Arbitration
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<strong>Arbitration</strong> Place<br />
CANADA<br />
Update and trends<br />
The number of international trade and investment treaties to which<br />
Canada is a party has increased markedly in recent years. As noted in<br />
question 2, most of these bilateral investment treaties and free trade<br />
agreements contain investment arbitration provisions. With Canada’s<br />
recent ratification of the ICSID Convention, and the signing of the<br />
Trans-Pacific Partnership and the European Union Comprehensive<br />
Economic and Trade Agreement, the trend of Canada’s growing<br />
involvement in international investment arbitration looks likely to<br />
accelerate.<br />
Legislative review of the International <strong>Arbitration</strong> Acts continues<br />
to be an issue of discussion in Canadian legal circles. At its 2014 annual<br />
meeting, the Uniform Law Conference of Canada adopted the final<br />
Report of a Task Force on the Model Law Amendments, which included<br />
a proposed new uniform International Commercial <strong>Arbitration</strong> Act, and<br />
called for its implementation throughout Canada. The new uniform<br />
Act adopts the 2006 Model Law amendments, and aims at eliminating<br />
the variety of small discrepancies that currently exist as between the<br />
International <strong>Arbitration</strong> Acts.<br />
In Quebec, the legislature passed comprehensive amendments<br />
to that province’s Code of Civil Procedure in 2014, with the changes<br />
expected to come into force in January 2016. Among numerous other<br />
changes, the new Code of Civil Procedure requires that parties –<br />
including public entities – consider recourse to private forms of dispute<br />
resolution (such as mediation and arbitration), and codifies many<br />
procedural rules applicable to arbitral proceedings in Quebec.<br />
A number of recent judicial decisions not mentioned in this<br />
chapter have also strengthened Canada’s position as an arbitrationfriendly<br />
jurisdiction. In particular, in Sattva Capital Corp. v Creston Moly<br />
Corp., 2014 SCC 53, the Supreme Court of Canada confirmed (albeit<br />
in the context of a domestic arbitration) that significant deference<br />
is owed to the decisions of arbitrators, and that a review standard of<br />
‘reasonableness’ rather than ‘correctness’ applies when those decisions<br />
are appealed to the courts. In Depo Traffic v Vikeda International, 2015<br />
ONSC 999, the Ontario Superior Court of Justice, in granting an order<br />
for recognition and enforcement of a foreign arbitral award, emphasised<br />
the importance of the ‘principle of non-judicial intervention in arbitral<br />
awards’. In Popack v Lipszyc, 2015 ONSC 3460, in the face of evidence<br />
that grounds to set aside an arbitral award (from an international<br />
tribunal seated in Ontario) under article 34 of the Model Law had been<br />
met, the Ontario Superior Court of Justice refused to do so. The Court<br />
reasoned that given the principles and objectives which underpin the<br />
Model Law (namely party autonomy and the respect owed to tribunals),<br />
an application to set aside an award must be weighed against the<br />
prejudice that would result to both parties if such an order were granted.<br />
The Court determined that the annulment or setting aside of an award<br />
was discretionary and that the particular due process issue in that case<br />
(the tribunal spoke to a witness in the absence of the parties, but with<br />
the agreement of the parties) did not outweigh the prejudice of setting<br />
aside the award.<br />
Times vary from province to province, but in general, an appeal can<br />
take from six to 12 months, with even longer time frames expected when<br />
appealing to the Supreme Court of Canada.<br />
Costs depend largely on the length and complexity of the case, and<br />
on tariffs that differ in each Canadian jurisdiction. As noted above, cost<br />
awards in Canada follow the ‘loser pays’ principle, and may be apportioned<br />
according to mixed success.<br />
44 Recognition and enforcement<br />
What requirements exist for recognition and enforcement of<br />
domestic and foreign awards, what grounds exist for refusing<br />
recognition and enforcement, and what is the procedure?<br />
For the purposes of recognition and enforcement under the Model Law, the<br />
award must be commercial and international as those terms are defined in<br />
the International <strong>Arbitration</strong> Acts. In Ontario, however, an arbitral award<br />
will include commercial arbitral awards made outside of Canada, even if<br />
