Enforcing Domestic and International Arbitral Awards in Canada

Enforcing Domestic and
International Arbitral Awards
in Canada
Evelyn Perez Youssoufian
Avocats en litiges et arbitrages commerciaux
20 Queen Street West, Suite 3000
Toronto, Ontario M5H 3R3
416-365-3700 F 416-368-2982
www.ellynlaw.com
© 2015 Evelyn Perez Youssoufian
May not be reproduced without
written permission
ELLYN LAW LLP - Business Litigation & Arbitration Lawyers –
www.ellynlaw.com

Overview
 An Arbitral Award rendered pursuant to a valid arbitration clause has virtual
finality and international currency in terms of enforcement.
 There is no statutory right of appeal for international arbitral awards in
Canada.
 Arbitration awards are more widely and readily enforceable than court
judgments due to the 1958 New York Convention.
 Intention is that parties will enforce an award with minimal court
intervention.
 A Court can recognize an award without enforcing it, for example, where a
party uses the award as a defence to a claim by the other party.
 In Canada parties may apply for the recognition and enforcement of a
Domestic or International Arbitral Award.
ELLYN LAW LLP - Business Litigation & Arbitration Lawyers – www.ellynlaw.com

Overview
 Enforcement of arbitration awards can arise in either a domestic or international
legal context, e.g. Arbitral Award to be recognized and enforced in:
 Same province or territory;
 Other province or territory; and
 Canada, where it is deemed an international award.
 Application should be made in the court of the province or territory where the
arbitral award debtor possess, or might eventually possess, assets.
 Only the supervising court, the court at the place of arbitration has the power to
set aside an award (setting aside an award is different to an appeal, more akin
to judicial review). The enforcing court only has the power to decide if the
award will be enforced in its jurisdiction.
 Where applicable, applications can also be brought in Federal Court.

Canadian Arbitration Legislation
 Domestic
 In Ontario, Arbitration Act, 1991, SO 1991, C 17 (“Act”).
 International
 In Ontario – the International Commercial Arbitration Act, RSO 1990,
c I9 (“International Act”) incorporates the entirety of UNCITRAL
Model Law on International Commercial Arbitration (“Model Law”)
 The New York Convention on the Recognition and enforcement of
Foreign Arbitral Awards (1958) has effect in Ontario only to the
extent that the provisions are repeated in the Model Law.
 Federal
 Commercial Arbitration Act, RSC, 1985, c 17 (2nd Supp) applies to
commercial arbitration involving the federal government, a federal
Crown corporation or in relation to maritime or admiralty matters.

Domestic or International?
 An Arbitration is international if:
 The arbitration was held outside Canada;
 The parties have their places of business in different states
(countries) even if the award is made in, and enforcement is
sought in, Canada;
 The place at which a substantial part of the obligations of the
commercial relationship were performed outside Canada;
 The place with which the subject-matter of the dispute is most
closely connected is outside Canada; or
 The parties have expressly agreed that the subject-matter of the
arbitration agreement relates to more than one country.
Act, s. 2(1)(b); International Act, s. 1(7); Model Law, Art. 1

Requirements of an Arbitral Award
– Domestic and International
 An award shall:
 Be in writing;
 State the date the award was made;
 Be signed by all members of the arbitral tribunal (or by
a majority if an explanation of the omission of the
other signatures is included) – meaning all arbitrators
must participate in the award; and
 Be delivered to all parties.
Act, s. 38(1)-(4); Model Law, Art. 31(1)-(4)

– Written Reasons
 International – written reasons are required, unless the
parties agree:
 no reasons are to be given (i.e. in the Arbitration Agreement); or
 to use rules (e.g. commercial arbitration rules of the American
Arbitration Association) where written reasons are not required. Only
as long as the court can fairly determine on the record before it that
the arbitrator did not deal with the dispute beyond his/her jurisdiction
and that it is not contrary to the public policy of Ontario.
Activ Financial v Orbixa Management, 2011 ONSC 7286.
Model Law, Art. 31 (2)
 Domestic – Written reasons required, except where award is
on consent.
Act, s. 38(1)

– Seat of Arbitration
 Model Law wording is superior:
 International – The award shall state the place the
arbitration took place and the award is deemed to have
taken place there.
Model Law, Art. 31(3)
 Domestic – The place the award is made is to be specified
in the award.
Act, s. 38(2)
 Problem can develop if the award is actually made
at a place different from that of the arbitration,
especially regarding which law applies.
Hiscox v Outhwaite, [1991] 2 Lloyd’s Rep. 1.

