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CANADA Arbitration Place jurisprudence (such as the Ontario Superior Court’s 1998 decision in Noble China Inc v Lei, 42 O.R. (3d) 69), the prevailing view is that the following Model Law articles are mandatory: • article 18 (equal treatment of parties); • article 24 (hearings and written proceedings); • article 31 (form and contents of awards); • article 32 (termination of proceedings); and • articles 35 and 36 (recognition and enforcement). 6 Substantive law Is there any rule in your domestic arbitration law that provides the arbitral tribunal with guidance as to which substantive law to apply to the merits of the dispute? Pursuant to article 28(2) of the Model Law, parties may select the substantive law applicable to their dispute. In the absence of such a selection, the arbitral tribunal shall apply the law determined by the conflict of laws rules that it considers to be applicable. In Ontario, article 28(2) of the Model Law is modified such that the arbitral tribunal shall, in the absence of a selection by the parties, apply the rules of law it considers to be appropriate in all the circumstances respecting the dispute. 7 Arbitral institutions What are the most prominent arbitral institutions situated in your country? Domestic arbitrations in Canada are commonly conducted on an ad hoc basis. Some of the prominent Canadian-based arbitral institutions include: • ADR Institute of Canada (www.adrcanada.ca); • ADR Chambers (www.adrchambers.com/ca); • British Columbia International Commercial Arbitration Centre (www. bcicac.com); and • Institut de médiation et d’arbitrage du Quebec (www.imaq.org). Although not an arbitral institution, Arbitration Place in Toronto is a stateof-the-art hearing facility for domestic and international arbitrations, both ad hoc and institutional. Leading international institutions (such as the ICC, LCIA, HKIAC and ICDR) are also commonly selected to administer international arbitrations seated in Canada. Arbitration agreement 8 Arbitrability Are there any types of disputes that are not arbitrable? With limited exceptions, any commercial matter is arbitrable in Canada, whether it is based on contract, tort or a statutory claim. As the Supreme Court of Canada held in Desputeaux v Éditions Chouette Inc, 2003 SCC 17, parties to an arbitration agreement have ‘virtually unfettered autonomy in identifying the disputes’ that may be arbitrable. In general, commercial disputes involving intellectual property, construction and engineering, technology licensing, distribution and agency, joint ventures, financing, and banking are all arbitrable. Internal corporate disputes, including shareholder disputes and oppression claims, may also be the subject of arbitration proceedings. With the exception of Quebec, employment agreements are generally not considered to be commercial for the purposes of arbitrability under the International Arbitration Acts. Regarding consumer disputes, some provinces such as Alberta, Ontario and Quebec have consumer protection legislation in place that relieves consumers from the effects of mandatory arbitration clauses. The Supreme Court of Canada’s ruling in Seidel v Telus Communications Inc, 2011 SCC 15, also served to weaken the enforceability of consumer arbitration clauses in the common law jurisdictions, as have a number of Ontario lower court decisions dealing with class proceedings. Under certain statutory frameworks (particularly those dealing with matters of public interest) that establish robust investigative and enforcement mechanisms, such as the federal Criminal Code, the federal Competition Act and the securities legislation of the common law provinces, those mechanisms cannot be ousted by an arbitration clause. However, the review and assessment of legal fees chargeable to a client may also be determined by arbitration instead of a judicial procedure. 9 Requirements What formal and other requirements exist for an arbitration agreement? The International Arbitration Acts implement article 7 of the Model Law, which only requires that an arbitration agreement be in writing. This requirement is satisfied by the creation of a signed document, by the exchange of documents providing a record of the agreement, or through incorporation by reference. Pursuant to various electronic commerce legislation in force across Canada, the formal writing requirement can often be satisfied through electronic forms of communication. 10 Enforceability In what circumstances is an arbitration agreement no longer enforceable? The International Arbitration Acts implement article 8(1) of the Model Law, which provides that an arbitration agreement is unenforceable if it is ‘null and void, inoperative or incapable of being performed’. Pursuant to article 16 of the Model Law, an arbitration agreement shall be treated independently from the other terms of the contract in which it may be embedded. An arbitration agreement may be considered null or void in circumstances where the initial formation of the agreement itself is compromised, such as on the basis of non est factum, duress, fraud or mistake. An arbitration agreement may be inoperative in circumstances where the agreement was not void ab initio, but it ceases to have effect for reasons such as an expired time limit, waiver or where it is overridden by a competing legislative framework. Finally, an arbitration agreement may be unenforceable pursuant to article 8(1) where there is some impediment to the conduct of an arbitral proceeding that is beyond the parties’ control and that makes performance in accordance with the agreement impossible. One example of such circumstances would include the death of a named arbitrator. 