Commercial Arbitration

Last verified on Friday 28th May 2021

Commercial Arbitration: Canada

Laurence Ste-Marie, Dina Prokic and Stephen L Drymer

Woods LLP

Infrastructure

1. Is your state a party to the New York Convention? Are there any noteworthy declarations or reservations?

Canada

Canada ratified the New York Convention (the Convention) in 1986. All 10 Canadian provinces and three territories have also enacted statutes to which the full text of the Convention is attached or otherwise incorporated (in Québec, Canada’s only civil law jurisdiction, the Convention is implemented through the provisions of the Québec Code of Civil Procedure, which specifically instruct courts to take the Convention into consideration when they interpret those provisions). 

Canada and its provinces and territories – other than Québec – have declared that the Convention applies to disputes arising solely out of legal relationships, whether contractual or not, that are considered to be commercial under applicable law. In Québec, the Convention applies to commercial and non-commercial matters alike.

Answer contributed by Laurence Ste-Marie, Dina Prokic and Stephen L Drymer

2. Is your state a party to any other bilateral or multilateral treaties regarding the recognition and enforcement of arbitral awards?

Canada

In November 2013, Canada ratified the ICSID Convention, which provides that an award rendered under the Convention will be recognised as binding.

Canada is also a party to a number of bilateral investment treaties and regional free trade agreements, some of which require the parties to provide appropriate procedures to ensure for the recognition and enforcement of arbitral awards, and provide that the parties are deemed to be in compliance with this requirement if they are a party to and in compliance with the New York Convention (see in particular the Canada-European Union Comprehensive Economic and Trade Agreement (CETA), and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP)).

Answer contributed by Laurence Ste-Marie, Dina Prokic and Stephen L Drymer

3. Is there an arbitration act or equivalent and, if so, is it based on the UNCITRAL Model Law? Does it apply to all arbitral proceedings with their seat in your jurisdiction?

Canada

In 1986, Canada became the first country in the world to adopt the UNCITRAL Model Law, along with the federal Commercial Arbitration Act, which applies to all commercial arbitrations, whether international or domestic, when one of the parties to the arbitration is the federal government, one of its agencies or a federal crown corporation, and where the subject matter of the dispute concerns a matter of exclusive federal jurisdiction, such as maritime or admiralty. 

The 1985 Model Law has been implemented across the country at the provincial level, generally as a schedule to the relevant international commercial arbitration legislation, with some slight variation, or, in Québec, as chapters of the Québec Civil Code and the Québec Code of Civil Procedure.

The 2017 Ontario International Commercial Arbitration Act provides that the 2006 Model Law has force of law in the province. In 2018, British Columbia followed suit and also updated its international arbitration legislation in line with the 2006 amendments to the UNCITRAL Model Law.

Answer contributed by Laurence Ste-Marie, Dina Prokic and Stephen L Drymer

4. What arbitration bodies relevant to international arbitration are based within your jurisdiction? Do such bodies also act as appointing authorities?

Canada

A number of institutions operate in Canada, including ADR Chambers International, the ADR Institute of Canada, the Vancouver International Commercial Arbitration Centre and the Canadian Commercial Arbitration Centre. The ICDR also provides arbitration and mediation rules specific to Canadian disputes. Other institutions, such as Arbitration Place, provide hearing facilities and services (including online hearing platforms) and rosters of arbitrators.

Answer contributed by Laurence Ste-Marie, Dina Prokic and Stephen L Drymer

5. Can foreign arbitral providers operate in your jurisdiction?

Canada

The parties to an international arbitration seated in Canada can, and frequently do, opt for the services of international arbitral institutions, which operate freely in Canada.

Answer contributed by Laurence Ste-Marie, Dina Prokic and Stephen L Drymer

6. Is there a specialist arbitration court? Is the judiciary in your jurisdiction generally familiar with, and supportive of, the law and practice of international arbitration?

Canada

Although no Canadian jurisdiction has established a specialist arbitration court, Canadian courts are generally very familiar with the law and practice of international arbitration, supportive of arbitration and deferential to arbitration agreements, tribunals and awards. Upholding the principle of competence-competence, Canadian courts frequently stay proceedings or decline jurisdiction in favour of parallel international commercial arbitrations, in compliance with article 8(1) of the UNCITRAL Model Law and in line with the Supreme Court of Canada’s modern pro-arbitration jurisprudence (see, for example, Seidel v Telus, 2011 SCC 15).

Answer contributed by Laurence Ste-Marie, Dina Prokic and Stephen L Drymer

Agreement to arbitrate

7. What, if any, requirements must be met if an arbitration agreement is to be valid and enforceable under the law of your jurisdiction? Can an arbitration agreement cover future disputes?