the arbitration itself was not international. Article 36 of the Model Law<br />
prescribes the grounds for refusing recognition and enforcement of an<br />
award, and these are very similar to the grounds available for setting aside<br />
an award.<br />
In Canada, the task of enforcement is left to the courts: once recognised,<br />
an arbitral award is enforceable in the same manner as a judgment<br />
of the court. Canadian courts generally look favourably on the enforcement<br />
of foreign arbitral awards. A recent decision of the Supreme Court<br />
of Canada, Chevron Corp v Yaiguaje, 2015 SCC 42, clarified the state of<br />
the law with regard to the recognition and enforcement of foreign judicial<br />
decisions, and this in turn may influence the approach applicable to<br />
arbitral awards. In particular, the Supreme Court held that the absence of<br />
recoverable judgment debtor assets in Canada does not, by itself, preclude<br />
a Canadian court from exercising jurisdiction in recognition and enforcement<br />
proceedings. Also, the Supreme Court confirmed that there need not<br />
be any ‘real and substantial connection’ between the Canadian court and<br />
the foreign court or the subject matter of the dispute.<br />
45 Enforcement of foreign awards<br />
What is the attitude of domestic courts to the enforcement<br />
of foreign awards set aside by the courts at the place of<br />
arbitration?<br />
Pursuant to Article 36 of the Model Law, Canadian courts will generally not<br />
enforce foreign arbitral awards that have been set aside by the courts at the<br />
place of arbitration, although they retain the judicial discretion to do so. In<br />
Stans Energy Corp. v Kyrgyz Republic, 2015 ONSC 3236, the Ontario Divisional<br />
Court recently set aside an ongoing Mareva injunction in part on the basis<br />
that the underlying foreign award had been set aside by a Russian court.<br />
46 Enforcement of orders by emergency arbitrators<br />
Does your domestic arbitration legislation, case law or the<br />
rules of domestic arbitration institutions provide for the<br />
enforcement of orders by emergency arbitrators?<br />
The International <strong>Arbitration</strong> Acts do not address the enforcement of<br />
orders issued by emergency arbitrators, nor has the issue been considered<br />
by Canadian courts.<br />
The <strong>Arbitration</strong> Rules of the ADR Institute of Canada, provide that the<br />
emergency arbitrator’s decision ‘must be in the form of an order’, whereas<br />
the ADR Chambers <strong>Arbitration</strong> Rules provide that an emergency arbitrator<br />
may enter an ‘interim award’. Arguably, only an award is enforceable pursuant<br />
to the terms of the Model Law and the New York Convention.<br />
47 Cost of enforcement<br />
What costs are incurred in enforcing awards?<br />
Recognition and enforcement proceedings are commenced by way of<br />
applications to the court, which generally proceed in writing supported by<br />
affidavit evidence. The costs involved include filing fees and associated<br />
legal fees, which are heavily dependent on the complexity of the application<br />
and whether there are contested issues regarding enforcement.<br />
Once recognised, the award can be enforced through the full range of<br />
remedies available for execution of court judgments, which in turn carry<br />
their own (fact-dependent) costs.<br />
Other<br />
48 Judicial system influence<br />
What dominant features of your judicial system might exert an<br />
influence on an arbitrator from your country?<br />
The influence exerted by the Canadian judicial system on Canadian<br />
arbitrators is, in general, favourable towards arbitration. This influence<br />
includes a deference towards arbitrators, a flexible approach to procedural<br />
rules in the ultimate interests of fairness and efficiency, and respect for<br />
underlying principles of natural justice and the rule of law.<br />
In particular, Canada’s judicial system generally entails pre-hearing<br />
documentary productions and oral discovery of a single witness per party,<br />
subject to time limits and the rules of privilege. US-style discovery involving<br />
the deposition of numerous witnesses is prohibited. In the arbitration<br />
context, however, pre-hearing oral discoveries are rarely seen; witness<br />
statements are common, and hearings are typically restricted to crossexaminations.<br />
In both the judicial and arbitration context, individual<br />
parties and corporate officers may be expected to testify if they are in a<br />
position to provide relevant and probative evidence (and an adverse inference<br />
may be drawn if they do not).<br />
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