Questions to Ask
Which legislation applies, domestic or international?
 Enforcing an award:
 Where should the award be enforced?
 Is the award ripe for enforcement?
 Have time limits to appeal/set-aside elapsed?
 Is it a final or interim award?
 Are you outside the limitation period?
 Are there other concurrent proceedings? i.e. application to set aside or appeal? Or application to
refuse to enforce?
 Challenging an award:
 Can you appeal or bring an application to set aside the award?
 What are the time limits to bring an appeal or an application to set aside the award?
 What are the grounds to set aside an award?
 Where do you bring the appeal or application to set aside?
 If there is an Application to enforce, should you bring an Application to refuse enforcement? What
are the grounds to refuse enforcement?

Time Limit for Appealing or
Challenging Award
 After receiving the award (or correction, explanation,
change, statement of reasons or additional award):
 30 days to appeal or set aside the award – Act, s. 47(1).
 3 months to set aside the award – Model Law, Art. 34(3).
 Exceptions:
 Fraud – Act, s. 47(2).

Enforcing an Award
 Enforcing an award in Ontario:
 Domestic – Act, s. 50;
 International – International Act, s. 11(1); Model Law, Art. 35.
 International commercial arbitration awards are to be enforced
exclusively under the International Commercial Arbitrations Act, not
common law used to enforce foreign judgments.
Activ Financial v Orbixa, 2011 ONSC 7286.
 Counsel cannot simply have the arbitral award date stamped.
Farah v Sauvageau, 2011 ONSC 1819.
 Once an Award has been converted into a Judgment, enforcement
procedures are similar to trial judgments and the ordinary rules of
procedure apply.
International Act, s. 11; Act, 50(8)

Ripe for Enforcement –
Domestic
 Courts have discretion to enforce an award notwithstanding the time
for bringing an appeal, application to set aside or for a declaration of
invalidity has not yet elapsed, or that such a proceeding is pending.
Act, s. 50(5)
 The test will turn on issues of balance of convenience and
irreparable harm. In exercising discretion to enforce award, the
court considers:
 what is just and reasonable in the circumstances;
 the bona fides of the application/appeal;
 the hardship to the parties if a stay is granted/refused; and
 whether or not the status quo ought to be maintained pending final disposition of
the appeal.
Walls Alive v The Sherwin-Williams Co., 2002 ABQB 721.
G.S. Dunn v. Venture Seed Ltd., 2003 MBQB 293.

Ripe for Enforcement – International
 A court may refuse recognition/enforcement of an award if the award has not yet
become binding on the parties or has been set aside or suspended by a court of the
country in which, or under the law of which, that award was made.
Model Law, Art. 36(1)(a)(v)
 N.Y.S.E. v. Orbixa, 2013 ONSC 5521, aff’d by 2014 ONCA 219.
 Date Application comes before Court, not date Application is made.
 Parties who bring applications for enforcement of an award before the award is final and
binding risk the court refusing to exercise its discretion to enforce the award and may have
costs awarded against them.
 Yugraneft Corp. v Rexx Management Corp., 2010 SCC 19.
 SCC observed that an award may not be ripe for enforcement until after the set-aside period
has expired but did not foreclose that awards may be ripe for enforcement before expiration
of set-aside period.
 SCC stated that courts "would be entitled to refuse to grant recognition and enforcement of
[an] award “until the set-aside period expired, not that courts must refuse to grant
enforcement until that time.