Canada

Save for Ontario and British Columbia, all common law provinces apply article 7 of the 1985 Model Law, which provides that an arbitration agreement must be in writing in the form of: a document signed by the parties; an exchange of letters or other means of communication that provide a record of an agreement; or an exchange of pleadings in which the existence of an agreement is alleged and not denied. Recently, the Court of Queen’s Bench (the superior court) of Saskatchewan found an “agreement in writing” to have been concluded by means of an exchange of text messages (see Parrish & Heimbecker Ltd v TSM Winny AG Ltd., 2020 SKQB 348).

Ontario and British Columbia have adopted Option 1 of article 7 of the 2006 Model Law, which provides that while arbitration agreements shall be in writing to be enforceable, they may be concluded orally, by conduct, or by other means.

Under the Québec Civil Code, arbitration agreements must be evidenced in writing, and are deemed to be such when contained in an exchange of communications or in an exchange of proceedings in which their existence is alleged by one party and not contested by the other.

Answer contributed by Laurence Ste-Marie, Dina Prokic and Stephen L Drymer

8. Are any types of dispute non-arbitrable? If so, which?

Canada

Generally speaking, disputes involving criminal offences, bankruptcy matters, public recognition of civil status, capacity of persons and family-law matters cannot be arbitrated in Canada (though exceptions exist and vary across the country). Further, in Québec, only courts are competent to hear matters regarding liability for injury suffered as a result of exposure to or the use of certain extractive resources originating in Québec, such as asbestos. Certain provincial consumer protection laws also set limits on the arbitrability of consumer and employment matters. The Supreme Court of Canada had previously refused to certify a class action on behalf of business customers bound by an arbitration clause but did allow the judicial proceedings to go forward with respect to consumers’ claims: TELUS Communications Inc v Wellman, 2019 SCC 19.

Answer contributed by Laurence Ste-Marie, Dina Prokic and Stephen L Drymer

9. Can a third party be bound by an arbitration clause and, if so, in what circumstances? Can third parties participate in the arbitration process through joinder or a third-party notice?

Canada

In principle, third parties cannot be bound by an arbitration clause unless they are found to have consented to it, either expressly or implicitly, despite the lack of signature. The Court of Appeal for British Columbia recently held that a court-appointed receiver was not bound by a mandatory arbitration clause contained in the contract of the entity in receivership and its business partner (see Petrowest Corporation v Peace River Hydro Partners, 2020 BCCA 339 (CanLII)). Generally, the rules regarding agency, assignment, novation and estoppel may permit a third party to be bound by an arbitration to which it did not directly agree.

Answer contributed by Laurence Ste-Marie, Dina Prokic and Stephen L Drymer

10. Would an arbitral tribunal with its seat in your jurisdiction be able to consolidate separate arbitral proceedings under one or more contracts and, if so, in what circumstances?

Canada

Generally, arbitral tribunals seated in Canada cannot order consolidation of arbitral proceedings without the consent of all parties concerned, although this is not specifically addressed in legislation. Arbitration acts of most Canadian jurisdictions do, however, grant courts the power to consolidate arbitral proceedings, on such terms as they deem just. Although these provisions are typically interpreted as requiring the consent of the parties, in its decision in Japan Canada Oil Sands Limited v Toyo Engineering Canada Ltd, the Court of Queen’s Bench of Alberta held that, under Alberta’s International Commercial Arbitration Act, it could  consolidate a domestic arbitration and an international arbitration without the parties’ consent involved (Japan Canada Oil Sands Limited v Toyo Engineering Canada Ltd, 2018 ABQB 844; see, also Pricaspian Development Corporation v BG International Ltd, 2016 ABQB 611, on which the court relied).

Answer contributed by Laurence Ste-Marie, Dina Prokic and Stephen L Drymer

11. Is the "group of companies doctrine" recognised in your jurisdiction?

Canada

The doctrine of piercing the corporate veil is recognised in Canadian jurisdictions, but its application is generally limited to situations where there is evidence of fraud or similar misconduct. Courts tend to pierce the corporate veil between affiliated companies only where: (i) a parent controls and dominates the affiliate and (ii) the affiliate is used as a shield for fraudulent or unlawful conduct. The fact that a corporate entity belongs to the same corporate group as a party to the proceeding is not sufficient, in and of itself, to lift the veil.

Answer contributed by Laurence Ste-Marie, Dina Prokic and Stephen L Drymer

12. Are arbitration clauses considered separable from the main contract?

Canada

All common law provinces have incorporated article 16 of the Model Law, which enshrines the doctrine of separability. In Québec, article 2642 of the Civil Code is to the same effect.

Answer contributed by Laurence Ste-Marie, Dina Prokic and Stephen L Drymer

13. Is the principle of competence-competence recognised in your jurisdiction? Can a party to an arbitration ask the courts to determine an issue relating to the tribunals jurisdiction and competence?

