ICLG.com Practice areas International Arbitration Canada
Canada: International Arbitration 2018
The ICLG to: International Arbitration Laws and Regulations covers common issues in international arbitration laws and regulations – including arbitration agreements, governing legislation, choice of law rules, selection of arbitral tribunal, preliminary relief and interim measures – in 50 jurisdictions.
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Matthew J. Latella
Christina Doria
Chapter content
Choice of Law Rules
Selection of Arbitral Tribunal
Preliminary Relief and Interim Measures
Evidentiary Matters
Making an Award
Challenge of an Award
Enforcement of an Award
Remedies / Interests / Costs
Investor State Arbitrations
1. Arbitration Agreements
1.1 What, if any, are the legal requirements of an arbitration agreement under the laws of your jurisdiction?
As a federal country, generally each of the provinces and territories and the federal government has adopted the UNCITRAL Model Law ("Model Law").
An arbitration agreement under the Model Law must be in writing; however, a record of the "contents" of the agreement "in any form" is recognised as being equivalent to a traditional written agreement. It will be sufficient if it is contained in a document signed by the parties, an exchange of letters, telex, telegrams or other means of telecommunication which provide a record of the agreement which today would presumably include email. Ontario and British Columbia are the first Canadian provinces to adopt the 2006 Model Law, which is more flexible and provides that the arbitration agreement must still be in writing to be enforceable, but an agreement to arbitrate is in writing if the content is recorded in written form, including by electronic communication or email. However, in Ontario and British Columbia, an arbitration agreement can be concluded orally, by conduct, or by other means.
1.2 What other elements ought to be incorporated in an arbitration agreement?
An arbitration clause should use clear, standardised words, which spell out as clearly as possible the agreement between the parties. It must not be contradicted or modified by other clauses in the contract. The arbitration clause should address: (i) what is to be arbitrated (the scope of the clause); (ii) how it is to be arbitrated (i.e. ad hoc or institutional and which rules apply); (iii) where it should be arbitrated (the seat of arbitration); (iv) by whom it is to be arbitrated (number of arbitrators); (v) the applicable law of the arbitration clause; and (vi) the language of the arbitration.
If an institution is selected for an arbitration, a best practice is to use the sample clause of that particular institution and consider any additional elements the parties wish to incorporate.
1.3 What has been the approach of the national courts to the enforcement of arbitration agreements?
Canadian law strongly favours enforcing arbitration agreements. Even if the jurisdiction of the arbitrator is disputed, courts will generally enforce an arbitration agreement unless it is clear that the agreement is void, inoperative or incapable of being performed (Model Law, Article 8).
2. Governing Legislation
2.1 What legislation governs the enforcement of arbitration proceedings in your jurisdiction?
Canada is a federation comprised of 10 provinces and three territories. Each province has exclusive jurisdiction with respect to all matters concerning property and civil rights. Thus, there is no unifying federal law with respect to arbitration. The Federal Commercial Arbitration Act, RSC 1985, c 17 (2nd Suppl) only deals with matters involving the federal government. Commercial arbitration between private parties is governed by the legislation of the particular province in which the arbitration takes place. Fortunately, all the provinces have recognised the necessity for uniform legislation with respect to international commercial arbitration and all, save for Québec, have adopted the Model Law and the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the "New York Convention") as the law applicable to international commercial arbitration. In Québec, the Civil Code generally tracks the language of the Model Law and provides that the court take into consideration both the Model Law and the New York Convention where matters of extra-provincial or international trade are at issue.
2.2 Does the same arbitration law govern both domestic and international arbitration proceedings? If not, how do they differ?
The issue of whether an arbitration is characterised as domestic or international is important, as it determines whether the particular international or domestic legislation of a province applies. Generally speaking, legislation dealing with domestic arbitrations provides for more court involvement than legislation dealing with international arbitration, including the grounds on which a court may refuse to stay a proceeding and with respect to rights of appeal.
2.3 Is the law governing international arbitration based on the UNCITRAL Model Law? Are there significant differences between the two?
As discussed above, with the exception of Québec, each of the provinces and the federal government have adopted the Model Law as it was articulated in 1985 as the basic law for international arbitration. To date, Ontario and British Columbia are the only provinces that have adopted the 2006 amendments to the Model Law, and it is expected that other provinces will follow.
