Canada

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Applicable requirements as to the form of arbitral awards

Applicable legislation as to the form of awards

1 Must an award take any particular form?

Rule 31 of the International Commercial Arbitration Act (ICAA) in both Ontario and British Columbia provides that the award must be in writing and signed by the arbitrators. In Ontario, in proceedings with more than one arbitrator, the signatures of the majority of the tribunal is sufficient but the reason for any omitted signature must be provided. The award must state the date and place of the arbitration and set out the reasons. Parties can agree, however, that no reasons should be given. The award must be delivered to each party.

If an arbitration settles prior to the conclusion of a hearing, which is often the case, both the UNCITRAL Model Law (the Model Law) and the rules of Ontario and British Columbia provide that the parties can ask the arbitral panel to write an award reflecting the settlement. That makes the settlement binding on all parties to the arbitration and subject to enforcement in other jurisdictions.

The UNCITRAL Rules have no provisions regarding the timing of the award nor do the corresponding provincial rules. However, Rule 46 of the ICSID Rules provides that the award shall be drawn up and signed within 120 days of closure of the proceeding. However, the tribunal may extend this by a further 60 days if it is otherwise unable to draw up the award.

The arbitration proceedings terminate with the delivery of the final award. They can terminate earlier, however. Both the Model Law and the Ontario and British Columbia rules provide that the proceedings may terminate earlier if the parties agree to terminate, or the tribunal determines that continuing the proceedings is either unnecessary or impossible.

Applicable procedural law for recourse against an award

Applicable legislation governing recourse against an award

2 Are there provisions governing modification, clarification or correction of an award? Are there provisions governing retractation or revision of an award? Under what circumstances may an award be retracted or revised (for fraud or other reasons)?

Section 44 of the Ontario Arbitration Act 1991 and Article 33 of the Model Law, which is adopted by reference in the Ontario International Commercial Arbitration Act 2017 (the Ontario ICAA), grant arbitrators the right to correct typographical errors, errors in calculations and similar errors in awards. This must be done within 30 days of receipt of the award unless the parties agree to a longer term.

Section 44(2) of the Ontario Arbitration Act also grants the right to correct an injustice caused by oversight by the tribunal, and grants the tribunal authority to make an additional award to deal with a claim that was presented in the arbitration but omitted from the earlier award.

Article 33(3) of the Model Law contains a much narrower power to amend an award. The tribunal has no broader power without agreement by the parties. Article 33 states that if the parties agree, the tribunal may offer an interpretation on a specific point or part of the award. Article 33 also allows a party to apply to the tribunal, with notice to the other party, with a request to make an additional award regarding claims presented in the arbitration but omitted from the award.

Canadian case law often deal with the difference between correcting an error (of computation, typography, or clerical in nature) and rewriting the decision. The leading cases are the British Columbia Court of Appeal decision in Westnav Container, 2010, 315DLR (4th) 649 and the Ontario decision in Canadian Broadcasting Corp, 1997, 34OR (3rd) 493.

Under the ICSID Rules, a party can apply to have an award changed through a process known as revision or reconsideration. If a party later discovers some fact that would have decisively affected the award but was not known to the applicant or the tribunal at the time the award was rendered, despite their own due diligence, the party can apply to have an award changed by a process known as revision. A party also has a right to apply for annulment of the award on procedural grounds.

Two recent decisions deal with the question of whether tribunals under the ICSID Rules can reconsider final decisions (Perenco v. Ecuador ICSID Case No. ARB/08/6; Standard Chartered Bank v. Tanzania, ICSID Case No. ARB/10/20). In Perenco, a notice of motion was filed for a reconsideration of the decision. The tribunal permitted the motion to proceed but emphasised that only in exceptional circumstances would it reconsider a previous decision. Ecuador submitted eight grounds on which the tribunal’s decision should be reconsidered, including findings of jurisdiction over Perenco’s claim and its interpretation of certain contractual defences. In the end, the tribunal dismissed the motion to reconsider the decision, with a useful analysis of its authority to reconsider under the ICSID Rules. In Standard Chartered Bank, the claimant requested reconsideration based on the receipt of new information. The tribunal did so, finding it had the authority to reconsider prior jurisdictional decisions, as provided by Articles 41(1) and 44 of the ICSID Convention and ICSID Arbitration Rules 41(1) and 41(2).

Consistent with the Model Law, there have been recent developments in a tribunal’s ability to make corrections under Article 36 of the 2021 ICC Rules and Article 27 of the 2020 LCIA Rules.

Under the 2017 ICC Rules, awards already rendered could be subject to correction or interpretation by arbitral tribunals under the supervision of the court. Article 36(3) now provides that, within 30 days of receipt of the award, a party may request the arbitral tribunal to issue an additional award to rule on claims made during the proceedings on which ‘the arbitral tribunal has omitted to decide’.

Under the new 2020 LCIA Rules, the ability to correct awards has also been expanded. Under the 2014 Rules, arbitrators were able to correct an award and issue an addendum if the request was justified. Under the new Rule 27.3, an arbitral tribunal can ‘nevertheless issue an addendum to the award’ even if it considers such a request to be unjustified. The tribunal is empowered to award costs regarding the request depending on the result.

Appeals from an award

3 May an award be appealed to or set aside by the courts? What are the differences between appeals and applications to set aside awards?

Judicial intervention in domestic arbitrations across Canada is limited to those specific situations set out in the provincial legislation. In Ontario, four situations are specified:

to assist in conducting the arbitration;
to ensure that the arbitration is conducted within the terms of the arbitration agreement;
to prevent unequal or unfair treatment of the parties to the arbitration agreement; and
to enforce the award (see Adams v. Canada 2011 ONSC 325). It is common ground that there is no appeal of procedural orders or interim orders issued by an arbitrator (Inforica v. CGI 2,009 ONCA 642).

Across Canada, provincial legislation provides that domestic arbitration awards can be appealed only on a question of law with leave of the court. For example, Section 31 of the British Columbia Arbitration Act provides that a party to an arbitration can appeal to the court on any question of law arising from the award if all parties to the arbitration consent or the court grants leave. Section 31 also provides that the court may grant leave if it determines that the importance of the result justifies intervention by the court, the determination of the point of law may prevent a miscarriage of justice and the point of law is important to both the applicant and the general public.

The Ontario Arbitration Act of 1991 contains a similar provision in Section 45. There, a court will grant leave to appeal only if the court is satisfied that the issue is important to the parties and significantly affects the rights of the parties. The two leading cases are the Supreme Court of Canada decisions in Sattva Capital (2014 SCC 53) and Teal Cedar (2017 SCC 32). The decision of the British Columbia Court of Appeal in Richmont (2018 BCCA 452) also confirms that courts grant leave only in the clearest of circumstances.

The new British Columbia Arbitration Act, which came into force on 1 September 2020, made some significant changes in the appeal process. Under the new Act, appeals moved to the British Columbia Court of Appeal. As before, appeals can be made only on a question of law but they must now be made within 30 days, not 60 days as under the old Act. Under the new Act, the parties can opt out of appeals, which was not available under the old Act.

A new standard of review

The Supreme Court of Canada decision in Vavilov 2019 SCC 64 may lead to a new standard of review regarding appeals from arbitration awards. The decision held that where there was a statutory appeal, the standard of review should be correctness not reasonableness, as it had been in the past. It is quite possible that Canada will see a reasonableness standard for consensual arbitrations and a correctness standard for statutory appeals.

Courts typically grant judicial deference to the award on appeal and will only allow the appeal if the award was unreasonable. However, recent changes to the standards of appellate review in Canada have resulted in some courts granting no deference to domestic awards, although this approach has not been followed in all jurisdictions (see Cove Contracting Ltd, 2020 ABQB 106). The Supreme Court of Canada is divided (Wastech Services 2021 SCC 7).

Set-asides

The Model Law, which underlies all provincial legislation dealing with arbitrations limits, challenges to very narrow grounds. Article 34 of the Model Law governs application to set aside all international commercial arbitrations seated in Canada and any attempts to refuse enforcement of awards from tribunals seated outside Canada. Article 34(2) provides that an award may be set aside only if:

the applicant furnishes proof of:
- the incapacity of a party or the invalidity of the arbitration agreement;
- lack of notice or denial of the opportunity to present its case;
- excess of jurisdiction; or
- the arbitral procedure not being in accordance with the agreement; or
the court finds that:
- the subject matter is not arbitrable; or
- the award is against public policy.

There is no scope for any review on grounds of error of law or fact (Canada v. SD Myers [2004] 3 FCR 368) and failure to object in the arbitration may constitute a waiver of rights (FCA Canada Inc 2019 ONSC 364).

Article 16(2) of the Model Law provides that a plea that the tribunal lacks jurisdiction must be raised no later than the statement of defence or as soon as a matter alleged to exceed jurisdiction is raised. This may preclude later challenges to the award (SD Myers). There is a presumption that the tribunal acted within its jurisdiction (Corporacion Transnacional (2000) 49 OR (3rd) 414 (CA)). As previously stated, Canadian courts typically grant significant judicial deference to arbitral tribunals (Nippon Steel Corp [1991] WWR 219 (CA)) and are reluctant to overturn decisions of international tribunals (United Mexican States v. Burr, 2020 ONSC 2376).