Limitation Period to Enforce
Award
 International – Model Law does not stipulate any limitation period,
leaving it open to each state.
 Yugraneft v Rexx Management, 2010 SCC 19:
 Limitation period of two years under provincial law is not inconsistent with the New
York Convention.
 Obligation arises when award becomes final – not from refusal to pay.
 Agreement between parties to alter limitation period is against public policy.
 Limitation period begins to run after:
 Deadline to set aside award has passed; or
 When the arbitral award creditor has learned, exercising reasonable diligence, the
arbitral award debtor possess assets in the jurisdiction where enforcement is
sought.
 Domestic – Two year limitation period. Time starts to run the day award
is received. No discoverability.
Act, s. 52(3)

Picking an Application Date
 Upon completion of the arbitration: immediately bring Application to
enforce.
 Pick first available date for an Application.
 If there is a pending appeal, application to set aside, or the date is
before expiry of time limit, request an Order for:
 Enforcement; and
 Alternatively, security for full amount of award pending outcome of set-
aside proceedings or expiration of set-aside period pursuant to Model
Law, 36(2) or Act, s. 50(5)(b).
Powerex Corp. v Alcan Inc., 2004 BCCA 504.
Europcar Italia v. Alba Tours, [1997] OJ No. 133 (CJ).

Requirements of an
Application to Enforce
 Application (on notice if domestic Act s. 50(2)) to the Ontario
Superior Court of Justice must be made in accordance with the
Rules of Civil Procedure, RRO 1990, Reg 194, and must contain:
 Notice of Application
 Affidavit attaching/establishing:
 Arbitral Award, original or certified copy;
 Arbitration Agreement, original or certified copy; and
 Calculation necessary to deal with pre/post award interest (using date of
award); and
 If enforcing an international award – Certified translation of the Award and
Arbitration Agreement, if not in English.
Model Law, Art. 35; Act s. 50

Length of Enforcement
Procedures
 Vary in length depending on:
 Whether the procedure is contested
 Case load of the Courts
 Litigation Rules of relevant jurisdictions

Result – Domestic
 Where award made in Ontario (Act, s. 50(3)) a Court shall give a judgment enforcing
the award unless:
 the 30 day appeal/application set-aside period has not yet elapsed,
 there is a pending appeal/application to set aside the award or application for
declaration of invalidity; or
 award has been set aside or arbitration is the subject of a declaration of invalidity.
 Where award made outside Ontario, (Act, s. 50(4)) – The court shall give a
judgment enforcing an award unless:
 same as above; and
 subject-matter of the award is not capable of being the subject of arbitration under
Ontario law.
 If a party wants to resist enforcement of an award made in Canada, outside of
Ontario, the award must be appealed/challenged in the province where the award
was made.

Result – International
 An arbitral award, irrespective of the country in
which it was made, shall:
 be recognized as binding and,
 upon application in writing to the competent court,
shall be enforced subject to the grounds for
refusing recognition or enforcement in Art. 36.
Model Law, Art. 35

Result – Stay of Enforcement
 If an application to set aside or suspend an arbitral
award is pending, the enforcing court may:
 adjourn its decision on enforcement and it may order
appropriate security to demonstrate the bona fides of the
respondent pursuing the appeal in an expeditious manner;
or
 Recognize and give judgment on the award, but then stay
execution (in the same way a money judgment would be
stayed).
Dalimpex Ltd. v Janicki, 2003 CanLII 34234 (ON CA).
Kanto Yakin v Can-Eng (1992), 7 OR (3d) 779 (Gen Div), aff’d by 1995 CanLII 8942 (ON
CA).
 Ontario Courts have no authority to grant “provisional
judgment” to be in effect until the appeal in the foreign
jurisdiction is determined.
Dalimpex Ltd. v Janicki, 2003 CanLII 34234 (ON CA).

Unusual Remedies – Domestic
 Instead of setting aside an award, the court may remit it to the arbitral tribunal
and give directions about the conduct of the arbitration.
Act, s. 46(8)
 If an award gives a remedy that the court does not have jurisdiction to grant or
would not grant in a proceeding based on similar circumstances, the court may:
 grant a different remedy requested by the applicant; or
 in the case of an award made in Ontario, remit it to the arbitral tribunal with the court’s
opinion, in which case the arbitral tribunal may award a different remedy.
Act, s. 50(7)
 A Court cannot remit an arbitration award to the original tribunal where:
 The arbitration award includes findings of fact and credibility as it would raise a
reasonable apprehension of bias.
Elk Valley Coal v. United Mine Workers Local 1656, 2009 ABCA 407.
 The tribunal had no jurisdiction to make the award in the first place.
MJS Recycling Inc. v Shane Homes Limited, 2011 ABCA 221.