Canada

The arbitration acts of Canada’s common law jurisdictions provide that arbitral tribunals may rule on their own jurisdiction, including in respect of any objections relating to the existence or validity of the arbitration agreement. If such decisions are made as rulings on “preliminary questions”, within the meaning of article 16(3) of the UNCITRAL Model Law, they may not be appealed (see United Mexican States v Burr, 2021 ONCA 64). The Québec Code of Civil Procedure also safeguards arbitral tribunals’ power to rule on their jurisdiction. Canadian courts have reiterated on multiple occasions that arbitrators should be given the opportunity to decide on challenges to their jurisdiction first, before a court can consider the issue, subject to a few narrow exceptions (see, for instance, Seidel v TELUS Communications, 2011 SCC 15; Clayworth v Octaform Systems Inc, 2020 BCCA 117; Bakaris v Southern Sky, 2020 ONSC 7306; Proservin inc. c Investissements Toro inc, 2020 QCCS 3561). One such exception was recently carved out in Uber Technologies Inc v Heller, 2020 SCC 16, where the Supreme Court of Canada held that a court may resolve a genuine challenge to arbitral jurisdiction if it determines that there is a real prospect that the challenge may never be resolved by the arbitrator if a stay is granted.

Answer contributed by Laurence Ste-Marie, Dina Prokic and Stephen L Drymer

14. Are there particular issues to note when drafting an arbitration clause where your jurisdiction will be the seat of arbitration or the place where enforcement of an award will be sought?

Canada

There are no particular idiosyncrasies to bear in mind when drafting an arbitration agreement with a seat in Canada, though there may well be distinctions between mandatory laws governing arbitration or the enforcement of awards in the various provinces and territories.

Answer contributed by Laurence Ste-Marie, Dina Prokic and Stephen L Drymer

15. Is institutional international arbitration more or less common than ad hoc international arbitration? Are the UNCITRAL Rules commonly used in ad hoc international arbitrations in your jurisdiction?

Canada

Although ad hoc and institutional arbitrations are both commonly used in Canada, there is a strong tradition of ad hoc arbitration in domestic arbitration. Parties to ad hoc arbitrations often, however, adopt standard rules of procedure, such as the UNCITRAL Rules.

Answer contributed by Laurence Ste-Marie, Dina Prokic and Stephen L Drymer

16. What, if any, are the particular points to note when drafting a multi-party arbitration agreement with your jurisdiction in mind? In relation to, for example, the appointment of arbitrators.

Canada

Although not specifically addressed by the relevant legislation, multi-party agreements are used and enforced in Canada. In terms of drafting, unless all parties can be identified and are able to agree on a mechanism for the appointment of arbitrators at the drafting stage, parties may wish to refer the constitution of the tribunal to an appointing authority, in order to avoid problems in this regard. Drafting parties should also consider stating expressly that notice of proceedings commenced under the clause should be sent to every party to the contract, irrespective of their potential role in the proceedings, and stipulate a time limit for the contracting parties to provide notice of their intention to join the proceedings.

Answer contributed by Laurence Ste-Marie, Dina Prokic and Stephen L Drymer

Commencing the arbitration

17. How are arbitral proceedings commenced in your jurisdiction? Are there any key provisions under the arbitration laws of your jurisdiction relating to limitation periods of which the parties should be aware?

Canada

All Canadian jurisdictions have incorporated article 21 of the Model Law, which provides that arbitration proceedings are deemed commenced on the date of receipt of the notice to refer the dispute to arbitration.

Limitation periods vary according to the jurisdiction as well as the nature of the claim. They range between one to 10 years.

Answer contributed by Laurence Ste-Marie, Dina Prokic and Stephen L Drymer

Choice of law

18. How is the substantive law of the dispute determined? Where the substantive law is unclear, how will a tribunal determine what it should be?

Canada

All Canadian jurisdictions follow article 28(1) of the Model Law, which provides that the substantive law applicable to a dispute is determined first by agreement of the parties. All jurisdictions have also specified that, despite article 28(2) of the Model Law, if the parties have not designated an applicable substantive law to the dispute, the arbitral tribunal “shall apply the rules of law it considers to be appropriate given all the circumstances respecting the dispute”.

Answer contributed by Laurence Ste-Marie, Dina Prokic and Stephen L Drymer

Appointing the tribunal

19. Does the law of your jurisdiction place any limitations in respect of a partys choice of arbitrator?

Canada

Beyond the typical restrictions concerning independence and impartiality, there are no limitations concerning the selection of arbitrators for arbitrations seated in Canada. Most Canadian arbitration statutes mandate appointing authorities (where used) to consider whether it is advisable to appoint an arbitrator of a nationality other than those of the parties. British Columbia legislation explicitly forbids courts from appointing a sole or third arbitrator who is of the same nationality as one of the parties, save for prior agreement of the parties.

Answer contributed by Laurence Ste-Marie, Dina Prokic and Stephen L Drymer

20. Can non-nationals act as arbitrators where the seat is in your jurisdiction or hearings are held there? Is this subject to any immigration or other requirements?