In a set-aside application, the applicant cannot present new evidence as of right (Russian Federation v. Luxtona 2019 ONSC 7558). Leave is required and the applicant must meet the test in Palmer 1980 SCR 759. Further, the applicant must show that the evidence:

could not have been obtained using reasonable diligence;
will probably have an important influence on the case;
must be apparently credible; and
must be such that, if believed, it could reasonably be expected, when taken with the other evidence adduced at the hearing, to have affected the result.

Canadian courts rarely allow set-asides on the grounds of public policy. In Corporacion Transnacional, the court stated that public policy does not refer to the political or an international position of Canada but refers to fundamental principles of justice. There have been attempts to argue that ‘manifest disregard of law’ should be a ground, but so far that argument has been unsuccessful. It appears to have had much greater success in the United States.

The Supreme Court of Canada has added another ground, however, that will become very important in setting-aside arbitration awards in Canada, that is that the arbitration agreement is unconscionable (Uber Technologies v. Heller 2020 SCC 16). Note that the ICC in Article 1280 of the 2021 Rules also allows courts to disregard arbitration agreements that are unconscionable.

Appeals, set-asides and reconsiderations all take place after an award has been granted. Some attention should be paid to the early dismissal provisions. For example, Rule 41 of the ICSID Rules provides for a preliminary objection of any claim that is not within the jurisdiction of ICSID or the tribunal. Any objection must be filed no later than the time limit fixed for filing the counter-memorial. If the tribunal decides that the dispute is not within the jurisdiction of ICSID or within its own competence, or that the claims are manifestly without legal merit, it must render an award to that effect.

Applicable procedural law for setting aside of arbitral awards

Time limit

4 Is there a time limit for applying for the setting aside of an arbitral award?

The Model Law (Article 34(3)) and the Canadian statutes based on the Model Law, including the Commercial Arbitration Code, British Columbia’s International Commercial Arbitration Act and Ontario’s International Commercial Arbitration Act, provide that an application to set aside an award may not be made after three months have elapsed from the date on which the party making that application had received the arbitral award or, if a request had been made for a correction, interpretation or addition to the award, from the date on which the request had been disposed of by the arbitral tribunal.

It is important to note that Article 34(4) of the Commercial Arbitration Code provides:

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 in order 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.

Under Quebec’s Code of Civil Procedure (Section 947.4), an application for annulment must be made within three months of receipt of the arbitration award or of the decision rendered under Section 945.6 (correction, interpretation and supplementary award).

With respect to domestic arbitration, under the legislation of Ontario, British Columbia, Alberta, Manitoba, New Brunswick, Nova Scotia and Saskatchewan, an application to set aside an arbitral award must be commenced within 30 days of the applicant receiving the award, correction, explanation, change or statement of reasons on which the application is based.

Award

5 What kind of arbitral decision can be set aside in your jurisdiction? Can courts set aside partial or interim awards?

The New York Convention provides that each contracting state shall recognise arbitral awards as binding and enforce them in accordance with the rules of procedure of the territory where the award is relied on, under the conditions laid down in the Convention (Article III). The enforcement of interim measures is not provided for.

Although the Model Law does not explicitly make provision for partial or interim awards, but only makes reference to the ‘award’, interim and partial awards are commonly made under that law.

Competent court

6 Which court has jurisdiction over an application for the setting aside of an arbitral award?

Both the Federal Court of Canada and the superior courts in the provinces have jurisdiction to hear enforcement applications.

The Federal Court has a limited statutory jurisdiction to review a narrow scope of legal issues, whereas the superior courts of the provinces have plenary jurisdiction. The Federal Court has jurisdiction over commercial arbitration awards that fall within the purview of applicable federal legislation where one of the parties is the Crown, a federal government agency, or the subject matter is within exclusive federal jurisdiction, such as maritime law and patent law. The New York Convention was incorporated into the federal United Nations Foreign Arbitral Awards Act, which functions to govern foreign awards that are within the jurisdiction of the federal government.

The UNCITRAL Model Law has been incorporated into the various versions of the federal Commercial Arbitration Act, which is applicable to international arbitrations within the purview of federal jurisdiction.

In each province, legislation governing the enforcement of international arbitral awards is separate from that of domestic awards. All provinces have an International Commercial Arbitration Act and an Arbitration Act to govern international and domestic arbitration awards respectively. In Ontario and the other provinces, the legislation follows the Model Law, including Article 35 indicating that an award shall be recognised as binding and shall be enforced ‘upon application in writing to the competent court’. Ontario’s International Commercial Arbitration Act 2017 provides that ‘court’ or ‘competent court’, when used in the Model Law in reference to an Ontario court, shall be read as a reference to the Superior Court of Justice unless the context requires otherwise. In British Columbia’s International Commercial Arbitration Act, ‘court’ means a body or an organ of the judicial system of a state, and ‘Supreme Court’ means the Supreme Court of British Columbia.

Enforcement occurs by application to a court of competent jurisdiction, which must be supplied with original documents that reflect the award or certified copies. Application for enforcement is commenced by issuing a notice of application to the appropriate court. These applications are generally made by notice but may be brought ex parte in limited circumstances.

The Federal Court Rules are more detailed and require an affidavit stating that the award has not been satisfied, that there is no impediment to recognition or enforcement, and the award is final.

Enforcement in superior court proceedings can include a number of steps, including examination and garnishment, and writ of seizure or sale. In all provinces, the Rules of Civil Procedure under provincial legislation apply. The Federal Court has its own Rules of Procedure, which apply in the case of federal applications.

Form of application and required documentation

7 What documentation is required when applying for the setting aside of an arbitral award?

All applications relating to international awards require the original award and arbitration agreement, or certified copies, in a manner that conforms with Article 35(2) of the Model Law. The same generally applies with respect to domestic awards. Once approved, the order of the arbitrator can be enforced in the same manner as a judgment of the court with leave of the court.

Filing fees vary across the provinces and range from C$35 to C$250.

Article 34(2) of the Model Law provides that an award may be set aside only if:

the applicant furnishes proof of:
- the incapacity of the party or the invalidity of the arbitration agreement;
- lack of notice or denial of the opportunity to present its case;
- excess of jurisdiction; or
- the arbitral procedure not being in accordance with the agreement; or
the court finds that:
- the subject matter is not arbitrable; or
- the award is against public policy.

Translation of required documentation

8 If the required documentation is drafted in a language other than the official language of your jurisdiction, is it necessary to submit a translation with the application for the setting aside of an arbitral award? If yes, in what form must the translation be?

If an award is not in one of the official languages of Canada (French or English), the original or certified copy of the award must be accompanied by an official certified translation. This applies to both international and domestic awards.

Other practical requirements

9 What are the other practical requirements relating to the setting aside of an arbitral award? Are there any limitations on the language and length of the submissions and of the documentation filed by the parties?

An important practical consideration concerns limitations periods, for which there are no provisions in the New York Convention or the Model Law. Article III of the New York Convention provides: ‘Each Contracting State shall recognize arbitral awards as binding and enforce them in accordance with the rules of procedure of the territory where the award is relied upon.’

In Canada, the provincial rules for limitation periods are applicable to enforcement of internationl arbitrations, and enforcement applications may be subject to provincial discoverability rules. In some provinces, this means that an application must be made within two years of the date of the award. In others, the limitation period runs from the date of expiry of the appeal period. Courts are generally unwilling to extend limitation periods.

Under Section 10 of Ontario’s International Commercial Arbitration Act:

No application under the Convention or the Model Law for recognition or enforcement (or both) of an arbitral award shall be made after the later of December 31, 2018 and the tenth anniversary of,
(a) the date on which the award was made; or
(b) if proceedings at the place of arbitration to set aside the award were commenced, the date on which the proceedings concluded.

Another time-sensitive consideration is when objections to arbitral jurisdiction can be made. For international arbitrations, Ontario’s International Commercial Arbitration Act adopts Article 16(2) of the Model Law, which requires that objections to an arbitral tribunal’s jurisdiction must be raised not later than the submission of the statement of defence. For domestic arbitrations, under Subsection 17(3) of Ontario’s Arbitration Act, an objection must be made no later than the beginning of the hearing or, if there is no hearing, no later than the first occasion on which the parties submit a statement to the tribunal.

Similarly, challenges to an arbitrator’s impartiality or independence are time-sensitive. This is a common claim that has become a disguised ground of appeal. Article 13 of the Model Law requires challenges to be brought within 15 days of the notice of appointment or the date on which the circumstances giving rise to the challenge become known.