Unusual Remedies –
International
 The Court, when asked to set aside an award, may,
where appropriate and so requested by a party,
suspend the setting aside proceedings for a period
of time determined by it to give the arbitral tribunal:
 an opportunity to resume the arbitral proceedings; or
 to take such other action as in the arbitral tribunal’s
opinion will eliminate the grounds for setting aside.
Model Law, Art. 46(8)
GPEC International v. Canadian Commercial Corporation, 2008 FC 414.

Enforcement of Award Set Aside by
Court at Place of Arbitration
 A Canadian court has discretion to:
 enforce an award even if it is under attack at place of
arbitration; or
Schreter v Gasmac Inc., 1992 CanLII 7671 (ON SC).
 adjourn Canadian enforcement proceeding where
award is subject to set-aside proceedings at place of
arbitration.
Powerex Corp. v Alcan Inc., 2004 BCCA 504.
 Enforcement will depend on the reasons for the
setting aside of the award.

Challenges to Award –
Domestic
 Grounds for setting aside an award (Act, s. 46):
 Legal incapacity of one of the parties;
 Invalid arbitration agreement or it has ceased to exist;
 Award deals with a dispute that the agreement does not cover or contains decision on
matter beyond scope of agreement;
 Composition of tribunal not in accordance with agreement or, if agreement did not deal
with matter, not in accordance with Act;
 Subject-matter of dispute not capable of being the subject of arbitration under Ontario
law;
 Applicant not treated equally and fairly, not given opportunity to present their case or to
respond to another party’s case, or not given proper notice of arbitration or of
appointment of an arbitrator;
 Procedures followed in the arbitration did not comply with Act;
 Arbitrator committed a corrupt or fraudulent act or there is reasonable apprehension of
bias (Farah v Sauvageau, 2011 ONSC 1819.);
 award obtained by fraud; or
 Award is a family arbitration award that is not enforceable under the Family Law Act.

Challenges to Award -
International
 Only recourse available in Canada against an international arbitration
award is opposing its enforcement on the following grounds:
 Incapacity of one of the parties or invalidity of the arbitration agreement;
 Improper notice to a party or party unable to present its case;
 Award deals with a dispute not contemplated by or falling within terms of
submission to arbitration (Mexico v Cargill, 2011 ONCA 622.);
 Composition or tribunal or its procedure not in accordance with parties’
agreement;
 Award not yet binding on the parties, or has been set aside/suspended by a court
of the country in which, or under the law of which, that award was made;
 Court’s finding that subject matter of dispute not arbitrable in the jurisdiction
enforcement is sought; or
 Reasons of public policy.
Model Law, Art. 36

Challenge to Award –
International
 Onus of proof is on the party resisting enforcement.
 Must satisfy the Court that, based on one of the enumerated
grounds, the award should not be enforced.
 Sliding scale of deference, depending on the ground for challenge.
United Mexican States v Feldman Karpa, 2005 CanLII 249 (ON CA).
 Any challenge to recognition/enforcement must be under the law of
the place of arbitration, or the law under which the parties have
submitted it, not the domestic law of the enforcing province.
Kanto v Can-Eng (1992), 7 OR (3d) 779 (Gen Div), aff’d by 1995 CanLII 8942 (ON CA).
Dunhill Personnel v Temps, 1993 CanLII 7171 (AB QB).

Public policy
 Two grounds for refusing enforcement involve the laws of
the enforcing province. Enforcement will be refused if:
 Court’s finding that subject matter of dispute not arbitrable in the
jurisdiction enforcement is sought; or
 Reasons of public policy.
Model Law, 36(1)(b)
 A party who raises a public policy argument must point to
some provincial or Canadian law that is declarative of that
public policy.
 However, mere existence of such a law is not necessarily a
reflection of public policy regarding enforcement of a
foreign award.

Public Policy
 Public policy grounds for resisting enforcement of an arbitral award are narrowly
construed and should apply only where enforcement would violate our "most basic
notions of morality and justice”.
 If illegal in Ontario, but legal in foreign jurisdiction, the award should be enforced in
Ontario unless the party can show it is against public policy to enforce the award.
Corporacion Transnacional de Inversiones v STET, 1999 CanLII 14819 (ON SC).
 The provision that a court may refuse to recognize or enforce an award if it is "in
conflict with the public policy of Canada", does not contemplate a political or
international position taken by Canada.
 Public policy refers to "fundamental notions and principles of justice”, i.e. tribunal
exceeded jurisdiction, decision is patently unreasonable or irrational or tribunal
completely disregards the law so the decision constitutes an abuse of authority
amounting to a flagrant denial of justice.
Canada (Attorney General) v. S.D. Myers Inc., 2004 FC 38.