11 Third parties – bound by arbitration agreement In which instances can third parties or non-signatories be bound by an arbitration agreement? A third party to an arbitration agreement may, through consent, become bound by that agreement. In the absence of express consent, a third party’s consent may, in very limited circumstances, be implied under a number of different legal theories, including: • agency: an agent acting within his or her authority may bind a thirdparty principal; • assumption: a third party by its conduct and dealings may assume obligations under an arbitration agreement, such as a successor corporation following a merger or amalgamation; • equitable estoppel: a party may be estopped from relying on the absence of its signature on an arbitration agreement where that same party has sought enforcement for its own benefit; and • the ‘piercing the corporate veil’ and ‘alter ego’ doctrines. 12 Third parties – participation Does your domestic arbitration law make any provisions with respect to third-party participation in arbitration, such as joinder or third-party notice? The International Arbitration Acts make no special provision for thirdparty participation in arbitral proceedings. An interested non-signatory may nevertheless participate in the arbitration, subject to prevailing procedural rules and the same theories described above (ie, through express consent or some form of implied consent (including the consent of the signatory parties)). 68 Getting the Deal Through – Arbitration 2016 © Law Business Research 2016
Arbitration Place CANADA 13 Groups of companies Do courts and arbitral tribunals in your jurisdiction extend an arbitration agreement to non-signatory parent or subsidiary companies of a signatory company, provided that the non-signatory was somehow involved in the conclusion, performance or termination of the contract in dispute, under the ‘group of companies’ doctrine? The ‘group of companies’ doctrine has been recognised in a small body of Canadian jurisprudence where a non-signatory company has been bound by and allowed to participate in arbitral proceedings alongside a signatory parent or subsidiary (eg, the Ontario Superior Court’s decision in Xerox Canada Ltd v MPI Technologies Inc, 2006 CanLII 41006, where the court upheld a tribunal’s decision to allow a non-signatory parent company to participate as a claimant based on that parent’s involvement in the overall dispute resolution process). 14 Multiparty arbitration agreements What are the requirements for a valid multiparty arbitration agreement? The International Arbitration Acts do not specifically address multiparty arbitration agreements, although such arbitrations are reasonably common in Canada under express contractual terms. Under Ontario’s International Commercial Arbitration Act, parties may make an application to the Superior Court of Justice for an order consolidating two or more arbitration proceedings, the result of which may be a multiparty arbitration. Where the court orders such a consolidation, the statute also provides that arbitrator selection for the consolidated tribunal will remain in the hands of the parties, if they can agree, failing which the court may appoint the arbitrators. A court order is not necessary, however, to effect such a consolidation: it may still be done by private agreement of the parties. Constitution of arbitral tribunal 15 Eligibility of arbitrators Are there any restrictions as to who may act as an arbitrator? Would any contractually stipulated requirement for arbitrators based on nationality, religion or gender be recognised by the courts in your jurisdiction? There are no formal qualifications or restrictions imposed by law for arbitrators in either domestic or international arbitrations, other than basic tenets of natural justice requiring independence and impartiality. Sitting judges may serve as arbitrators, albeit without remuneration other than reasonable compensation for related expenses. However it is the accepted policy of the judiciary that sitting judges should not serve as arbitrators. Retired judges frequently act as arbitrators. The International Commercial Arbitration Acts of Ontario and British Columbia incorporate a modified version of article 11(1) of the Model Law in such a way as to eliminate a party’s right to restrict the choice of arbitrator according to nationality. No Canadian court has yet considered the Jivraj v Haswani case, though any efforts to limit arbitrator selection based on religion or ethnicity may intersect with the anti-discrimination provisions of various human rights statutes in force across Canada. 