Form of the setting-aside proceedings

10 What are the different steps of the proceedings?

Canada is a federal jurisdiction with 10 provinces and three territories. Each of these has separate statutes for dealing with both domestic and international arbitration. The New York Convention and the Model Law are incorporated by reference into legislation dealing with international arbitration. Legislation relating to domestic arbitrations, whether provincial and federal, is generally based on the Model Law.

The federal Commercial Arbitration Act only applies where Her Majesty the Queen in the right of Canada, a government department or a federal Crown corporation is a party to the arbitration or the dispute relates to a matter exclusively under federal jurisdiction, such as maritime and admiralty matters.

In Quebec, Canada’s only civil law jurisdiction, both domestic and international arbitration is governed by the Civil Code of Quebec (Books 5 and 10) and the Quebec Code of Civil Procedure (Book 7).

To set aside foreign or domestic awards, an application is usually made on notice to the appropriate court with jurisdiction over the arbitration. Applications on matters governed by provincial law are made to the superior court of first instance. Subject matter governed by federal law falls within the jurisdiction of the Federal Court Trial Division.

There are no material differences between the language of Article V.2(b) of the New York Convention and Article 36(1)(b) of the Model Law and the language adopted in the statutes of the Canadian provinces. Canadian courts take a deferential approach to the enforcement of international arbitral awards and a narrow approach regarding public policy defences under the New York Convention and the Model Law.

Suspensive effect

11 Do setting-aside proceedings have suspensive effect? May an arbitral award be recognised or enforced pending the setting-aside proceedings in your jurisdiction?

Applying Article 36(2) of the Model Law, which has been incorporated into Canadian arbitration laws, a court in Canada may stay proceedings to enforce an award pending the outcome of a challenge to the award (see Dalimpex Ltd v. Janicki [2003] OJ No. 2094 (CA) at paras. 60 and 61) and may also, on the application of the party seeking the recognition and enforcement of the award, order the other party to provide appropriate security.

There are similar stay provisions in domestic arbitration acts. For instance, under Section 50(5) of Ontario’s Arbitration Act, if the period for commencing an appeal, an application to set aside the award or an application for a declaration of invalidity has not yet elapsed, or if such a proceeding is pending, the court may order, on such conditions as are just, that enforcement of the award is stayed until the period has elapsed without such a proceeding being commenced, or until the pending proceeding is finally disposed of.

Grounds for setting aside an arbitral award

12 What are the grounds on which an arbitral award may be set aside?

Generally, the grounds for refusing to recognise or enforce a foreign arbitral award are wider and more comprehensive than the grounds for refusing recognition or enforcement of domestic awards. This is due to the fact that the parties may not have enjoyed the same right to appeal or to set aside the award in or under the law of the originating jurisdiction. However, grounds for refusing recognition or enforcement of foreign arbitral awards are nonetheless limited.

The grounds for challenging an award under the Model Law are derived from Article V of the New York Convention. Accordingly, authorities relating to Article V have application to the corresponding provisions in Articles 34 (application for setting aside) and 36 (grounds for refusing recognition and enforcement) of the Model Law.

It has been noted that under Article 36 of the Model Law, ‘[n]either the absence of the judgment debtor from the jurisdiction of the receiving court nor the absence of assets in the receiving jurisdiction is specified as a circumstance in which a refusal to recognize can be made’, at least expressly (see Yaiguaje v. Chevron Corp. (2013), 361 D.L.R. (4th) 489 (Ont. S.C.J. [Commercial List])).

Decision on the setting-aside application

13 What is the effect of the decision on the setting-aside application in your jurisdiction? What challenges are available?

A decision by a court to recognise an arbitration award makes an award enforceable as an order of the court. That gives the holder of the arbitration award a broad range of remedies that the court may provide to assist in the recovery of what has become a judgment of the court. However, it is open to the parties objecting to the court’s decision to appeal that decision on the usual legal grounds. Further, any appeal requires leave of the court and Canadian courts are reluctant to grant leave.

Effects of decisions rendered in other jurisdictions

14 Will courts take into consideration decisions rendered in the same matter in other jurisdictions or give effect to them?

Recognition and enforcement can be refused 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 (UNCITRAL Model Arbitration Law, Article 36(1)(a)(v); New York Convention, Article V1(b)).

Under the domestic law of Ontario, British Columbia, Manitoba, Alberta, Saskatchewan and New Brunswick, the court may refuse to recognise and enforce an award made elsewhere in Canada, if there is a pending appeal to set aside the award, or if the award has been set aside in the province or territory where it was made or the arbitration is the subject of a declaration of invalidity granted there.

Applicable procedural law for recognition and enforcement of arbitral awards

Applicable legislation for recognition and enforcement

15 What is the applicable procedural law for recognition and enforcement of an arbitral award in your jurisdiction? Is your jurisdiction party to treaties facilitating recognition and enforcement of arbitral awards?

Canada is a federal jurisdiction with 10 provinces and three territories. Each of these has separate statutes for dealing with both domestic and international arbitration. The New York Convention and the Model Law are incorporated into the national legislation. The domestic provincial legislation is generally based on the Model Law.

Federal legislation also governs domestic arbitration, which is also based on the Model Law. The federal Commercial Arbitration Act applies only where Her Majesty the Queen in the right of Canada, a government department or a federal or Crown corporation is a party or the dispute relates to a matter exclusively under federal jurisdiction, such as maritime and intellectual property law.

Canada and its provinces were among the first jurisdictions in the world to enact legislation expressly implementing the Model Law. As indicated, it has been incorporated into all provincial legislation governing arbitration.

To enforce foreign or domestic awards, an application is usually made on notice to the appropriate court with jurisdiction over the arbitration. Applications on matters governed by provincial law are made to the superior court of first instance. Subject matter governed by federal law falls within the jurisdiction of the Federal Court Trial Division.

There are no material differences between the language of Article V.2(b) of the New York Convention and Article 36(1)(b) of the Model Law on the one hand and the language adopted by the Canadian provinces on the other hand.

Canadian courts take a deferential approach to the enforcement of international arbitral awards and a narrow approach regarding public policy defences under the New York Convention and the Model Law.

ICSID

Canada ratified the Convention on the Settlement of Disputes Between States and Nationals of Other States, 1966 (the ICSID Convention) on 1 November 2013.

Enforcement procedures differ for awards issued under the Convention establishing the International Centre for the Settlement of Investment Disputes. Non-ICSID awards generally fall under the New York Convention. The ICSID Convention now covers 154 contracting states, including Canada.

The ICSID Convention in Article 53(1) provides that an ICSID award shall be binding on the parties and shall not be subject to any appeal or any other remedy except for the limited revision and annulment remedies provided for in Articles 51 and 52. When an annulment application is made, the enforcement may be stayed at the discretion of the three-person ad hoc committee that ICSID appoints to consider annulment applications.

ICSID awards are directly and immediately enforceable. Article 54(1) of the ICSID Convention requires all Member States to treat ICSID awards as binding and to enforce such awards as if they were a final judgment of the Member State’s court. A party seeking to enforce an ICSID award merely needs to provide, pursuant to Article 54(2), a copy of the award certified by the ICSID Secretary General to the court that the Member State has designated with ICSID.

Non-ICSID awards, on the other hand, must be enforced under the New York Convention or a similar treaty. In such cases, the court may refuse to recognise a non-ICSID award under the narrow grounds provided in the New York Convention or other applicable enforcement treaties. The party opposing enforcement of a non-ICSID award may seek to have the award annulled in the courts at the arbitration seat. If a set-aside proceeding is launched, enforcement must be stayed.

Article 54 provides that all contracting states to the ICSID Convention are obliged to recognise ICSID awards as binding. There is no basis in the ICSID Convention for a contracting state party to refuse recognition of an ICSID award. Article 54 also provides that all contracting states of the ICSID Convention are obliged to enforce pecuniary obligations imposed by an arbitral award as if it were a final judgment of a court in that state. There is, therefore, no basis for a contracting state to decline to enforce the obligations imposed by an ICSID award.

However, Article 55 clarifies that the obligations in Article 54 of the ICSID Convention do not alter the laws in effect regarding foreign sovereign immunity. Whatever national laws apply to the execution of final judgments against foreign states and their assets generally apply also to the execution of ICSID awards.

North American Free Trade Agreement

The other international treaty important in Canadian arbitration circles is the North American Free Trade Agreement (NAFTA). That agreement gave investors from the United States and Mexico protection for their investments in Canada, and Canadian investors protection for their investments in the United States and Mexico.

As in the case of many international investment treaties, Chapter 11 of NAFTA provided potential recovery for claimants when the host state violated investment protection obligations such as fair and equitable treatment, full protection and security, national treatment and most favoured nation treatment. During the 25 years when NAFTA was in force, Canada lost eight and won nine arbitration decisions.

All this came to an end on 30 September 2018, when the three countries reached agreement on a new treaty called the United States Mexico Canada Agreement (USMCA), which will replace NAFTA.

Going forward, Canadian investors will have no protection for their investments in the United States and US investors will have no protection for their investments in Canada. The domestic courts will still be open to those investors as will other international arbitration agreements, such as ICSID and the New York Convention.