Public Policy – Examples of
Non-Enforcement
 Corporacion Transnacional v STET, 1999 CanLII 14819 (ON SC).
 Inability to present a case.
 Failure to observe procedural fairness.
 Corruption, bribery or fraud.
 Znamensky v Donaldson Intl Livestock, 2010 ONCA 303.
 Non-attendance due to death threats.
 American Marketing Systemsv Old TGHI, 2007 ONCA 226.
 Respondents not given notice of the capacity in which they were made
parties to the arbitration.

Enforcing Partial or
Interim Arbitral Awards
 Domestic – No issue enforcing an interim award, order or direction
at the place of arbitration, and an order made by a court in one
province will be enforced in another (Act, s. 41).
 International – Model Law deals with power of arbitral tribunal to
order interim measures of protection and security in connection with
such measure (Model Law, Art 17) and such an order is to be
treated as an award (International Act, s. 9).
 Canada will enforce international interim awards:
 Enforcement of Arbitrator’s interim award granting a worldwide Mareva order,
made without notice.
Ce International Resources v Yeap, S.A. Minerals, 2013 BCSC 1804.
 Ex parte Mareva injunction obtained over shipment in BC, compelled party to
pay amount equal to award into Court to release shipment.
Sociedade-de-Fomento v Pakistan Steel Mills, 2014 BCCA 205.

Enforcement in one Court, Litigation in
Another
 Accentuate v Asigra, 2010 ONSC 3364.
 A court will not refuse to enforce an award because
one of the parties seeking to enforce it is taking
proceedings in another jurisdiction which would
contradict the award.
 Arbitral Award was final and would not be altered by
other proceeding.
 Conduct did not amount to public policy consideration
precluding the enforcement of the award.

Small Claims Court
 The Small Claims Court has jurisdiction for enforcement of
arbitration awards under the Courts of Justice Act for any amount
that falls within its jurisdiction.
 Argument that the Small Claims Court is precluded from dealing
with the Award because of the use of the word “application”,
meaning Notice of Application, in s. 50 was rejected.
 “Application” in s. 50 of the Act to be interpreted more broadly and
more generically to allow a person to approach or invoke the Small
Claims Court’s jurisdiction.
 Proceed by way of motion in the Small Claims Court.
Evergreen Solutions Ca v Depositario, 2014 CanLII 41038 (ON SCSM).

Final thoughts
 Using the proper legislation, preparing the proper documents and
following proper procedure will streamline the process of enforcing
an arbitral award.
 Keep limitation periods in mind – search out all of the debtor’s
assets and file an application in good time.
 Arbitral awards will be enforced in almost all circumstances.
 Unless there are strong public policy reasons for not doing so,
arbitral awards must be enforced by the courts.
 If they are not, then the efficacy of the whole arbitration process is
undermined.

Further Reading
 Bienvenu, Pierre and Valasek, Martin, Arbitration Guide Canada (IBA Arbitration Committee, Feb. 2013)
http://goo.gl/ZmJbGY.
 Brown, John P., Gertner, Eric and Bazov, Gleb, “Canada”, Arbitration in 42 jurisdictions worldwide,
(Global Arbitration Review; 2008); http://goo.gl/fktMLc.
 Casey, J. Brian, Arbitration Law of Canada: Practice and Procedure, 2nd ed. (Huntington NY: Juris,
2011).
 Heinzman, Thomas G., “An International Commercial Arbitral Award is Enforced Even Though It
Provided No Reasons”; http://goo.gl/RqO2a4.
 Heinzman, Thomas G., “Can a Party Enforce an Arbitration Award in One Court and Litigate the Issue in
Another Court?”; http://goo.gl/5FrZNb.
 Odumeru, Jonathan. “Developments in Enforcement of Foreign Arbitral Awards” (June 5, 2012);
http://goo.gl/MBuBFS.
 Pappas Vasilis F.L. and Wong, William Vol. 1, No. 5 “When Do Foreign Arbitral Awards Become Ripe for
Enforcement in Canada ?” ADR Perspectives (ADR Institute of Canada Inc., Nov. 2014);
http://goo.gl/sCQLYK.
 Richler, Joel, Cohen, Mitchell & Tupper, David, “International commercial Arbitration: Supreme Court of
Canada enforces domestic limitation period on application to enforce foreign arbitration award”;
http://goo.gl/5wL3Dy.
 Swanson, H. P., “The Enforcement of Arbitration Awards in Canada”; http://goo.gl/02HUqe.
 Thacker, Lawrence and Laxer, Jon, “Arbitration (International) Recent Developments of Importance”,
The 2012 Lexpert®/American Lawyer Guide to the Leading 500 Lawyers in Canada;
http://goo.gl/INZe0U.
 Wisner, Robert “Challenges to Arbitral Awards in Canada : Lessons from Commercial and NAFTA
Arbitrations; http://goo.gl/Mch4Ug.