Canada

Visa requirements aside, non-Canadian nationals may generally serve as arbitrators or represent parties in international arbitrations in Canada. The international arbitration legislation in British Columbia, for instance, specifically provides that a party may be represented in an arbitration by any person, “including but not limited to a legal practitioner from another state”.

Answer contributed by Laurence Ste-Marie, Dina Prokic and Stephen L Drymer

21. How are arbitrators appointed where no nomination is made by a party or parties or the selection mechanism fails for any reason? Do the courts have any role to play?

Canada

All Canadian jurisdictions have incorporated the rules concerning the selection of arbitrators at article 11(3)-(5) of the Model Law, and designated specific courts to decide matters that arise under article 6 of the Model Law. Where a party fails to nominate an arbitrator or where assistance is required in the selection of an arbitrator or the constitution of a tribunal, the parties have recourse to the designated court. The decision of that court concerning the selection of an arbitrator is not subject to appeal.

Answer contributed by Laurence Ste-Marie, Dina Prokic and Stephen L Drymer

22. Are arbitrators afforded immunity from suit under the law of your jurisdiction and, if so, in what terms?

Canada

In most Canadian common law jurisdictions, applicable international commercial arbitration acts are silent on the question, though there are some exceptions (see, eg, section 36.02 of the British Columbia International Commercial Arbitration Act, RSBC 1996, c 233, which states that “an arbitrator is not liable for anything done or omitted in connection with an arbitration unless the act or omission is in bad faith or the arbitrator has engaged in intentional wrongdoing”). In Québec, the Code of Civil Procedure provides specifically that “arbitrators cannot be prosecuted for an act performed in the course of their arbitration mission, unless they acted in bad faith or committed an intentional or gross fault.” However, irrespective of the absence of explicit legislative provisions in some provinces, courts have taken the position that absent fraud and bad faith, arbitrators are immune from civil liability (Sport Maska Inc v Zittrer [1988] 1 SCR 564).

Answer contributed by Laurence Ste-Marie, Dina Prokic and Stephen L Drymer

23. Can arbitrators secure payment of their fees in your jurisdiction? Are there fundholding services provided by relevant institutions?

Canada

Canadian arbitration laws do not explicitly address this issue, and there is little case law on point. However, the rules of most arbitral institutions operating in Canada require that parties pay a deposit covering the tribunal’s fees, which is held and administered by the institution in question. Many of those institutions also provide pure “fundholding” services. Perhaps most importantly, there is no law or rule prohibiting deposits or advances for arbitrators’ fees, and experienced arbitrators typically require deposits that are kept sufficiently current to cover payment of their anticipated fees.

The domestic arbitration acts specify that arbitrators may decide on their own fees, provided the fees and expenses paid to them do not exceed the fair value of the services performed and the necessary and reasonable expenses actually incurred. The domestic arbitration acts of Alberta, British Columbia, Manitoba, New Brunswick and Ontario also allow parties to bring an application before a court to review an arbitrator’s account for fees and expenses. In Nova Scotia and Saskatchewan, a party may request that the arbitrator’s account for fees and expenses be taxed in the same manner as a charge for services of an attorney.

Answer contributed by Laurence Ste-Marie, Dina Prokic and Stephen L Drymer

Challenges to arbitrators

24. On what grounds may a party challenge an arbitrator? How are challenges dealt with in the courts or (as applicable) the main arbitration institutions in your jurisdiction? Will the IBA Guidelines on Conflicts of Interest in International Arbitration generally be taken into account?

Canada

Generally, a party may challenge an arbitrator on two grounds: reasonable apprehension of bias (or “justifiable doubts” as to the arbitrator’s independence or impartiality in British Columbia) and lack of qualifications that may have been agreed between the parties.

Subject to mandatory law, parties are free to agree on a challenge procedure of their choice, including by way of institutional or other rules. Where the parties have not agreed on a procedure for challenges, as set out in the Model Law, the challenging party must bring the matter before the tribunal within 15 days of becoming aware of the ground of challenge. If the challenge is refused, the challenging party may, within 30 days, request the competent court to rule on the challenge.

Both international tribunals seated in Canada and Canadian courts often refer to the IBA Guidelines on Conflicts of Interest in International Arbitration when handling challenges to the members of the arbitral tribunal.

Answer contributed by Laurence Ste-Marie, Dina Prokic and Stephen L Drymer

Interim relief

25. What main types of interim relief are available in respect of international arbitration and from whom (the tribunal or the courts)? Are anti-suit injunctions available where proceedings are brought elsewhere in breach of an arbitration agreement?

Canada

In Canada, both courts and arbitral tribunals can issue interim relief in respect of an international arbitration. See questions 26 (in relation to article 17 of the Model Law) and 35 (on limitation on the type of relief arbitrators may grant). In Ontario, British Columbia and Québec, an interim measure may be recognised and enforced in the same way as an award. 