There will be a sunset provision, however. Canadian or US investors must initiate any valid claims regarding the investments established or acquired while NAFTA was in force within three years of NAFTA’s termination. After the three-year window for legacy claims, Canadian and US investors will no longer be able to invoke NAFTA investor state remedies.

Canadian and US investors will be limited to litigating future investment disputes in the domestic courts or before other international arbitration tribunals. All of the Canadian provinces have international arbitration legislation that incorporates both Model Law and New York Convention rights but the substantive rights are not as specific as outlined in NAFTA. In effect, the provincial legislation is largely procedural.

Canadian investors in Mexico and Mexican investors in Canada will continue to have investor-state arbitration protection because both countries are now signatories to the Comprehensive and Progressive Agreement for Trans Pacific Partnership (CPTPP), which came into force on 30 December 2018.

In February 2016, following seven years of negotiation, Canada, the United States, Mexico and nine other states signed the Transpacific Partnership (TPP) free trade agreement. However, the United States withdrew from the TPP in January 2017 and it remains unratified by the remaining signatories.

The Comprehensive Economic and Trade Agreement (CETA) between Canada and the European Union entered into force on 21 September 2017, and Canada has agreed to provisionally apply parts of the agreement. Chapter 8 of CETA, which deals with investment disputes, will not be applied during provisional implementation and will only take effect after CETA is ratified by all Member States. Investment disputes under CETA are to proceed before a three-member tribunal comprising one EU national, one Canadian national and one third country, with the tribunal panel being randomly selected from a pool of 15 members appointed by the CETA Joint Committee. In addition to the creation of a tribunal to hear cases submitted pursuant to Article 8.23 of CETA, an appellate tribunal has also been created to ‘uphold, modify or reverse a Tribunal’s award’ on any errors in the application or interpretation of applicable law; any manifest errors in the appreciation of the facts, including the appreciation of relevant domestic law; and on any of the grounds set out in Article 52(1) of the ICSID Convention.

The New York Convention

16 Is the state a party to the 1958 New York Convention? If yes, what is the date of entry into force of the Convention? Was there any reservation made under Article I(3) of the Convention?

The New York Convention entered into force in Canada on 10 August 1986. There was one reservation, being that Canada declared that it would apply the Convention only to differences arising out of legal relationships, whether contractual or not, that are considered commercial under the laws of Canada. The exception is the province of Quebec, where the law does not provide for such a limitation.

Recognition proceedings

Time limit

17 Is there a time limit for applying for the recognition and enforcement of an arbitral award?

Article III of the New York Convention provides, under the conditions specified, that: ‘Each Contracting State shall recognize arbitral awards as binding and enforce them in accordance with the rules of procedure of the territory where the award is relied upon.’ This Article permits, although it does not require, contracting states or, in the case of a federal state such as Canada, a sub-national territory (province) with jurisdiction over the matter, to subject the recognition and enforcement of foreign arbitral awards to a time limit.

In Canada, the provincial rules for limitation periods are applicable to enforcement of international arbitrations, and enforcement applications may be subject to provincial discoverability rules. In some provinces, this means that an application must be made within two years of the date of the award. In others, the limitation period runs from the date of expiry of the appeal period. Courts are generally unwilling to extend limitation periods.

For instance, under Section 10 of Ontario’s International Commercial Arbitration Act:

No application under the Convention or the Model Law for recognition or enforcement (or both) of an arbitral award shall be made after the later of December 31, 2018 and the tenth anniversary of,
(a) the date on which the award was made; or
(b) if proceedings at the place of arbitration to set aside the award were commenced, the date on which the proceedings concluded.

The British Columbia Limitation Act expressly provides that the term ‘local judgment’ includes international arbitral awards (Limitation Act, RSBC 1996, c 266, section 1), and is therefore subject to a basic limitation period for court proceeding to enforce or sue on judgment (i.e., 10 years after the judgment for the payment of money or the return of personal property becomes enforceable).

Competent court

18 Which court has jurisdiction over an application for recognition and enforcement of an arbitral award?

Both the Federal Court of Canada and the superior courts in the provinces have jurisdiction to hear enforcement applications.

The New York Convention was incorporated into the federal United Nations Foreign Arbitral Awards Act, which functions to govern foreign awards that are within the jurisdiction of the federal government.

The UNCITRAL Model Law has been implemented into the various versions of the federal Commercial Arbitration Act, which is applicable to international arbitrations within the purview of federal jurisdiction.

In each province, legislation for enforcement of international arbitral awards is separate from that of domestic awards. All provinces have an International Commercial Arbitration Act and an Arbitration Act to govern international and domestic arbitration awards, respectively. In the provinces, the legislation follows the Model Law, including the language in Article 35 indicating that awards must be recognised, with the court having little or no discretion to refuse enforcement unless one of the grounds for refusing recognition or enforcement under Article 36 can be shown.

Enforcement occurs by application to a court of competent jurisdiction, which must be supplied with original documents that reflect the award, or certified copies. Application for enforcement is commenced by issuing a notice of application to the appropriate court. These applications are generally made by notice but may be brought ex parte in limited circumstances.

The Federal Court Rules are more detailed and require an affidavit stating that the award has not been satisfied, that there is no impediment to recognition or enforcement, and the award is final.

Enforcement in superior court proceedings can involve a number of steps, including examination and garnishment, and writ of seizure or sale. In all provinces, the Rules of Civil Procedure under provincial legislation apply. The Federal Court has its own Rules of Procedure, which apply in the case of federal applications.

Under the new British Columbia Arbitration Act, which came into effect on 1 September 2021, a new streamlined enforcement process is available for enforcing awards made across Canada. Subject to certain grounds for refusing the recognition or enforcement of an award that are set out in the Act, interim orders and arbitral orders made in other Canadian provinces can now be enforced on application to the Supreme Court of British Columbia. Under the new Act, parties can now apply directly to that Court and have arbitral awards made in another Canadian jurisdiction recognised and enforced. Previously parties had to rely on a two-step process that required them to first obtain recognition and enforcement in the home province.

Jurisdictional and admissibility issues

19 What are the requirements for the court to have jurisdiction over an application for recognition and enforcement and for the application to be admissible? Must the applicant identify assets within the jurisdiction of the court that will be the subject of enforcement for the purpose of recognition proceedings?

The Supreme Court decision in Chevron v. Yaiguaje (2015 SCC 42) settles the long-standing question of whether a foreign judgment may be enforced in Canada without the claimant demonstrating that either the claim or the judgment debtor has any connection with Canada. The Court has ruled that no such connection is necessary. In particular, it is not necessary to identify assets within the jurisdiction of the court that will be the subject of enforcement for the purpose of recognition proceedings.

This situation is not the same as when a claim is initiated in Ontario; there, a substantial connection may be required. The issue here is whether Canada has an obligation under the relevant treaties to enforce the claim.

In Chevron, the Supreme Court held that the Ontario court had jurisdiction over an application for recognition and enforcement on the basis that the respondent company was served at its place of business in Ontario. The Supreme Court held that its conclusion on the jurisdictional issue was based on three reasons:

First, this Court has rightly never imposed a requirement to prove a real and substantial connection between the defendant or the dispute and the province in actions to recognize and enforce foreign judgments. Second, the distinct principles that underlie actions for recognition and enforcement as opposed to actions at first instance support this position. Third, the experiences of other jurisdictions, convincing academic commentary, and the fact that comparable statutory provisions exist in provincial legislation reinforce this approach. Finally, practical considerations militate against adopting Chevron’s submission.

Form of the recognition proceedings

20 Are the recognition proceedings in your jurisdiction adversarial or ex parte? What are the different steps of the proceedings?

Under domestic arbitration legislation in Ontario, Alberta, Saskatchewan, Manitoba and New Brunswick, a person entitled to the enforcement of an award made anywhere in Canada can apply to the superior court in that province. In some provinces, the legislation expressly provides that the application for enforcement must be made on notice. However, in most cases, there is a provision to bring the application ex parte if there is neither the means nor the time to provide meaningful notice or if a delay would frustrate the process.

To enforce a foreign award, an application for enforcement is commenced by issuing a notice of application under the applicable legislation to the appropriate court.

Form of application and required documentation

21 What documentation is required to obtain recognition?

Translation of required documentation

22 If the required documentation is drafted in a language other than the official language of your jurisdiction, is it necessary to submit a translation with an application to obtain recognition? If yes, in what form must the translation be?

Other practical requirements

23 What are the other practical requirements relating to recognition and enforcement? Are there any limitations on the language and length of the submissions and of the documentation filed by the parties?

An important practical consideration concerns limitations periods, for which there are no provisions in the New York Convention or the Model Law. However, in Canada, the provincial rules for limitation periods are applicable to enforcement of international arbitrations, and enforcement applications are subject to provincial discoverability rules. In some provinces, this means that an application must be made within two years of the date of the award. In others, the two-year period runs from the date of expiry of the appeal period. Courts are generally unwilling to extend limitation periods. Further, recent amendments to Ontario legislation have extended the limitation period in the province to 10 years.

