Executive Summary: Key Legal and Evidentiary Issues

• Interaction between an imperfectly drafted arbitration clause and the competence-competence principle in determining who decides the arbitrator’s jurisdiction
• Characterization of contractual interpretation of the dispute resolution clause as a mixed question of fact and law, warranting referral to arbitration rather than court determination
• Scope of the arbitration agreement, including whether it applies only to the Laval plant operations or also to the later Anjou plant activities at the core of Bveggie’s claim
• Relationship between Quebec courts’ jurisdiction, the presence of a foreign arbitration clause, and the residual/suppletive use of forum non conveniens in favour of California courts
• Effect of the parties’ acceptance of California as the venue for “any litigation” and the Agreement’s deeming provision that it was executed in California
• Procedural outcome of staying Superior Court proceedings and allocating judicial costs against Bveggie while referring the dispute to arbitration in California

Factual background

Aliments Bveggie Inc. is a mid-sized Quebec-based company that manufactured plant-based food products for Beyond Meat Inc., a large publicly traded American company. In 2020, the parties entered into a Manufacturing and Supply Agreement under which Bveggie was to manufacture, package, label, store, and ship certain Beyond Meat products in Quebec. Initially, production took place at Bveggie’s Laval plant; later, in 2021, Bveggie began manufacturing different Beyond Meat products from a plant in Anjou. In May 2023, Beyond Meat terminated its contractual arrangements with Bveggie. Bveggie then sued Beyond Meat in the Quebec Superior Court, claiming approximately CAD 130 million in damages for the termination of the relationship.

The Superior Court proceedings and forum non conveniens

In response to Bveggie’s action, Beyond Meat brought a Motion for Declinatory Exception and Forum Non Conveniens in the Superior Court. It advanced two main arguments. First, it argued that the Superior Court lacked jurisdiction because the Agreement contained a “complete” arbitration clause obliging the parties to submit their dispute to arbitration. Second, in the alternative, it argued that even if the Quebec court had jurisdiction, it should decline to exercise it in favour of the courts of California on the basis of forum non conveniens. The Superior Court judge rejected Beyond Meat’s argument that the arbitration clause ousted the court’s jurisdiction. He considered that determining whether the Agreement, including its arbitration clause, applied to the Anjou operations raised several questions of fact and law, and also concluded that the dispute resolution wording was not “complete and conclusive” because it did not clearly exclude recourse to ordinary courts. However, the judge accepted the forum non conveniens argument. He held that the State of California was clearly more appropriate than Quebec to hear the matter, emphasizing that Beyond Meat’s principal assets were in the United States, that the Agreement was deemed executed in California, and that Bveggie would likely need to seek recognition of any Quebec judgment in California if it prevailed. Citing paragraph 16(g) of the Agreement, he regarded the parties’ acceptance that California would be the venue for any litigation as a particularly weighty factor and concluded that order and fairness required declining Quebec jurisdiction in favour of California.

The dispute resolution clause and competing interpretations

The key contractual provision is paragraph 11 of the Agreement, a multi-step dispute resolution clause. Paragraph 11(a) requires that any “Dispute” arising out of or relating to the Agreement first be addressed through good-faith negotiations by representatives with primary responsibility under the Agreement. If those negotiations fail within a reasonable time, a party may escalate the Dispute to duly authorized representatives of both sides, who then have thirty days (or a longer mutually agreed period) to resolve it. Critically, if the Dispute remains unresolved after this internal process, the clause states that either party will be “free to exercise any and all rights under this Agreement or in equity or in law.” It also provides for injunctive relief from courts where necessary and suspends applicable limitation periods during the internal dispute resolution phase. Paragraph 11(b) then provides that Disputes not resolved under 11(a) shall be resolved by binding arbitration before JAMS, Inc. in Los Angeles County, California (unless otherwise agreed), under JAMS’ Optional Expedited Arbitration Procedures, excluding claims for injunctive or other equitable relief, which may still be brought before courts to prevent confidentiality breaches or intellectual property infringement. The Superior Court judge read the phrase giving parties freedom to exercise “any and all rights under this Agreement or in equity or in law” as creating uncertainty: in his view, it suggested that recourse to ordinary courts remained open rather than being fully displaced by arbitration. He therefore found the arbitration clause to be imperfect or incomplete. On appeal, Beyond Meat challenged that approach, arguing that the judge erred by: (i) failing to apply the competence-competence principle and deciding himself whether the arbitration clause was complete; (ii) failing to apply California law, under which Beyond Meat argued the clause would be considered complete; and (iii) even under Quebec law, wrongly concluding that the clause was incomplete.