16 Default appointment of arbitrators Failing prior agreement of the parties, what is the default mechanism for the appointment of arbitrators? Pursuant to articles 10 and 11 of the Model Law, in the absence of an agreement between the parties, the International Arbitration Acts set the default number of arbitrators at three, with each party selecting one arbitrator and those two appointees then selecting the presiding arbitrator. In circumstances of a default in the appointment of a sole arbitrator or a three-person panel, a party may apply to the court or to an agreed appointment authority. The leading Canadian arbitral institutions provide for similar procedural rules dealing with default appointments. In ad hoc arbitrations, or where neither the arbitration agreement nor the applicable arbitration rules provide for an appointing authority, the courts will assume the role of resolving defaults in the appointment of arbitrators. 17 Challenge and replacement of arbitrators On what grounds and how can an arbitrator be challenged and replaced? Please discuss in particular the grounds for challenge and replacement, and the procedure, including challenge in court. Is there a tendency to apply or seek guidance from the IBA Guidelines on Conflicts of Interest in International Arbitration? The International Arbitration Acts implement articles 12 to 15 of the Model Law that address the challenge and replacement of arbitrators. The available grounds for challenge under article 12 of the Model Law are: (i) where there are justifiable doubts as to the arbitrator’s impartiality or independence; or (ii) where the arbitrator lacks the qualifications agreed to by the parties. In Canada, a challenge to an arbitrator’s impartiality or independence is assessed based on the ‘reasonable apprehension of bias’ test. The Supreme Court of Canada held in Wewaykum Indian Band v Canada, 2003 SCC 45, that the applicable standard asks whether the apprehension of bias could arise in the mind of a reasonably informed person, viewing the matter realistically and practically, and having thought the matter through. The IBA Guidelines on Conflicts of Interest in International Arbitration have not been the subject of significant judicial consideration. However, in Telesat Canada v Boeing Satellite Systems International Inc, 2010 ONSC 4023, the Ontario Superior Court of Justice removed an arbitrator because of a reasonable apprehension of bias; in so doing, the court referred to the IBA Guidelines, which had not been formally incorporated by reference into the arbitration. The court nevertheless found that the IBA Guidelines represent the view of the ‘arbitration community’. Absent any agreement establishing a different challenge procedure, article 13(2) of the Model Law will apply, whereby a party must make its claim in writing to the tribunal within 15 days of discovering the ground for challenge. The arbitral tribunal shall then decide on the challenge, unless the challenged arbitrator first withdraws. If the challenge is rejected, the challenging party then has 30 days to raise the challenge with the courts (or another appointed authority such as an arbitral institution). The court’s decision on the challenge is not subject to an appeal. Pursuant to article 14 of the Model Law, an arbitrator may also be challenged where he or she is unable to carry out his or her functions without undue delay. In such a situation, which can arise for example when an arbitrator falls seriously ill, the Model Law provides that the arbitrator’s mandate terminates when he or she resigns or when the parties agree on the termination. A party may also ask the court to remove the arbitrator. In Ontario, if an arbitrator is replaced or removed, and unless the parties agree otherwise, all proceedings that have already taken place will start afresh. 18 Relationship between parties and arbitrators What is the relationship between parties and arbitrators? Please elaborate on the contractual relationship between parties and arbitrators, neutrality of party-appointed arbitrators, remuneration, and expenses of arbitrators. Arbitrators are bound contractually to all parties to an arbitration agreement, and are held to the same standards of neutrality, impartiality and independence, regardless of who appointed them. In an ad hoc arbitration, arbitrators are typically remunerated on an hourly or daily basis, plus related expenses. Deposits and cancellations fees are common. In institutional arbitrations, fees are typically paid through the institution in accordance with its rules and policies. 19 Immunity of arbitrators from liability To what extent are arbitrators immune from liability for their conduct in the course of the arbitration? Generally, arbitrators in Canada enjoy immunity from actions in negligence or breach of contract, similar to the judiciary. An arbitrator will benefit from this immunity where: • there is an existing dispute that the parties have submitted to the arbitrator; • the arbitrator is acting in a judicial or quasi-judicial capacity; and • the arbitrator is fulfilling his or her function in compliance with the provisions of the applicable legislation. www.gettingthedealthrough.com 69 © Law Business Research 2016
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