The practical requirement relating to the enforcement of arbitral awards generally comes down to the limitation period. This is not covered by the New York Convention or the Model Law. In Canada, the rules in each province relating to court proceedings generally apply to arbitrations; the new British Columbia Arbitration Act specifically states that. In general, an application to enforce an award must be made within two years of the date the award was granted, although in some cases that date may run from the expiry of the appeal. As stated above, the limitation period in Ontario is now 10 years.

Other limitation periods

The limitation period on enforcing an award is one thing. There are also limitation periods on initiating an arbitration, objecting to jurisdiction and objecting to an arbitrator. Under Section 52 of the Ontario Arbitration Act and Section 4 of the Ontario Limitations Act, the general limitation for starting an arbitration is two years from the day the claim was discovered. The ICAA in Ontario does not establish a limitation period but it is generally believed that the Rules of Civil Procedure will apply.

Another limitation period concerns any objection to jurisdiction. Under Section 17 of the domestic Arbitration Act, an objection must be made no later than the beginning of the hearing or, if there is no hearing, no later than the first occasion on which the parties submit a statement to the tribunal. Under Article 16 of the Model Law, which is attached to the Ontario ICAA, a claim that an arbitrator does not have jurisdiction must be raised no later than the submission of the statement of defence.

Another limitation period relates to any objection a party wishes to make regarding the appointment of an arbitrator. Usually this is based on an apprehension of bias. It is an increasingly common claim and often abused. Article 13 of the Model Law requires that challenges be brought within 15 days of the notice of appointment or the date on which the circumstances giving rise to the challenge become known (see MDG Computers 2013 ONSC 5436).

Counsel should be aware that limitation periods can also exist in the contract that is the subject of the arbitration or the arbitration agreement. This is common in insurance contracts.

The foregoing is just one of the time limits counsel must be aware of. The first limitation period starts the arbitration. Under Section 52 of the Ontario Arbitration Act and Section 4 of the Ontario Limitations Act, the general limitation is two years from the day of discovery of the claim: this will govern the first limitation period. The ICAA in Ontario does not establish a limitation period but it is generally believed that the Rules of Civil Procedure will apply.

The third deadline concerns any objection to jurisdiction. Under Section 17 of the domestic Arbitration Act, an objection must be made no later than the beginning of the hearing or, if there is no hearing, no later than the first occasion on which the parties submit a statement to the tribunal.

Under Article 16 of the Model Law, which is attached to the Ontario ICAA, a claim that an arbitrator does not have jurisdiction must be raised no later than the submission of the statement of defence.

The fourth time limit relates to disputes regarding an arbitrator’s impartiality or independence. This is a common claim that has become a disguised ground of appeal. Article 13 of the Model Law requires challenges to be brought within 15 days of the notice of appointment or the date on which the circumstances giving rise to the challenge become known.

Recognition of interim or partial awards

24 Do courts recognise and enforce partial or interim awards?

As a general rule, courts are more reluctant to grant interim relief in international arbitrations than domestic arbitrations. The arbitrator’s jurisdiction does not extend to parties not bound by the arbitration agreement and any award made against non-parties will not be enforceable. Interim relief may be sought from the arbitral tribunal or the courts, which are prepared generally to assist an arbitral tribunal if it is necessary to carry out their responsibilities.

With the exception of Quebec, Canadian arbitrators regularly grant interim relief. Article 940.4 of the Quebec Civil Code has been interpreted to mean that only judges hold the power to grant injunctions.

Parties may alter a tribunal’s power to award preliminary or interim relief by agreement. Otherwise, arbitral tribunals hold broad discretion to order interim relief against parties to a dispute. Tribunals will typically exercise their discretion when the following elements are present:

the request for preliminary or interim relief cannot await a decision on the merits;
the relief is necessary to prevent imminent harm that is not reasonably compensable by money;
the balance of convenience favours the applicant; or
the applicant has established a reasonable possibility of success on the merits.

Canadian courts will enforce interim orders of tribunals, and parties can apply directly to the courts for interim relief when necessary. Courts will even grant relief before the arbitration begins (Dynatec, 2016 ONSC 2810). Courts have refused to grant Mareva injunctions or Anton Piller orders because they bind third parties (Sauvageau Holdings, 2011 ONSC 1819). Canadian courts will also grant interim relief in support of foreign arbitration (TLC Multimedia, 1998 BCJ No. 11656 BCSC).

UNCITRAL Model Law

The Model Law expressly provides for security for costs if a party is seeking an interim measure (CGI Information Systems, 2008 311 DLR 4th 728, Ont CA).

New British Columbia provisions

The new British Columbia Arbitration Act, which came into force in the province on 1 September 2020, offers a new and expansive regime for interim measures in arbitration. Interim measures are defined as orders requiring parties to preserve assets and evidence, maintain the status quo pending determination of the dispute, security for costs and actions that would prevent harm or prejudice to the arbitration. The new Act allows a party to apply for these measures without notice but the party who applies for a preliminary order must provide security unless the court orders otherwise. There is also a requirement for the parties to disclose any material changes in the circumstances in which the interim measures were sought.

New international provisions

Interim measures have attracted more attention recently on the international front, particularly under the rules of the ICC and the LCIA, the rules most often used in Canada. These measures include early determination, consolidation and expanded remedies as set out below.

Early determination

On 11 August 2020, the LCIA formally adopted its new arbitration rules, which came into force on 1 October 2020 and apply to any LCIA arbitration commenced after that date. Particularly notable is the new power that allows arbitrators to expedite proceedings by making an early determination that application is outside the jurisdiction of the tribunal, inadmissible or manifestly without merit. This power relates not just to claims. It also includes counterclaims, cross-claims and defences that are manifestly without merit. This provision follows other international institutions that now offer summary dismissal provisions. The ICC does not have a similar provision to date.

Consolidation

The 2020 LCIA Arbitration Rules adopt broader standards with respect to multiparty and multi-contract arbitrations. The rules expand the arbitral tribunal’s power to order consolidation in cases where the parties are not the same but their disputes arise out of the same or related transactions. This was not an option under the 2014 Rules. The 2020 rules expressly authorise the LCIA to consolidate arbitration when parties agree in writing. There is also a new provision whereby a tribunal composed of the same arbitrators can conduct arbitrations on a concurrent basis without consolidating them.

Under the 2014 Rules, two or more arbitrations could be consolidated into a single arbitration if claims were made under the same arbitration agreement. Under Article 10b of the 2020 Rules, and at a party’s request, the LCIA may consolidate if the claims are made under the same agreement or agreements. In addition, the Rules allow consolidation even if the claims are not made under the same arbitration agreement, provided that the arbitrations are between the same parties, the disputes arise in connection with the same legal relationship and the LCIA finds the arbitration agreements to be compatible. Article 7 of the 2021 Rules now permits joinder of additional parties after the constitution of the arbitral tribunal at the party’s request. Consent of all parties is no longer a requirement in comparison with the 2014 Rules, which only permitted joinder with the consent of all parties before the tribunal was constituted.

The new Article 75 allows a request for joinder to be made by one of the parties after appointment of the tribunal. The tribunal will consider the joinder request after reviewing various factors, including jurisdiction, timing of the request, the impact on the additional party and conflicts of interests. This is different from earlier versions, where parties could join proceedings only after the appointment of the arbitrator with the consent of all parties, including the additional party. The 2021 Rules also confirm that consolidation of claims being arbitrated may occur if all claims in the arbitration are made under the same arbitration agreement, regardless of whether different parties are involved or under different arbitration agreements, provided the agreements are compatible and the dispute centres on the same relationship.

Canadian courts continue the practice of allowing consolidation only when all parties consent. The leading exception is a recent decision of the Alberta Court of Queen’s Bench, which joined a domestic and an international arbitration that involved related parties, similar questions of law and the same transaction. The court relied on the provision in the International Arbitration Act that allowed consolidation if the court found it to be just and reasonable. On this basis, the court merged the dispute under the domestic Act into the same dispute with the same parties under the International Act (see Toyo Engineering, 2018 ABQB 844).

Expanded remedies

Interim measures are designed to increase the efficiency of the arbitral process. More recently, arbitration institutions have turned to increasing the power and scope of an arbitrator’s authority to address inefficiency. A leading example is the new British Columbia Arbitration Act, under which arbitrators are expressly allowed to rule on jurisdiction. If the arbitrator rules on his or her own jurisdiction as a preliminary matter, a party can then appeal the jurisdictional decision to the British Columbia Supreme Court. If the party exercises this right, the decision of the court is final. Arbitrators are required to consider equitable rights and defences in addition to legal principles. This can add significantly to an arbitrator’s ability to deal with interim matters.