2.4 To what extent are there mandatory rules governing international arbitration proceedings sited in your jurisdiction?
If Canada is the place of arbitration, its mandatory laws will be applicable. Parties to an international arbitration may oust the application of the provincial legislation, but only to the extent that it does not have mandatory provisions. Further, in the absence of agreement between the parties, the lex arbitri will provide the law for the arbitral procedure and will deal with all matters concerning the conduct of the arbitration, and the court supervision thereof (James Miller & Partners Ltd. v. Whitworth Street Estates (Manchester) Ltd., [1970] A.C. 583).
3.1 Are there any subject matters that may not be referred to arbitration under the governing law of your jurisdiction? What is the general approach used in determining whether or not a dispute is "arbitrable"?
The courts have the power, on public policy grounds, to refuse to permit a matter to be arbitrated. Normally, matters of private commercial law between parties will be arbitrable. The question of whether or not the subject matter of a dispute is arbitrable usually turns on the existence of a statute that may remove the right of parties to contract for a third party to resolve their dispute. For example, certain consumer protection disputes may not be arbitrated under relevant provincial legislation (Wellman v. Telus, 2017 ONCA 433; see also J. B. Casey, Arbitration Law of Canada: Practice and Procedure, 3rd ed, [JurisNet 2017] ("Casey"), ch. 3, 5 and 7).
3.2 Is an arbitral tribunal permitted to rule on the question of its own jurisdiction?
Under the international arbitration acts, an arbitral tribunal may rule on its own jurisdiction. An arbitral tribunal's finding on jurisdiction is subject to review by the courts (Model Law, Article 16(3), 34).
As a general rule, courts will give deference to the arbitral tribunal to determine its own jurisdiction, including any jurisdictional challenges with respect to the existence or validity of the arbitration agreement. Where a court case has been brought in the face of an arbitration agreement and a question arises as to whether or not the matter falls within the jurisdiction of the arbitrator, there are three questions that need to be asked:
Are these the parties to the arbitration agreement?
Is the arbitration agreement prima facie enforceable between the parties?
Is the subject matter of the dispute arguably within the scope of the arbitration agreement?
If the answers to these questions turn on a pure question of law with little or no need to examine the facts then the court will typically decide the arbitrator's jurisdiction. If the answers involve mixed fact and law, or require a careful review of the evidence, then the court will refer the matter to the arbitral tribunal to decide its jurisdiction even if one of the issues it will have to decide is the existence or validity of the contract between the parties, within which the arbitration agreement is found (see United Mexican States v. Cargill, Inc., 2011 ONCA 622; Casey, ch. 5 and ch. 7).
3.3 What is the approach of the national courts in your jurisdiction towards a party who commences court proceedings in apparent breach of an arbitration agreement?
The courts in Canada are favourably disposed to arbitration and if there is a valid arbitration agreement the parties will be "held to their bargain". If a party to an arbitration agreement commences a court proceeding and refuses to arbitrate, the respondent can either accept the breach and continue the litigation or move for a stay of the court proceedings. Canadian courts will impose the obligation in a negative way by refusing to allow the court proceeding to continue if it is shown that an arbitration agreement is in full force and effect (Mind Star Toys Inc. v. Samsung Co. (1992) 9 O.R. (3d) 374 (Ont. Gen. Div.)).
In addition, the party seeking a stay of court proceedings must do so before that party's first submission on the substance of the dispute.
3.4 Under what circumstances can a national court address the issue of the jurisdiction and competence of an arbitral tribunal? What is the standard of review in respect of a tribunal's decision as to its own jurisdiction?
As discussed above, Canadian courts can, in limited circumstances, address the issue of the jurisdiction and competence of an arbitral tribunal in an international arbitration. A court may deal with jurisdiction in the first instance where questions of jurisdiction turn on a pure question of law with little or no need to examine the facts. However, Canadian courts are generally arbitration-friendly and will usually defer to the tribunal's jurisdiction to determine its own jurisdiction and competence.
Courts may also address the issue of the jurisdiction and competence of an arbitral tribunal if a party is challenging an international arbitration award in Canada.