Anti-suit injunctions are available in Canada, although they are generally difficult to obtain (Amchem Products Inc v British Columbia (Workers' Compensation Board) [1993] 1 SCR 897). There is no explicit judicial treatment of a requested injunction against foreign judicial proceedings that allegedly contravene an arbitration agreement. Recently, however, the Court of Appeal for British Columbia issued an anti-arbitration injunction, enjoining a would-be claimant from pursuing his claim under a CIETAC arbitration clause, on the (very case-specific) ground that the parties had agreed not to pursue arbitration until certain applications pending before the courts were determined (Li v Rao, 2019 BCCA 264).

Answer contributed by Laurence Ste-Marie, Dina Prokic and Stephen L Drymer

26. Does the law of your jurisdiction allow a court or tribunal to order a party to provide security for costs?

Canada

Article 17 of the Model Law, which allows a tribunal, at the request of a party, and absent an agreement to the contrary, to make “any interim measure of protection as the arbitral tribunal considers necessary”, has been implemented in all Canadian jurisdictions.

The 2006 amendments to the Model Law, which incorporate a broader regime for interim measures, have been implemented in Québec through the new Code of Civil Procedure and in Ontario, through the 2017 International Commercial Arbitration Act, and in British Columbia, through the 2018 amendments to the International Commercial Arbitration Act.

In British Columbia, the legislation goes a step further and specifically provides that arbitral tribunals have the power to order appropriate security for costs in connection with arbitral proceedings. 

Answer contributed by Laurence Ste-Marie, Dina Prokic and Stephen L Drymer

Procedure

27. Are there any mandatory rules in your jurisdiction that govern the conduct of the arbitration (eg, general duties of the tribunal and/or the parties)?

Canada

All Canadian jurisdictions require arbitrators to be independent and impartial, and for the parties to be treated with equality and to be given an adequate opportunity to present their case. Aside from these fundamental requirements, tribunals generally have broad discretion to decide on the applicable procedure absent an agreement of the parties. In Québec, the Code of Civil Procedure reiterates the importance of the principle of proportionality, which governs civil procedure.

Answer contributed by Laurence Ste-Marie, Dina Prokic and Stephen L Drymer

28. What is the applicable law (and prevailing practice) where a respondent fails to participate in an arbitration?

Canada

Common law provinces follow article 25 of the Model Law: if the claimant fails to communicate its statement of claim, the arbitral tribunal terminates the proceedings. However, if the respondent fails to communicate its statement of defence, the tribunal shall continue the proceedings without treating such failure in itself as an admission of the claimant’s allegations. If any party, after due notice, fails to appear before the arbitral tribunal, the latter may nevertheless go on with the proceedings and render a binding award. In any case, the defaulting party can be excused if it can demonstrate that the parties had agreed otherwise or of it had sufficient cause.

In Québec, the Code of Civil Procedure provides that if a party fails to state its contentions, attend at the hearing or present evidence in support of its contentions, the arbitrator, after recording the default, may continue the arbitration. However, if the party that submitted the dispute to arbitration fails to state its contentions, the arbitration is ended unless the other party objects (article 635).

Answer contributed by Laurence Ste-Marie, Dina Prokic and Stephen L Drymer

29. What types of evidence are usually admitted, and how is evidence usually taken? Will the IBA Rules on the Taking of Evidence in International Arbitration generally be taken into account?

Canada

In international arbitration matters, article 19(2) of the Model Law gives arbitrators wide discretion to determine the “admissibility, relevance, materiality and weight of any evidence”. Parties and tribunals frequently address matters relating to the taking of evidence at the outset of the arbitration, in an initial procedural order that will often refer to the IBA Rules on the Taking of Evidence in International Arbitration (“IBA Rules”) either as a binding text or as guidance. Even when the parties have not expressly adopted the IBA Rules, it is common for arbitrators to refer to the IBA Rules as indicative of international arbitral practice on evidentiary matters.

Though the Prague Rules, which favour the civil law “inquisitorial model of procedure”, are likely to find traction with parties and lawyers from civil law systems, it is not yet possible to evaluate their potential success in Canada since Québec, while being the only civil law jurisdiction in the country, largely follows the common law approach in procedural matters (Webasto c. Transport TFI 6, 2019 QCCA 342).

In domestic arbitration proceedings, arbitrators are generally afforded more flexibility in the administration of evidence than state judges, although some domestic arbitration legislation requires that witnesses testify under oath.