In addition, under the British Columbia Act, arbitrators can now issue subpoenas to non-party witnesses, requiring them to give evidence or produce records in their possession or control. In addition, where the arbitration agreement is silent on the law applicable to the dispute, the arbitral tribunal may choose the applicable law. Finally, the new Act expressly grants tribunals the power to appoint a tribunal expert and order parties to provide the expert with information, access to records or other property for inspection.

British Columbia and Ontario have taken important steps in respect of interim relief. The former, in Section 17 of its ICAA, provides that an arbitral tribunal may order interim relief unless otherwise prohibited by the parties. The same is true in Ontario, where the authority to grant interim relief changed recently as a result of the ICAA 2017. Jurisdiction to award interim relief is granted by Article 17 of the Model Law, which permits an arbitral tribunal at the request of a party and, absent an agreement to the contrary, to grant interim measures to maintain or restore the status quo pending determination of the dispute. Other grounds include the need to preserve evidence that may be relevant. In interim relief applications, a party must prove that irreparable harm is likely to result without the interim relief. However, there is a requirement that there is a reasonable possibility that the moving party will succeed on the merits of the claim. Note that the party seeking interim relief may be liable for any costs or damage caused if the arbitrator ultimately finds that relief should not have been granted. The tribunal may grant interim relief without notice to the other party, unless otherwise agreed by the parties, provided that the tribunal finds first that notice would risk frustrating the purpose of the interim relief.

Parties can seek to enforce only part of an award. This usually happens when the party against whom the award was made has partially performed its obligations under the award.

Grounds for refusing recognition of an arbitral award

25 What are the grounds on which an arbitral award may be refused recognition? Are the grounds applied by the courts different from those provided under Article V of the New York Convention?

In domestic arbitrations, under provincial legislation, the courts generally follow the enumerated grounds listed in Article 36 of the Model Law. Note that the onus for establishing grounds rests with the party attempting to resist enforcement (see Tianjin v. Xu, 2019 ONSC 628).

The most common objection is that the subject matter is not considered arbitrable in the jurisdiction in which enforcement is being sought; in the case of Canadian provinces, examples would be criminal or family law matters and certain consumer contracts (Seidel v.Telus, 2011 SCC 15). However, counsel must be careful not to waive the right to object. Article 16 of the Model Law provides that a claim that a tribunal lacks jurisdiction must be raised no later than the statement of defence or as soon as the matter alleged to exceed jurisdiction is raised.

Another ground is where there exists a pending challenge to an award in the originating jurisdiction. Canadian courts will generally adjourn the enforcement proceedings to allow the challenge to proceed to its conclusion. Further, the court may order that security be provided.

Canadian courts have recognised annulled foreign awards (see Powerex Corp, 2004 BCSC 876) but this is rare. The Ontario courts have also considered the impact of outstanding appeals in enforcement applications (Dalimpex, 2003 64 OR 737) and regulatory proceedings relating to the same dispute (NYSE v. Orbixa, 2014 ONCA 219). As a general rule, the courts have either adjourned the enforcement application or simply disregarded the parallel proceedings.

Another common objection is a claim that the public policy of the enforcing jurisdiction is being violated. A number of objections have been lodged based on bribery or fraud claims arising out of existing litigation that US and Canadian parties face under anti-bribery legislation. Canadian courts are reluctant to allow public policy challenges. The Ontario Superior Court has stated that to succeed on public policy grounds, an award must be egregious and fundamentally offend the most basic principles of fairness and justice. (The leading case in that regard is Schreter v. Gasmasc (1992) OJ No. 257.)

Canadian courts have rejected foreign awards on public policy grounds because an arbitrator failed to give reasons, rather than because of error of law, unless it was patently unreasonable. However, the courts will refuse to enforce awards when a tribunal has decided a claim does not fall within the scope of the arbitration agreement (see Telestat Canada, 2012 ONSC 2785). One of the unique Canadian contributions to this body of law is the finding that double recovery may be contrary to public policy principles. The leading cases are Lambert (2001 OJ No. 2776) and Boardwalk Regency ((1992) 51 OAC 64).

The other common ground for refusing to enforce an arbitration award is that the applicant has missed the limitation period. The leading case here is Yugraneft (2010 SCC 19), in which a Russian corporation sought to enforce an award in Alberta more than three years after the award was rendered. The Supreme Court of Canada refused to enforce the award because the Alberta Limitations Act provided for a two-year limitation period.

Another common challenge arises when there are justifiable doubts about an arbitrator’s impartiality or independence. However, again there are some time limits. Under Article 13 of the Model Law, challenges must be brought within 15 days of the notice of appointment or the date the circumstances giving rise to the challenge became known to the party. Rule 9 of the ICSID Rules provides that a challenge must be brought promptly and in any event before the proceedings are declared closed.

Note, however, that the Ontario Court of Appeal recently found that the two-year limitation period commenced on the date the mediation requirement in the parties’ contract had been fulfilled despite the fact that the arbitration was initiated four years after the claim was discovered. For most claims under Ontario law, including arbitration claims, the act prohibits proceedings being brought more than two years after the claim was discovered (PQ Licensing, 2018 ONCA 331).

Effect of a decision recognising an arbitral award

26 What is the effect of a decision recognising an arbitral award in your jurisdiction?

Decisions refusing to recognise an arbitral award

27 What challenges are available against a decision refusing recognition in your jurisdiction?

A decision by a court refusing to recognise an award is subject to an appeal to the appellate court in that jurisdiction. The usual grounds of appeal generally relate to an error of law. Note that the courts typically grant deference to a lower court’s decision. The number of successful appeals is relatively rare. This is particularly the case with respect to decisions refusing to recognise an arbitral award

Recognition or enforcement proceedings pending annulment proceedings

28 What are the effects of annulment proceedings at the seat of the arbitration on recognition or enforcement proceedings in your jurisdiction?

The courts will generally adjourn recognition or enforcement proceedings pending the outcome of annulment proceedings at the seat of the arbitration. Courts will look at the strength of the objection at the seat and, in some circumstances, will require security for costs. The decision to order security for costs is always a matter of judgement, depending on the strength of the objections and the prospects for success (Empresa Minera Los Quenuales SA v. Vena Resources, 2015 ONSC 4408).

Security

29 If the courts adjourn the recognition or enforcement proceedings pending annulment proceedings, will the defendant to the recognition or enforcement proceedings be ordered to post security?

Where warranted and where requested, the courts will order security for costs when annulment proceedings have been initiated at the seat of the arbitration while a party is attempting to have the award recognised in another jurisdiction. Security for costs are more likely to be awarded if there is a long-standing record of delay with respect to the arbitration proceedings.

Recognition or enforcement of an award set aside at the seat

30 Is it possible to obtain the recognition and enforcement of an award that has been fully or partly set aside at the seat of the arbitration? If an arbitral award is set aside after the decision recognising the award has been issued, what challenges are available?

A foreign award set aside at the seat of the arbitration may be recognised and enforced if the set-aside decision was impeachable for fraud, contrary to natural justice, or contrary to public policy. However, Canadian courts interpret public policy claims very narrowly. The decision must offend the most basic and explicit principles of justice and fairness. It is likely that it would not be sufficient to find that the set-aside decision conflicted with Canadian law (Boardwalk Regency (1992) 51 OAC 64).

An error of law will not be sufficient but if a decision was patently unreasonable, clearly irrational or affected by fraud, there may be sufficient grounds to disregard a set-aside (Navigation Sonamar, 1995 1 MALQR 1 Que SC).

Service

Service in your jurisdiction

31 What is the procedure for service of extrajudicial and judicial documents to a defendant in your jurisdiction? If the extrajudicial and judicial documents are drafted in a language other than the official language of your jurisdiction, is it necessary to serve these documents with a translation?

A party may enforce an arbitral award in Canada by applying, typically on notice, to the appropriate Canadian court. Accordingly, application materials must be served on the defendant. The rules concerning service are set out in the civil procedure legislation in force in each province. The provincial civil procedure rules are similar, though not identical, and attention must be given to the specific legislation.

In broad terms, an application to enforce an award is an ‘originating’ document, which must be served ‘personally’ under the rules. In the case of ARA v. Staicu et al (2018 MBQB 92), for example, the Manitoba Court of Queen’s Bench considered that an application to enforce an international arbitration award was an originating process. For individuals, this means that documents must be left with the individual. For corporations and partnerships, this means that documents must be left with an officer or director, or a partner. Subsequent documents arising during the enforcement proceedings (i.e., after the application has been served) may be served more simply. Indeed, most rules of procedure now permit service by email for documents that are not originating documents (see, e.g., the Alberta Rules of Court, Rule 11.21).

The rules of civil procedure also contemplate that Canada’s courts may make orders permitting ‘substitutional service’, ‘dispensing with service’ and ‘validating service’. In respect of the former, a court will permit an applicant to serve application materials in a manner not contemplated by the rules if service under the rules is ‘impractical’. Similarly, if service is impossible, a court may direct that service be dispensed with entirely. Finally, a court may validate (or ratify) service, despite non-compliance with the rules, if it can be shown that the defendant actually received the documents. These orders provide a party seeking to enforce an award additional tools to satisfy service requirements; they also narrow the gap between Canada and other jurisdictions where awards may be enforced ex parte.

