Or, in the context of deciding the stay application, the court may decide that the arbitrator
does not have jurisdiction, in which case it will not stay the action. In defined circumstances, the
court may not stay the civil action for statutorily defined reasons, such as the case is suitable for a
summary judgment in which cases, practically speaking, the court will decide the dispute and the
arbitrator’s jurisdiction, if any, is preempted.
Under the Arbitration Act, 1991, the exceptions to granting a stay and the application of
the competence-competence principle are that the court may refuse to stay its own proceedings:
(1) if a party entered into the arbitration agreement while under a legal incapacity; (2) if the
arbitration agreement is invalid; (3) if the subject matter of the dispute is not capable of being the
subject of arbitration under Ontario law; (4) if the motion was brought with undue delay;33 or (5)
if the matter is a proper one for default or summary judgment.34
In Haas v. Gunasekaram,35 the Court of Appeal set out a five-part analytical framework
for determining whether an action should be stayed for arbitration: (1) Is there an arbitration
agreement? (2) What is the subject matter of the dispute? (3) What is the scope of the arbitration
agreement? (4) Does the dispute arguably fall within the scope of the arbitration agreement? (5)
Are there grounds on which the court should refuse to stay the action?
Earlier cases about s.7(1) of the Arbitration Act, 1991 had summarized the approach to take
when deciding whether an action should be stayed as first interpreting the arbitration provision,
second analyzing the claim to determine whether it is encompassed by the arbitration provision
and third, if so, then the court must allow the arbitration to proceed, unless one of the exceptions
in s.7(2) applied to the circumstances of the case.36 In the seminal case of Heyman v. Darwins
Ltd.,37 discussed below, Lord Macmillan stated at p. 370:
Where proceedings at law are instituted by one of the parties to a contract containing an arbitration
clause and the other party, founding on the clause, applies for a stay, the first thing to be ascertained
is the precise nature of the dispute which has arisen. The next question is whether the dispute is one
which falls within the terms of the arbitration clause.
33 Allied Accounting & Tax Services Ltd. v. Pacey, 2017 ONSC 4388; Bouchan v. Slipacoff (2009), 94 O.R. (3d)
741; MDG Kingston Inc. v. MDG Computers Canada Inc., 2008 ONCA 656; Lansens v. Onbelay Automotive
Coatings Corp.,  O.J. No. 5470 (S.C.J.); ABN Amro Bank of Canada v. Krupp Mak Maschinenbau GmbH
(1994), 21 O.R. (3d) 511 (Gen. Div.).
34 Arbitration Act, 1991, S.O. 1991, c. 17, s. 7(2). Smith v. National Money Mart Co.,  O.J. No. 2248 (S.C.J.),
aff’d on other grounds  O.J. No. 4327 (C.A.), leave to appeal refused  S.C.C.A. No. 535; Dewshaf
Investments Inc. v. Buckingham Hospitality,  O.J. No. 6190 (S.C.J.), var’d  O.J. No. 1724 (C.A.); 407
ETR Concession Co. v. Ontario (Minister of Transportation),  O.J. No. 4516 (S.C.J.); Sigfussion Northern
Ltd. v. Cantera Mining Ltd.,  O.J. No. 1040 (C.A.); Kanitz v. Rogers Inc.,  O.J. No. 665 (S.C.J.);
Kallaur v. Baranick,  O.J. No. 2135 (Gen. Div.); Ottawa Rough Riders Inc. v. Ottawa (City),  O.J. No.
3797 (Gen. Div.).
35 2016 ONCA 744 at para. 17. See also: Pezo v. Pezo, 2021 ONSC 5406; Leon v. Dealnet Capital Corp., 2021
ONSC 3636 (Master); Gupta v. Lindal Cedar Homes Ltd. 2020 ONSC 6333; Grandfield Homes (Kenton) Ltd. v.
Chen 2020 ONSC 5230; Leeds Standard Condominium Corp. No. 41 v. Fuller, 2019 ONSC 3900; Rhinehart v.
Legend 3D Canada Inc., 2019 ONSC 3296.
36 MDG Kingston Inc. v. MDG Computers Canada Inc., 2008 ONCA 656 at para. 14; Stone v. Polon,  O.J.
No. 2981 (C.A.); Woolcock v. Bushert,  O.J. No. 4498 (C.A.); Mantini v. Smith Lyons LLP (2003), 64 O.R.
(3d) 505 at para. 17, (C.A.), leave to appeal ref’d  S.C.C. No. 344; T1T2 Limited Partnership v. Canada
(1994), 23 O.R. (3d) 66 (Gen. Div.); International Semi-Tech Microelectronics Inc. v. Provigo Inc. (1990), 75 O.R.
(2d) 724 (Gen. Div.); Heyman v. Darwins Ltd.  A.C. 356 (H.L.).
37  A.C. 356 at p. 370 (H.L.).