Answer contributed by Laurence Ste-Marie, Dina Prokic and Stephen L Drymer

30. Will the courts in your jurisdiction play any role in the obtaining of evidence?

Canada

In accordance with article 27 of the Model Law, all Canadian jurisdictions permit an arbitral tribunal or a party, with the tribunal’s permission, to request assistance from a competent court in obtaining evidence, including compelling a witness to attend, answer or produce real evidence in their possession. Recently, however, the Supreme Court of British Columbia clarified that it would only issue a subpoena compelling a witness’ attendance if there was “cogent evidence of refusal” to attend the hearing; in the absence of such refusal the court found that its intervention would be premature (see Octaform Inc v Leung, 2021 BCSC 73).

Answer contributed by Laurence Ste-Marie, Dina Prokic and Stephen L Drymer

31. What is the relevant law and prevailing practice relating to document production in international arbitration in your jurisdiction?

Canada

The arbitration laws in Canada contain no special rules for the disclosure of documents in arbitral proceedings. The IBA Rules are frequently used by the parties and arbitrators as guidelines.

Answer contributed by Laurence Ste-Marie, Dina Prokic and Stephen L Drymer

32. Is it mandatory to have a final hearing on the merits?

Canada

No. In accordance with the Model Law, the arbitral tribunal may conduct the arbitration on the basis of documents alone. The arbitral tribunal must however hold a hearing if any party requests it.

Answer contributed by Laurence Ste-Marie, Dina Prokic and Stephen L Drymer

33. If your jurisdiction is selected as the seat of arbitration, may hearings and procedural meetings be conducted elsewhere?

Canada

Yes. In accordance with article 20(2) of the Model Law, hearings may be held in an appropriate location outside the seat of arbitration.

Answer contributed by Laurence Ste-Marie, Dina Prokic and Stephen L Drymer

Award

34. Can the tribunal decide by majority?

Canada

Yes. Under the Model Law, a majority ruling constitutes the tribunal’s decision. The arbitration laws in many common-law provinces further specify that the decision of the chair of the tribunal prevails in the absence of a majority or unanimous decision. The laws of most provinces also explicitly allow one arbitrator to rule on a question of procedure if previously authorised by the other arbitrators and the parties.

Answer contributed by Laurence Ste-Marie, Dina Prokic and Stephen L Drymer

35. Are there any particular types of remedies or relief that an arbitral tribunal may not grant?

Canada

The Model Law, as adopted in common law Canadian jurisdictions, does not specifically address the types of relief that arbitral tribunals may grant. It is therefore an issue for the lex arbitri or the arbitration agreement, and unless either provides otherwise, there are no a priori restrictions on the types of relief arbitral tribunals may grant, including equitable remedies and declaratory orders.

In Québec, however, a distinction is made between injunctions (the non-respect of which entails penal consequences) and other injunctive relief, for instance, orders for specific performance. Arbitral tribunals seated in Québec cannot grant injunctions, which fall within the exclusive jurisdiction of the Superior Court, but they may grant other provisional measures and issue orders for specific performance.

Answer contributed by Laurence Ste-Marie, Dina Prokic and Stephen L Drymer

36. Are dissenting opinions permitted under the law of your jurisdiction? If so, are they common in practice?

Canada

Consistent with the Model Law, Canadian international arbitration acts provide that an award does not need to be signed by all of the tribunal members, as long as the refusal by an arbitrator to sign is explained in the award itself. If an arbitrator refuses to sign the award because of a dissenting opinion, the award should say so expressly. It will usually be up to the president of the tribunal to decide whether or not to append the dissenting opinion to the award. Alternatively, the dissenting arbitrator may sign the award and indicate the words “I dissent” next to his or her signature.

In Québec, if one of the arbitrators refuses to sign the award or is unable to sign, the other arbitrators must record that fact and the award has the same effect as if it were signed by all of them (article 642 Code of Civil Procedure).

Answer contributed by Laurence Ste-Marie, Dina Prokic and Stephen L Drymer

37. What, if any, are the legal and formal requirements for a valid and enforceable award?

Canada

Unless otherwise agreed between the parties, an arbitral award must be in writing and state the reasons on which it is based. It must also indicate the date and the place where it was made and be signed by all or a majority of the members of the tribunal. A copy of the arbitral award must be notified to all parties.

Answer contributed by Laurence Ste-Marie, Dina Prokic and Stephen L Drymer

38. What time limits, if any, should parties be aware of in respect of an award? In particular, do any time limits govern the interpretation and correction of an award?

Canada

In accordance with the Model Law, all Canadian jurisdictions allow parties to request that the tribunal interpret or correct or in certain cases supplement the award, within a specified period of time. The tribunal may also make corrections to the award on its own initiative within a similar period of time.

The limitation period for seeking the enforcement of an award varies from jurisdiction to jurisdiction. While most international arbitration acts in most Canadian jurisdictions are silent on the issue, the Supreme Court ruled that local limitations laws (under which the limitation period may be as short as two years) apply to the enforcement of an arbitral award, absent an express provision to the contrary in the relevant legislation (Yugraneft Corp v Rexx Management Corp, 2010 SCC 19).  