Service out of your jurisdiction

32 What is the procedure for service of extrajudicial and judicial documents to a defendant outside your jurisdiction? Is it necessary to serve these documents with a translation in the language of this jurisdiction?

When a defendant does not reside in the province in which enforcement proceedings are commenced, an order from the court for service ex juris may be required. However, in some circumstances, the provincial rules of civil procedure may permit service ex juris without an order (see Ontario’s Rules of Civil Procedure, Rules 17.02, 17.03).

Traditionally, when leave is required, the enforcing party applies to the court ex parte, with evidence demonstrating that there is a ‘real and substantial connection’ between the enforcement proceedings and the forum. However, the comments of the Supreme Court of Canada in Chevron v. Yaiguaje (2015 SCC 42) suggest that this analysis may no longer be necessary. In this case, the Supreme Court affirmed the importance of international comity and remarked: ‘In an action to recognize and enforce a foreign judgment where the foreign court validly assumed jurisdiction, there is no need to prove that a real and substantial connection exists between the enforcing forum and either the judgment debtor or the dispute.’ On the basis of these comments, courts may not grant orders for service ex juris as a matter of course.

The manner of service ex juris is also specified by the relevant rules of civil procedure. In Alberta, for example, documents served ex juris must be served in a way that would be permitted in Alberta, or be in accordance with the Convention on the Service Abroad of Judicial and Extrajudicial Documents in Civil or Commercial Matters, or be in accordance with the law of the place of service.

Identification of assets

Asset databases

33 Are there any databases or publicly available registers allowing the identification of an award debtor’s assets within your jurisdiction?

Judgment creditors in Canada have access to several databases and registries to search for and identify assets of a judgment debtor. Since arbitral awards may be enforced in the same manner as court judgments, these tools apply to parties seeking to enforce awards in Canada.

To begin, a judgment creditor may search for real estate property owned by the debtor through provincial land titles offices, which are public registries of land ownership in each province. In Alberta, for example, a party who obtains a judgment may request that the court issue a writ of enforcement, which the party may then present to the Alberta Land Titles Office and requisition a title search. Similar processes exist in the rest of Canada.

Additionally, a judgment creditor may search provincial personal property registries to identify a debtor’s movable property. Unlike land searches, a writ is typically not required before requisitioning a personal property search. However, personal property search results do not disclose all of a debtor’s assets, only those in respect of which third parties have registered security interests or liens.

A judgment creditor may also conduct corporate registry searches. Specifically, corporations must file basic information with provincial registries prior to conducting business in each province. This information is public and may be searched. In some provinces, corporations must disclose whether they hold shares in other corporations. Similarly, searches may be carried out with the Office of the Superintendent of Bankruptcy, which will disclose whether any bankruptcy proceedings have been commenced in respect of the judgment debtor. Bankruptcy searches are especially important when enforcement proceedings are contemplated, as Canada’s bankruptcy legislation stays any and all enforcement actions, unless the court orders otherwise.

Finally, several industry specific databases are available to judgment creditors, including those maintained by Canada’s securities commissions and by provincial energy or utilities regulators. The owners of trademarks may also be searched through the Canadian Intellectual Property Office, which is maintained by the federal government.

In short, many options are available to a party seeking to identify an award debtor’s assets in Canada, although the precise procedures (including any associated costs) depend on the province.

Information available through judicial proceedings

34 Are there any proceedings allowing for the disclosure of information about an award debtor within your jurisdiction?

The primary method of obtaining information concerning a judgment debtor’s assets in Canada is through ‘examinations in aid of execution’, pursuant to which a judgment creditor may question the debtor (under oath) regarding his or her assets and financial information. Again, since awards may be enforced in the same way as judgments, the process is available to parties seeking to enforce arbitral awards. The process for examinations in aid of execution are set out in the provincial rules of civil procedure and, depending on the province, leave of the court may be required before a notice of examination may be served. When the debtor is a corporation, a representative of the corporation may be examined to ascertain information regarding the assets of the company.

If a debtor fails to attend an examination, conceals information or refuses to answer any proper question, the court may sanction the debtor through various orders, including (in the most serious cases) an order for contempt of court. In addition to in-person examinations, provincial rules of procedure also contemplate examinations in writing, questionnaires to be completed by the debtor at the request of the enforcing party, and sworn statutory declarations by debtor.

Enforcement proceedings

Attachable property

35 What kinds of assets can be attached within your jurisdiction?

The procedural and legal requirements for attachment against property are generally the same and available for all types of property, including tangible or intangible, movable or immovable property, and related property rights.

Availability of interim measures

36 Are interim measures against assets available in your jurisdiction?

Interim relief against assets is available. However, these measures are more often granted by the court assisting the arbitration process, rather than by the arbitration tribunal itself, since tribunals may not make orders that bind third parties. In the important case of Sauvageau Holdings (2011 ONSC 1819), the Ontario Supreme Court made it clear that arbitration agreements as ‘private contractual provisions do not and cannot confer on the arbitrator the court’s jurisdiction over third parties who are strangers to the arbitration agreement’.

Procedure for interim measures

37 What is the procedure to apply interim measures against assets in your jurisdiction?

Reforms in recent years have resulted in greater jurisdiction being granted to both arbitrators and courts to grant interim relief against assets, in both domestic and international arbitrations. In practice, however, applications for interim measures against assets are most often made to the courts.

First, unlike orders of a tribunal, interim measures by a court may bind third parties. Second, for a tribunal to make an interim measure it must already be constituted, which may cause delay and prejudice to the party seeking the interim measure. Third, orders granted by a tribunal must be enforced by a court, which adds expense and procedural steps. Finally, and perhaps most importantly, tribunals are restricted in terms of the kinds of interim measures that may be ordered. In general, domestic and international arbitration legislation in Canada enables tribunals to make orders concerning the ‘detention, preservation or inspection of property that are the subject of the arbitration’ (Ontario Arbitration Act 1991, Section 18). In contrast, the court may grant interim injunctions, appoint receivers and grant any other equitable relief it sees fit (Ontario Arbitration Act 1991, Section 8).

In terms of procedure, parties seeking interim measures against assets may apply to the court with notice or on an ex parte basis, depending on the urgency and risks associated with providing notice. However, in Secure 2013 Group Inc v. Tiger Calcium Services Inc (2017 ABCA 316), the Alberta Court of Appeal affirmed that ex parte interim relief is ‘extraordinary’, that applicants must seek ex parte interim relief expeditiously and without delay, and that applicants seeking ex parte relief must act with the ‘utmost good faith’ and make full, fair and candid disclosure to the court. Although Secure 2013 Group did not concern relief in support of an arbitration, the Alberta Court of Appeal’s remarks have general application. Particular care must be taken, therefore, by any party preparing evidence and submissions for an application for interim relief against assets without notice.

The essential legal test applied by Canadian courts when considering interim relief is threefold:

whether the balance of convenience favours the granting of the measure;
whether the relief is necessary to prevent imminent and irreparable harm to the applicant; and
whether the applicant has a reasonable prospect of success on the merits in the arbitration.

Evidence must be adduced to meet this test. Most notably, Canadian courts will not grant preservation of property or other interim orders if damages would compensate the applicant.

A final consideration is that Canadian courts will require a party applying for interim measures to provide an ‘undertaking as to damages’. This is an undertaking by the party, made to the court, pursuant to which the party promises to compensate the opposing party for any harm caused by the interim relief, if the tribunal ultimately dismisses the underlying arbitration. Canadian courts may also request that undertakings are fortified with letters of credit or other security, and this may be particularly so in the context of an international arbitration when the applicant is not domiciled in Canada.

Interim measures against immovable property

38 What is the procedure for interim measures against immovable property within your jurisdiction?

The procedural and legal requirements for interim measures against assets (especially those granted by Canadian courts) are generally similar for immovable property, movable property and intangible property.

However, one specific interim measure that may be available in respect of immovable property is a certificate of pending litigation (or a certificate of lis pendens). A party who commences litigation in Canada, and claims an interest in land, may apply to the court for a certificate to be registered against the title of the land. The certificate of pending litigation does not restrain the debtor from selling the land but acts as notice to third parties that the land is subject to the litigation. In practice, a certificate of pending litigation operates as an interim injunction against the land. The specific procedures for obtaining a certificate of pending litigation are set out in the provincial rules of court. Most importantly, a certificate will only be granted if the land is the subject of the dispute. Certificates of pending litigation are frequently granted in Canadian civil litigation and may apply to arbitrations in the appropriate circumstances.

Interim measures against movable property

39 What is the procedure for interim measures against movable property within your jurisdiction?

The procedural and legal requirements for interim measures are generally the same for all types of property.

Interim measures against intangible property

40 What is the procedure for interim measures against intangible property within your jurisdiction?

The procedural and legal requirements for interim measures are generally the same for all types of property.

