A dispute involving a former TELUS International employee over restrictive covenants and arbitration jurisdiction will proceed in Virginia, not British Columbia, the Supreme Court of British Columbia has ruled.
The court granted TELUS International’s application to stay proceedings in B.C. and declined jurisdiction in favour of ongoing arbitration in Virginia. The ruling reinforces the principle that disputes clearly linked to arbitration agreements must first be assessed by the arbitrator, absent clear evidence otherwise.
At issue was a claim by S.M., a former account manager based in Virginia, who sought to have restrictive covenants—non-competition and non-solicitation clauses—declared invalid under B.C. law. TELUS argued that these issues were already before an arbitrator in Virginia, in line with the employment agreement signed by S.M.
Background of employment and agreements
S.M., an American citizen residing in Virginia, was employed from July 2021 to January 2024 as an account manager with TELUS International AI Inc., a Delaware-based subsidiary of TELUS International (Cda) Inc. The employment agreement explicitly stated it was governed by Virginia law and included a comprehensive arbitration agreement requiring that employment disputes be resolved through binding arbitration in Virginia under the rules of Judicial Arbitration and Mediation Services (JAMS).
Additionally, S.M. participated in a Restricted Share Unit (RSU) Award Agreement with TELUS Canada, which contained restrictive covenants—non-competition and non-solicitation clauses lasting six months following employment termination—and specified B.C. law as the governing jurisdiction.
S.M. later claimed she was unaware of these restrictive covenants at the time she agreed to accept the shares through an online “click-through” process, alleging her consent was obtained by “subterfuge.”
Dispute arises over employment termination
In January 2024, S.M. resigned from TELUS to join competitor Welocalize. TELUS subsequently initiated arbitration proceedings in Virginia, accusing S.M. of misappropriating trade secrets, violating restrictive covenants, and improperly using confidential information in her new role at Welocalize.
TELUS’s claims included seeking injunctive relief and monetary damages for breaches allegedly committed by S.M., who responded by initiating legal action in B.C. to challenge the enforceability of the restrictive covenants.
Jurisdictional conflict emerges
In her B.C. civil claim, S.M. sought a declaration that the restrictive covenants were void and unenforceable under B.C. law, arguing the issue should not be arbitrated in Virginia despite the arbitrator’s prior decision to the contrary.
TELUS requested that the B.C. proceedings be stayed, relying on the arbitrator’s jurisdictional ruling, which found the arbitration agreement clearly delegated authority over disputes—including those regarding the restrictive covenants—to arbitration in Virginia.
Court upholds arbitrator’s jurisdiction
The court agreed with TELUS, holding that the arbitration agreement explicitly authorized the arbitrator in Virginia to determine its own jurisdiction, including the enforceability and scope of the arbitration clause.
The court found that a superficial review of the arbitration agreement demonstrated an “arguable case” that restrictive covenant claims were indeed covered by arbitration. It also concluded that no clear intention emerged to exclude such claims from arbitration, thus deferring the matter to the arbitrator.
“The arbitrator shall have the exclusive authority to resolve any dispute relating to the interpretation, applicability, enforceability or formation of this Agreement including…any claim that all or any part of this Agreement is void or voidable,” the arbitration agreement explicitly stated.
Court’s analysis on convenient forum
In deciding whether B.C. or Virginia was the appropriate forum, the court considered factors outlined under the Court Jurisdiction and Proceedings Transfer Act (CJPTA). It emphasized that the case was fundamentally linked to the United States, where S.M. resides, worked, and where all relevant actions took place.
The court highlighted practical considerations favouring Virginia arbitration, noting it would be more convenient and cost-effective for parties and witnesses, most of whom are located in or near Virginia.
Additionally, it stressed that allowing the B.C. action to continue would result in overlapping legal proceedings and risk conflicting decisions between jurisdictions, undermining judicial efficiency and potentially creating confusion.
The court recognized the relevance of TELUS Canada’s B.C. presence and the applicability of B.C. law but found these factors did not outweigh the efficiency of having disputes resolved in the existing Virginia arbitration. It noted that the applicable B.C. law could be introduced easily into the Virginia proceedings through expert evidence.
Competence-competence principle reinforced
Crucially, the decision reinforced the “competence-competence” principle, which asserts that arbitral tribunals generally have the first opportunity to determine their jurisdiction, absent unusual circumstances.
The court referenced precedent, stating that unless a superficial review of evidence clearly indicates arbitration is inappropriate, questions of jurisdiction should primarily be left to the arbitrator. The B.C. court found no basis to override the arbitrator’s preliminary finding of jurisdiction.
Multiplicity of proceedings avoided
A significant factor influencing the decision was the court’s desire to avoid multiple proceedings and potentially conflicting decisions. With arbitration already underway in Virginia, the court found that continuing parallel proceedings in British Columbia would complicate matters unnecessarily.
The court noted: “The stay avoids a multiplicity of proceedings between the parties and conflicting findings and decisions in different proceedings.”
Thus, TELUS’s application to stay the B.C. proceedings was granted, affirming arbitration in Virginia as the appropriate forum.
For more information, see Mavrakis v TELUS International (Cda) Inc., 2025 BCSC 378 (CanLII).