In Ontario, the new international commercial arbitration act provides that an international arbitral award can only be enforced within 10 years.

Answer contributed by Laurence Ste-Marie, Dina Prokic and Stephen L Drymer

Costs and interest

39. Are parties able to recover fees paid and costs incurred? Does the "loser pays" rule generally apply in your jurisdiction?

Canada

Though arbitration laws in most Canadian jurisdictions contain provisions regarding costs, the issue of apportioning costs remains largely in the arbitral tribunals’ discretion, as appears from recent decisions of the Court of Queen’s Bench of Alberta in K-Rite Construction Ltd. v. Enigma Ventures Inc., 2020 ABQB 566, and the Supreme Court of British Columbia in Allard v. The University of British Columbia, 2021 BCSC 60. The general convention is that costs follow the event. Parties are encouraged to specify the tribunal’s authority to award costs in their arbitration agreements.

Answer contributed by Laurence Ste-Marie, Dina Prokic and Stephen L Drymer

40. Can interest be included on the principal claim and costs? Is there any mandatory or customary rate?

Canada

International arbitration legislation in Canada does not provide explicitly for the award of interest, except in British Columbia. Despite the legislative silence, arbitrators enjoy wide discretion and generally recognise that interest is an element of damages, and thus necessary to fully compensate the claimant.

Answer contributed by Laurence Ste-Marie, Dina Prokic and Stephen L Drymer

Challenging awards

41. Are there any grounds on which an award may be appealed before the courts of your jurisdiction?

Canada

In common law jurisdictions, no appeal is permitted from an international arbitration award unless specifically provided by the parties in the arbitration agreement. In some jurisdictions, domestic arbitral awards may be appealed on limited grounds (generally on questions of law), although there are differences among the provincial acts. 

In Québec, arbitration awards (domestic and international alike) may only be challenged directly by way of an application for annulment, or indirectly by contesting an application for homologation (recognition). Most authorities suggest that parties may not contract out of either procedure. 

Answer contributed by Laurence Ste-Marie, Dina Prokic and Stephen L Drymer

42. Are there any other bases on which an award may be challenged, and if so what?

Canada

Awards rendered in arbitrations having their seat in a Canadian province or territory may be challenged under the grounds provided in the Convention and the Model Law.

Answer contributed by Laurence Ste-Marie, Dina Prokic and Stephen L Drymer

43. Is it open to the parties to exclude by agreement any right of appeal or other recourse that the law of your jurisdiction may provide?

Canada

Parties can exclude the right to appeal and other recourses available under the Model Law (including the right to apply to set aside an award) so long as the court is satisfied that the agreement does not undermine the effect of the mandatory provisions of the Model Law, or the local court’s inherent ability to review an award based on grounds of public policy.

Answer contributed by Laurence Ste-Marie, Dina Prokic and Stephen L Drymer

Enforcement in your jurisdiction

44. Will an award that has been set aside by the courts in the seat of arbitration be enforced in your jurisdiction?

Canada

There are only a few cases in Canada addressing the issue of recognition and enforcement of awards that have been set aside at the seat of the arbitration. An Ontario court has ruled that it was within the discretion of the enforcing court to recognise and enforce an arbitral award even where it had been set aside by a court in the jurisdiction of the award, but did not specify what factors were relevant to the exercise of this discretion (Schreter v Gasmac Inc, 1992 CanLII 7671 (ON SC)). In other instances, courts found that they had discretion to recognise and enforce an award where a motion to set it aside was pending at the place of arbitration (Europcar Italia SpA v Alba Tours International Inc [1997] O.J. No. 133 (Ont. C.J.), Powerex Corp v Alcan Inc, 2004 BCSC 876 (CanLII), Wires Jolley LLP v Peter Wong, 2010 BCSC 391).

In Québec, the issue is governed by articles 653 paragraph 2, subparagraph (6) and 654 of the Code of Civil Procedure.

Answer contributed by Laurence Ste-Marie, Dina Prokic and Stephen L Drymer

45. What trends, if any, are suggested by recent enforcement decisions? What is the prevailing approach of the courts in this regard?

Canada

Canada remains an arbitration-friendly jurisdiction. Canadian courts are cautious not to unduly interfere with the arbitration process and they continue to apply a restrictive interpretation to the grounds for refusal of enforcement, as evidenced by the recent decision of the Superior Court of Justice of Ontario in Crystallex International Corporation v Bolivarian Republic of Venezuela, 2016 ONSC 4693, where the court proceeded ex parte to enforce an ICSID award against the Republic of Venezuela. The Superior Court of Quebec also recently reaffirmed that recognition could only be refused on grounds specifically outlined by law. It thus dismissed the argument that recognition should be refused because the award was fully executed, making its recognition “theoretical”(see Metso Minerals Canada Inc v Arcelormittal exploitation minière Canada, 2020 QCCS 1103).