Statues and Cases
 Accentuate v Asigra, 2010 ONSC 3364.
 Activ Financial Systems, Inc. v. Orbixa Management Services Inc., 2011 ONSC 7286.
 American Marketing Systems, Inc. v Old TGHI, Inc., 2007 ONCA 226.
 Arbitration Act, 1991, SO 1991, C 17.
 Canada (Attorney General) v S.D. Myers, Inc., 2004 FC 38.
 CE International Resources Holdings LLC v. Yeap Soon Sit, 2013 BCSC 1804.
 Commercial Arbitration Act, RSC, 1985, c 17 (2nd Supp).
 Corporacion Transnacional de Inversiones, S.A. de C.V. v STET International S.p.A., 1999 CanLII
14819 (ON SC).
 Dalimpex Ltd. v Janicki, 2003 CanLII 34234 (ON CA).
 Dunhill Personnel v Temps, 1993 CanLII 7171 (AB QB).
 Elk Valley Coal v. United Mine Workers of America Local 1656, 2009 ABCA 407.
 Europcar Italia v. Alba Tours, [1997] OJ No. 133 (CJ).
 Evergreen Solutions Ca Inc v Depositario, 2014 CanLII 41038 (ON SCSM).
 Farah v. Sauvageau Holdings Inc., 2011 ONSC 1819.
 G.S. Dunn & Co. Ltd. v. Venture Seed Ltd., 2003 MBQB 293.

Statues and Cases
 Hiscox v Outhwaite, [1991] 2 Lloyd’s Rep. 1.
 International Commercial Arbitration Act, RSO 1990, c I9.
 Kanto Yakin Kogyo Kabushiki-Kaisha v. Can-Eng Manufacturing Ltd., (1992), 7 OR (3d) 779 (Gen
Div), aff’d by 1995 CanLII 8942 (ON CA).
 Mexico v Cargill, Incorporated, 2011 ONCA 622.
 MJS Recycling Inc. v Shane Homes Limited, 2011 ABCA 221.
 N.Y.S.E. v. Orbixa, 2013 ONSC 5521, aff’d by 2014 ONCA 219.
 Powerex Corp. v Alcan Inc., 2004 BCCA 504.
 Rules of Civil Procedure, RRO 1990, Reg 194.
 Schreter v Gasmac Inc., 1992 CanLII 7671 (ON SC).
 Sociedade-de-fomento Industrial Private Limited v. Pakistan Steel Mills Corporation (Private)
Limited, 2014 BCCA 205.
 United Mexican States v Feldman Karpa, 2005 CanLII 249 (ON CA).
 Walls Alive (Edmonton) Ltd. v The Sherwin-Williams Co., 2002 ABQB 721.
 Yugraneft Corp. v Rexx Management Corp., 2010 SCC 19.
 Znamensky Selekcionno-Gibridny Centre LLC v Donaldson Intl Livestock Ltd., 2010 ONCA 303.

Enforcing Domestic and International Arbitral Awards in Canada

Recommended

Recommended

More Related Content

What's hot

What's hot (20)

Similar to Enforcing Domestic and International Arbitral Awards in Canada

Similar to Enforcing Domestic and International Arbitral Awards in Canada (20)

More from Evelyn Perez Youssoufian

More from Evelyn Perez Youssoufian (6)

Recently uploaded

Recently uploaded (20)

Enforcing Domestic and International Arbitral Awards in Canada