The standard of review with respect to an arbitral tribunal's decision as to its own jurisdiction is one of correctness. However, this does not give Canadian courts a broad scope for intervention in the decisions of international arbitral tribunals. Instead, courts in Canada should interfere only in rare cases where there is a true question of jurisdiction. Furthermore, courts must take a narrow view of what constitutes a question of jurisdiction and may not stray into the merits of the question decided by the tribunal (Canada (Attorney General) v. Mobil Investments Canada Inc., 2016 ONSC 790 at para 37; United Mexican States v. Cargill, Inc., 2011 ONCA 622 at paras 27–51).
3.5 Under what, if any, circumstances does the national law of your jurisdiction allow an arbitral tribunal to assume jurisdiction over individuals or entities which are not themselves party to an agreement to arbitrate?
Generally, the arbitral tribunal has no jurisdiction over persons who are not parties to the arbitration agreement. In Canada, there are six theories under which non-signatories could potentially be bound to, or may bind others to, arbitration agreements: (1) lifting the corporate veil/alter ego; (2) incorporation by reference; (3) assumption/assignment; (4) agency; (5) equitable estoppel; and (6) implied consent to arbitrate (see Casey, ch. 5, s. 5.3.1).
3.6 What laws or rules prescribe limitation periods for the commencement of arbitrations in your jurisdiction and what is the typical length of such periods? Do the national courts of your jurisdiction consider such rules procedural or substantive, i.e., what choice of law rules govern the application of limitation periods?
Limitation periods for the commencement of arbitrations in Canada are applied in the same manner as a court action. In Ontario, the provincial legislation imposes a limitation period of 10 years from the date the award was made, or, where there was a proceeding to set aside an award, 10 years from the date on which the proceedings concluded. As a general rule, if a provincial law governs the contract, the limitation periods are typically two years, but may vary from province to province. The international acts provide that the arbitral tribunal must decide a dispute in accordance with the rules of law chosen by the parties. The Supreme Court of Canada has held that limitation provisions in a statute are substantive (Yugraneft Corp. v. Rexx Management Corp., 2010 SCC 19, at para 27). Issues may arise in the context of international arbitration where the substantive law of the contract differs from the mandatory procedural law of the place of arbitration.
3.7 What is the effect in your jurisdiction of pending insolvency proceedings affecting one or more of the parties to ongoing arbitration proceedings?
In Canada, the Bankruptcy and Insolvency Act, RSC 1985 c B-3 ("BIA") provides that a creditor has no remedy against the debtor and all actions and proceedings respecting claims provable in bankruptcy are stayed (BIA, s. 69). Canadian courts have defined "proceedings" broadly to include arbitration proceedings (Quintette Coal Ltd. v. Nippon Steel Corp., (1990), 51 BCLR (2d) 105 (B.C.C.A). If a foreign bankruptcy order is obtained against a party involved in an international arbitration in Canada, the arbitrator must consider the extent to which the bankrupt party has lost capacity to proceed and whether or not the foreign court order should be recognised and the arbitration proceedings stayed (see Casey, ch. 7, s. 7.18.2).
4. Choice of Law Rules
4.1 How is the law applicable to the substance of a dispute determined?
The substantive law governing the issues in dispute is determined by the choice of law clause in the contract. If the parties have not agreed on the applicable law, it will be determined by the arbitral tribunal based on conflict of laws rules (Model Law, Article 28).
4.2 In what circumstances will mandatory laws (of the seat or of another jurisdiction) prevail over the law chosen by the parties?
Typically, the substantive law chosen by the parties will prevail so long as it is not contrary to Canadian public policy.
4.3 What choice of law rules govern the formation, validity, and legality of arbitration agreements?
The question of which law governs the formation, validity and effect of arbitration agreements is determined by the conflict of laws rules applicable to contracts in general. Often, considerations will be given to the express choice of law in the substantive contract, the implied choice of law, or the law which has the closest and most real connection to the arbitration agreement.
5. Selection of Arbitral Tribunal
5.1 Are there any limits to the parties' autonomy to select arbitrators?
In Canada, parties have general freedom to choose arbitrators. However, an arbitrator must be independent and impartial.
5.2 If the parties' chosen method for selecting arbitrators fails, is there a default procedure?
If the arbitration is administered by an institution, the institution's rules will typically provide a procedure for appointing arbitrators if the parties are not able to agree on any proposed candidates.
If the arbitration is ad hoc or the selected rules do not provide a procedure, the parties cannot agree on any proposed candidates, and cannot reach agreement of the procedure of appointing the arbitrator, the court will appoint the arbitrator on the application of either party (Model Law, Article 11(4)).