The competence-competence principle and arbitral jurisdiction

The Court of Appeal framed its analysis by recalling that a court must first determine whether it has jurisdiction before turning to forum non conveniens, which operates only in a suppletive way. That structure led the Court to examine Beyond Meat’s incidental appeal on the arbitration issue before addressing Bveggie’s principal appeal on forum non conveniens. Applying the competence-competence principle, as articulated in cases such as Dell Computer Corp. v. Union des consommateurs and Rogers Wireless Inc. v. Muroff, the Court of Appeal held that where an arbitration clause exists, challenges to the arbitrator’s jurisdiction must, in general, first be referred to the arbitrator. Only where the jurisdictional challenge raises a pure question of law, or a question of fact requiring merely a superficial review of the evidence, may courts depart from that rule. Questions of mixed law and fact, and questions requiring more than a superficial consideration of the evidence, should ordinarily be left to the arbitrator. In this case, the question before the Superior Court judge—whether the dispute resolution clause constituted a complete arbitration agreement and how to reconcile the reference to exercising all rights “in equity or in law” with the binding arbitration requirement—was a question of contractual interpretation and thus a mixed question of fact and law. Determining what the parties actually intended, and whether there was a real contradiction between paragraphs 11(a) and 11(b), required more than a superficial look at the documents and potentially involved evidence. The Court of Appeal therefore concluded that the judge should not have decided that the arbitration clause was imperfect. Even the mere presence of ambiguity was sufficient to trigger referral to arbitration: ambiguity does not, by itself, justify defaulting to the ordinary courts. The Court underscored that contemporary jurisprudence rejects treating an imprecise or ambiguous arbitration clause as a reason to bypass arbitration; instead, ambiguity reinforces the appropriateness of letting the arbitrator decide jurisdictional questions in the first instance. The competence-competence principle also applied to the threshold issue of whether the Agreement (and its arbitration clause) even governed the Anjou-related dispute. The Superior Court judge had already recognized that this question required more than a superficial analysis of the evidence, further supporting that the arbitrator, not the court, should determine the Agreement’s scope.

Forum non conveniens and the role of California courts

Because the Court of Appeal resolved the jurisdictional issue through the arbitration clause and competence-competence, it did not ultimately need to revisit in depth the forum non conveniens analysis. The Superior Court’s earlier conclusion—that California was clearly more appropriate than Quebec, based on factors such as the location of Beyond Meat’s assets, the Agreement’s deeming provision that it was executed in California, and the parties’ designation of California as the venue for litigation—was effectively overtaken by the decision to enforce the arbitral process. Once the arbitration clause was given effect and jurisdictional questions were remitted to the arbitrator, the residual role of forum non conveniens as between Quebec and California courts became secondary. The proper path forward was to stay the Quebec litigation in favour of arbitration rather than to shift the dispute to California courts for ordinary judicial proceedings.

Outcome and financial consequences

In the result, the Court of Appeal dismissed Bveggie’s main appeal, granted Beyond Meat’s incidental appeal, stayed the proceedings in the Superior Court file, and referred the dispute to arbitration in accordance with the Agreement’s dispute resolution clause. Judicial costs were ordered against Aliments Bveggie Inc., both at first instance and on appeal, reflecting Beyond Meat’s success in enforcing the arbitration mechanism. However, the judgment does not quantify the costs or any damages, nor does it determine the merits of Bveggie’s approximately CAD 130 million damages claim. Those matters are left entirely to the arbitral process, so the successful party at this appellate stage is Beyond Meat Inc., and the total monetary award or costs in its favour cannot be determined from this decision.