrained from ruling on whether the policy was in fact a contract of adhesion, leaving that question, together with the alleged abusiveness of the arbitration clause, to the arbitrators to determine under Quebec law and the mandatory protective provisions of the Civil Code.

Disposition and outcome

In the result, the Superior Court held that the arbitration clause in the Atradius credit insurance policy is a perfect and mandatory arbitration agreement covering Fuze’s present coverage dispute, and that the jurisdiction clause in the Policy Schedule does not displace or override it. Reading the contract as a whole, the Court reconciled the two provisions by treating the jurisdiction clause as designating the seat and residual jurisdiction of the Quebec courts, while the arbitration clause governs most contractual disputes over coverage and exclusions. The Court therefore granted Atradius’s declinatory exception, referred the dispute between Fuze and Atradius to arbitration in accordance with the policy, and ordered that this be done “with costs.” No damages, indemnity or monetary award on the underlying $693,715.80 coverage claim were adjudicated by the Court; that claim is left entirely to the arbitral tribunal to decide. Apart from the usual judicial costs, whose precise amount is not specified in the judgment and would be determined under procedural rules, there is no quantified monetary award in favour of any party. In this decision, Atradius is the successful party, but the total monetary recovery ordered in its favour, limited to court costs, cannot be determined from the judgment’s text.