Printemps 2011 - ADR Institute of Canada

law. As held by Feldman J. in Schreter v.Gasmac Inc., citing the UN Commissionon International Trade Law working group:It was understood that the term “publicpolicy” [...] covered fundamental principlesof law and justice in substantiveas well as procedural respects. Thus,instances such as corruption, bribery orfraud and similar serious cases wouldconstitute a ground for setting aside. Itwas noted, in that connection, that thewording “the award is in conflict withthe public policy of this State” was notto be interpreted as excluding instancesor events relating to the manner inwhich an award was arrived at. 21Thus, it is not only a foreign law that maybe contrary to Canadian public policy, butalso procedure, as well as related eventsleading to the award. On its face, this approachwould suggest a broadening of thepublic policy exception.The Application of thePublic 3Policy Exception HasRelied on the Common LawDeveloped in the Contextof the Enforcement ofForeign JudgmentsThere is relatively little jurisprudence inrespect of the public policy exception toenforcement of arbitral awards. There is,however, a substantial body of jurisprudenceand commentary that can be drawnupon from the analogous public policy defencein the conflict of laws context, whichis invoked where a foreign judgment issought to be enforced in Canada. 22 Muchof the law in respect of the exception isrooted in the common law application ofthe defence, but it is submitted that the twoareas of law cannot be applied as one andthe same, and as the law develops, differencesshould emerge. Thus, it is essentialthat the common law be taken into considerationwhen considering the public policyexception, but used judiciously. The statutorylanguage contained in the EnforcementLegislation and the purpose andintent of the Convention and the Modellaw as international documents will besignificant to understanding the publicpolicy exception.Remember theThree Objectives behindthe Principle of “Orderand Fairness”Key to the integrity of the judicial systemis the principle of “order and fairness”. Thisprinciple recognizes the need to balancethe importance of the security of internationaltransactions and the need for fairnessto those against whom recognition issought. 23 In furtherance of this principle,in the context of the public policy defencein the conflict of laws, is the rule that thejudgment must be final and res judicata inthe sense that it cannot be varied or rescinded.This rule serves three critical objectives:(1) certainty; (2) prevention ofinjustice to the party against whom the orderis enforced if the order were to subsequentlychange; and (3) public confidencethat the basis for enforcement (i.e., the foreignjudgment) will remain. 24 This has beenaccepted in the context of the enforcementof foreign money judgments, but it wouldbe difficult to argue that it should not alsoapply to most other forms of relief in thecontext of arbitral enforcement.The Sources ofPublic Policy Are BroadThe sources of domestic public policy arebroad. Castel and Walker describe the publicpolicy defence as dependent upon thelocal conception of justice:Canadian Courts will not recognize orenforce a foreign law or judgment or aright, power, capacity, status or disabilitycreated by a foreign law that is contraryto the forum’s fundamental publicpolicies, its “essential public or moralinterest”, or its “conception of essentialjustice and morality”. Public policyserves a corrective function. Its use isgenerally defensive. [...]It is difficult to give a precise definitionof public policy; nor can a generalstatement be made about its scope. Evidenceof public policy can be found inthe total body of the constitutional andstatute law as well as the case law ofthe forum, since it will reflect the localsense of justice and public welfare [...]Fundamental values must be at stake. 25[Emphasis added.]Thus, while the public policy exception isnarrowly construed, its role is significant,and potential sources for public policy tojustify the use of the exception are broad.There is an inherent tension between thebroad conception of public policy and itsnarrow application as a basis for refusingto enforce foreign arbitral awards. It appearsthat not all forms of public policyare sufficiently fundamental to localconceptions of justice. Accordingly,careful regard must be had for the publicpolicy one seeks to invoke whenseeking to refuse the enforcement of anarbitral award. This may have beenrecognised by Carthy J.A. in the decisionin Boardwalk Regency Corp. v. Maalouf,where he stated as follows:It cannot be every statutory statementor prohibition which raises this defenceor little would be left of the principleof comity [...]. 26To the extent that lessons can be drawnfrom the common law on the enforcementforeign judgments, it appears that thesources and application of the publicpolicy exception requires additionaljudicial consideration, and what constitutesrelevant public policy is unsettled.There are relatively few indicatorsin the jurisprudence to assist inpredicting what might succeed.In this regard, at least three jurists haveraised questions about when a foreignjudgment will be refused enforcementon public policy grounds. In Beals v.Saldanha, LeBel J. reasoned that thepublic policy defence in the enforcementof foreign judgments “should alsoapply to foreign laws that offend basictenets of our civil justice system, principlesthat are widely recognized ashaving a quality of essential fairness.” 27Similarly, in Justice Binnie’s dissent,it was reasoned that, despite the limitationson a recognizing court’s abilityto review the merits of the foreign decision,“such a bizarre outcome” invitesclose scrutiny of the foreign proceedings.28 The former reasoning supportsa broader interpretation of the publicpolicy exception, while latter reasoningsuggests that the court should haveregard for the effect of the enforcementof a particular judgment (as opposedCanadian Arbitration and Mediation Journal20