The pro-arbitration position of the Canadian judiciary is also evident from the decision of the Ontario Superior Court in The Russian Federation v Luxtona Limited, 2019 ONSC 7558. The Court in that case dismissed the Russian Federation’s request to file new evidence in support of its challenge of an arbitral award on jurisdiction. It held that such a request could only be allowed if: “(1) the evidence could not have been obtained using reasonable diligence; (2) the evidence would probably have an important influence on the case; (3) the evidence must be apparently credible; and (4) the evidence must be such that if believed it could reasonably, when taken with the other evidence adduced at the hearing, be expected to have affected the result.”  

Answer contributed by Laurence Ste-Marie, Dina Prokic and Stephen L Drymer

46. To what extent might a state or state entity successfully raise a defence of state or sovereign immunity at the enforcement stage?

Canada

Foreign state immunity in Canada is governed by the State Immunity Act. Section 12 of the Act provides for the general principle that “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.” There are a number of exceptions, including where the state has explicitly or implicitly waived such immunity, or the property is used or intended to be used for a commercial activity. 

Canadian courts mostly rely on the commercial activity exception and the waiver of execution immunity by implication to enforce arbitral awards against states (Collavino Inc v Tihama Development Authority, 2007 ABQB 212; Canadian Planning and Design Consultants Inc v Libya, 2015 ONCA 661 in the context of enforcement of an ICC award against Libya.)

Answer contributed by Laurence Ste-Marie, Dina Prokic and Stephen L Drymer

Further considerations

47. To what extent are arbitral proceedings in your jurisdiction confidential?

Canada

In most Canadian jurisdictions, the international arbitration laws do not expressly protect the confidentiality of arbitral proceedings. Exceptions include Québec, where the Code of Civil Procedure expressly requires arbitrators, parties and third persons assisting them to preserve the confidentiality of the arbitration process, and British Columbia, where the new international arbitration legislation provides that, unless otherwise agreed, “all hearings and meetings in arbitral proceedings must be held in private.”

Accordingly, parties would be well advised to provide for the confidentiality of their proceedings contractually. Parties should further bear in mind that arbitration proceedings are likely to become public when court intervention is sought since most Canadian courts are reluctant to issue sealing orders and similar measures to preserve the confidentiality of the arbitral proceedings. Some recent Québec authority, however, indicates that arbitral confidentiality should be fostered and maintained before the courts when possible (79411 USA Inc v Mondofix Inc, 2020 QCCS 1104).

Answer contributed by Laurence Ste-Marie, Dina Prokic and Stephen L Drymer

48. What is the position relating to evidence produced and pleadings filed in the arbitration? Are these confidential? Is there any way that they might be relied on in other proceedings (whether arbitral or court proceedings)?

Canada

Please see above. While Canadian courts have in some cases found that there may be an implied undertaking to not use information obtained in arbitration proceedings for purposes other than the arbitration, parties wishing to preserve the confidentiality of the evidence produced and the pleadings filed in the arbitration should specifically provide for it in their agreement.

Answer contributed by Laurence Ste-Marie, Dina Prokic and Stephen L Drymer

49. What ethical codes and other professional standards, if any, apply to counsel and arbitrators conducting proceedings in your jurisdiction?

Canada

Counsel and arbitrators are governed by the professional regulations and codes of ethics of their respective jurisdictions, bars or law societies.

Answer contributed by Laurence Ste-Marie, Dina Prokic and Stephen L Drymer

50. Are there any particular procedural expectations or assumptions of which counsel or arbitrators participating in an international arbitration with its seat in your jurisdiction should be aware?

Canada

None, other than the expectations or assumptions that might apply in any arbitral proceeding based on the adversarial principle as practised in international arbitration generally, including, for example, the taking of witness evidence, cross-examination of witnesses and experts, some degree of document discovery, and the opportunity for parties not only to state their case but to respond to the case as put by the other party. In addition, as noted in relation to question 27, in Québec, the principle of proportionality governs civil procedure.

Answer contributed by Laurence Ste-Marie, Dina Prokic and Stephen L Drymer

51. Is third-party funding permitted in your jurisdiction? If so, are there any rules governing its use?

Canada

Third-party funding agreements are not per se prohibited in Canada, as recently confirmed by the Supreme Court of Canada (9354-9186 Québec inc v Callidus Capital Corp, 2020 CanLII 5612 (SCC)). They are, however, subject to certain limitations pertaining to the role of the funder in the proceedings, its control over the proceedings and the return it may gain on the outcome of the proceedings.

In British Columbia, the international arbitration legislation specifically provides that it is not contrary to public policy for arbitration proceedings to be funded by a third party.

 

 

* The authors would like to thank Justina di Fazio and Joshua Crowe for their help with the research for this chapter.

Answer contributed by Laurence Ste-Marie, Dina Prokic and Stephen L Drymer

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