Attachment proceedings

41 What is the procedure to attach assets in your jurisdiction?

Canadian courts may grant attachment orders in support of arbitral proceedings. Specifically, Canada’s domestic and international arbitration legislation broadly empowers courts to make any interim injunction ‘as in court actions’ (see Ontario Arbitration Act 1991, Section 8), which includes attachment orders.

Under Canadian law, an attachment order is an injunction by the court freezing the property of the defendant and prohibiting the defendant (or others) from dealing with it. In certain provinces, an attachment order may be made pursuant to legislation (e.g., Alberta’s Civil Enforcement Act), and in all provinces, the courts have an inherent jurisdiction to grant attachment orders in the form of Mareva injunctions.

In contrast, and unlike other interim preservation measures, it is doubtful that a Canadian court would enforce an attachment order issued by a tribunal (see Sauvageau Holdings, 2011 ONSC 1819). As noted, a hallmark of an attachment order, such as a Mareva injunction, is that it binds non-parties (such as financial institutions) and, therefore, it has been held that a tribunal lacks jurisdiction to make such orders.

In terms of procedure, similar considerations apply to a party seeking a prejudgment attachment order from the court as apply to other court applications for interim relief. For instance, applications may be brought on notice or ex parte. If made ex parte, courts impose onerous duties on applicants to apply expeditiously, to act in good faith and to make full and fair disclosure. Provincial legislation concerning attachment orders may also set out specific procedures that must be followed.

The legal test applied by courts when considering attachment orders is generally the same three-part test as for interim relief. However, courts will also require evidence of a real risk that the defendant will remove assets from the jurisdiction to avoid future enforcement.

Finally, several provinces have published model attachment orders or Mareva injunctions, or both, which should be consulted when applying for such relief. Undertakings as to damages must also be given for attachment orders.

Attachment against immovable property

42 What is the procedure for enforcement measures against immovable property within your jurisdiction?

The procedural and legal requirements for attachment against property are generally the same for all types of property.

Attachment against movable property

43 What is the procedure for enforcement measures against movable property within your jurisdiction?

The procedural and legal requirements for attachment against property are generally the same for all types of property.

However, unique considerations concern one type of attachment order, which concerns movable property. An order for prejudgment garnishment has the effect of compelling third parties who owe debts to the defendant to pay such monies into court for preservation. Although prejudgment garnishment may not be available in all Canadian provinces, the courts of British Columbia and Manitoba have acknowledged its availability in support of arbitration (see Trade Fortune, 1994 CarswellBC 139; Winnipeg Condominium Corporation, 2017 MBQB 112). As with other attachment orders, Canadian courts hold that prejudgment garnishment orders may not be made by a tribunal and are exclusively within the jurisdiction of the courts (Winnipeg Condominium).

The specific availability, procedure and legal requirements for a prejudgment garnishment order vary from province to province.

Attachment against intangible property

44 What is the procedure for enforcement measures against intangible property within your jurisdiction?

The procedural and legal requirements for attachment against property are generally the same for all types of property.

Attachments against bank accounts

45 Is it possible in your jurisdiction to attach bank accounts opened in a branch or subsidiary of a foreign bank located in your jurisdiction or abroad? Is it possible in your jurisdiction to attach the bank accounts opened in a branch or subsidiary of a domestic bank located abroad?

Canadian courts may grant attachment orders in support of arbitral proceedings. Specifically, Canada’s domestic and international arbitration legislation broadly empowers courts to make orders with respect to the detention, preservation and inspection of property, interim injunctions and the appointment of receivers (see Ontario Arbitration Act 1991, Section 8). In certain provinces, an attachment order may be made pursuant to legislation (e.g., Alberta’s Civil Enforcement Act), and in all provinces, the courts have an inherent jurisdiction to grant attachment orders in the form of Mareva injunctions, which are applicable to all assets, including bank accounts.

In an age of electronic international banking, funds can enter or leave a jurisdiction quickly. As such, there need not be any assets in the jurisdiction or the bank account for a Canadian court to have jurisdiction to recognise and enforce a judgment, as noted by the Supreme Court of Canada in Chevron v. Yaiguaje (2015 SCC 42) at Paragraph 57:

In today’s globalized world and electronic age, to require that a judgment creditor wait until the foreign debtor is present or has assets in the province before a court can find that it has jurisdiction in recognition and enforcement proceedings would be to turn a blind eye to current economic reality.

Enforcement against foreign states

Applicable law

46 Are there any rules in your jurisdiction that specifically govern recognition and enforcement of arbitral awards against foreign states?

The rules governing recognition and enforcement of awards against foreign states are set out in the Canada State Immunity Act RSC 1985. A state may waive its immunity. In any event, there is no immunity with respect to commercial activities. The State Immunity Act does not provide for any exception from immunity for arbitration agreements.

Availability of interim measures

47 May award creditors apply interim measures against assets owned by a sovereign state?

In respect of interim measures against assets owned by a sovereign state, decisions run both ways. These cases are largely decided individually and often turn on whether a waiver has been granted. Canadian courts have both granted and denied interim applications relating to assets owned by sovereign states.

Service of documents to a foreign state

48 What is the procedure for service of extrajudicial and judicial documents to a foreign state? Is it necessary to serve extrajudicial and judicial documents with a translation in the language of the foreign state?

Under Section 9 of Canada’s State Immunity Act RSC 1985, service of an originating document, which includes a notice of application, on a foreign state, other than on an agency of the foreign state, may be made (1) in any manner agreed by the state, (2) in accordance with any international convention to which the state is a party or (3) by delivering a copy of the document, in person or by registered mail, to the Deputy Minister of Foreign Affairs or a person designated by the Deputy Minister for the purpose, who shall transmit it to the foreign state. An agency of a foreign state can also be served in accordance with Subsection 9(3) of the State Immunity Act.

Immunity from enforcement

49 Are assets belonging to a foreign state immune from enforcement in your jurisdiction? Are there exceptions to immunity?

Canada, like the United Kingdom and the United States, takes a restrictive approach to sovereign immunity. Under Canada’s State Immunity Act, RSC 1985, a state can wave immunity by submitting to the jurisdiction of a Canadian court. However, a waiver of immunity requires proof that the foreign state explicitly submits to the jurisdiction of the court by written agreement, as provided for in Section 4 of the State Immunity Act.

Section 5 of the State Immunity Act provides that a foreign state is not immune from jurisdiction in any proceeding relating to commercial activity. In addition, Canada does not have an exception for immunity for arbitration agreements. Canadian case law, such as TMR Energy Ltd v. State Property Fund of Ukraine (2003 FC 1517 (CanLII)), suggests that an agreement to arbitrate may be considered an express waiver of jurisdiction immunity.

Waiver of immunity from enforcement

50 Is it possible for a foreign state to waive immunity from enforcement in your jurisdiction? What are the requirements of waiver?

It is possible for a foreign state to waive immunity from enforcement in Canada. Under Section 12 of Canada’s State Immunity Act, RSC 1985, c S-18, the property of a foreign state that is located in Canada is immune from attachment and execution and, in the case of an action in rem, from arrest, detention, seizure and forfeiture except where:

(a) the state has, either explicitly or by implication, waived its immunity from attachment, execution, arrest, detention, seizure or forfeiture, unless the foreign state has withdrawn the waiver of immunity in accordance with any term thereof that permits such withdrawal;
(b) the property is used or is intended for a commercial activity; or
(c) the execution relates to a judgment establishing rights in property that has been acquired by succession or gift or in immovable property located in Canada.

However, Canadian cases in this area turn on their specific facts. The courts have both refused to find sovereign immunity and, in other cases, accepted that claim. In Collavino Inc v. Yemen (Tihama Development Authority) (2007 ABQB 212), the State of Yemen was deemed to have waived execution immunity by agreeing to international arbitration. A similar result followed in Canadian Planning and Design Consultants Inc v. Libya (2015 ONCA 661), in which the Ontario Court of Appeal considered whether bank accounts owned by Libya were related only to the embassy and were therefore subject to diplomatic unity.

Piercing the corporate veil and alter ego

51 Is it possible for a creditor of an award rendered against a foreign state to attach the assets held by an alter ego of the foreign state within your jurisdiction?

It is possible for a state entity to be made liable for the judgment debt of the state. In Roxford Enterprises S.A. v. Cuba ((2003), 236 F.T.R. 1, 2003 FCT 763), the Roxford company held a default judgment against Cuba and applied for an order of seizure and sale against a Cuban airline in Canada. The Federal Court of Canada held that the onus of proving that a legal entity is an alter ego of a state falls on the party who is making the allegations. The Court set out the following test for finding an alter ego relationship between a state and an entity:

1. That there be compelling evidence of de facto assimilation by the state of the entity, or its business and property;
2. That there be a clear legal basis of a de jure assimilation by the state.

Notes

^[1] Gordon E Kaiser is an arbitrator and settlement counsel at Energy Arbitration LLP • Toronto • Washington and Aweis Osman is an associate at Gowlings WLG.