5.3 Can a court intervene in the selection of arbitrators? If so, how?
Under the Model Law, the court may intervene if the parties are unable to select an arbitrator.
5.4 What are the requirements (if any) imposed by law or issued by arbitration institutions within your jurisdiction as to arbitrator independence, neutrality and/or impartiality and for disclosure of potential conflicts of interest for arbitrators?
Before accepting an appointment as arbitrator, the nominee must disclose to all parties "any circumstances likely to give rise to justifiable doubts as to his impartiality or independence" (Model Law, Article 12(1)).
6. Procedural Rules
6.1 Are there laws or rules governing the procedure of arbitration in your jurisdiction? If so, do those laws or rules apply to all arbitral proceedings sited in your jurisdiction?
A fundamental requirement of domestic and international arbitration is that the parties be treated fairly and equally and that each party be given an opportunity to present his or her case. Other than this general requirement, the arbitral tribunal is free to determine what procedure is to be followed, absent the agreement of the parties. In default of any agreement the basic procedures set out in the Model Law and the domestic legislation apply, but again, unless a provision is mandatory (such as fairness and equality), the arbitral tribunal may conduct the arbitration in any manner it considers appropriate.
6.2 In arbitration proceedings conducted in your jurisdiction, are there any particular procedural steps that are required by law?
As stated above, there is an obligation to treat the parties fairly and equally and to give each party an opportunity to present his or her case. The legislation also imposes the requirement of a reasoned, written award.
6.3 Are there any particular rules that govern the conduct of counsel from your jurisdiction in arbitral proceedings sited in your jurisdiction? If so: (i) do those same rules also govern the conduct of counsel from your jurisdiction in arbitral proceedings sited elsewhere; and (ii) do those same rules also govern the conduct of counsel from countries other than your jurisdiction in arbitral proceedings sited in your jurisdiction?
The conduct of Canadian counsel in arbitral proceedings is governed by the relevant law society rules of professional conduct within each province, but the local professional conduct rules are not binding on counsel from jurisdictions outside of Canada. This can create a lacuna where parties do not include rules governing the conduct of counsel in their arbitration agreements.
Parties to international arbitration proceedings in Canada are likely to adopt, in whole or in part, the International Bar Association ("IBA") Guidelines on Party Representation in International Arbitration once an arbitration is underway, although they seldom include these or other IBA Guidelines in arbitration clauses.
6.4 What powers and duties does the national law of your jurisdiction impose upon arbitrators?
An arbitral tribunal has the authority to rule on its own jurisdiction. Absent any agreement by the parties, an arbitral tribunal has the power to determine the procedure to be followed in the arbitration, provided it is in accordance with the mandatory provisions of the relevant arbitration legislation or Model Law.
An arbitral tribunal has the power to make orders for interim injunctions, the preservation or sale of assets, and, where appropriate, to appoint a receiver. Typically, the power to award interest and costs comes from the agreement between the parties. However, absent any agreement to the contrary, an international tribunal sitting in Canada has the power to award costs. An arbitral tribunal may also, in certain circumstances, have the power to award security for costs, as discussed below.
An award of an arbitral tribunal is final, and may not be limited to a monetary award, but may include orders for specific performance, injunctions, and other equitable remedies. (See Casey, ss. 5.8, 6.1, 8.2, 8.5 and 8.7.)
6.5 Are there rules restricting the appearance of lawyers from other jurisdictions in legal matters in your jurisdiction and, if so, is it clear that such restrictions do not apply to arbitration proceedings sited in your jurisdiction?
There are no particular qualification requirements for representatives appearing on behalf of a party in an arbitration in Canada. No provincial bar association has, to date, taken the position that a party may only be represented by a lawyer admitted to the local bar. However, in the event recourse to local courts may be required, there are restrictions that require counsel to be a member of the local bar, or at least that of another Canadian province. Such rules generally prevent a person who is not a member of the local bar from appearing.
6.6 To what extent are there laws or rules in your jurisdiction providing for arbitrator immunity?
Historically, an arbitrator has been immune from action in negligence or breach of contract. The Supreme Court of Canada in Sport Maska Inc. v. Zittrer [1988] 1 S.C.R. 564 established that an arbitrator will be immune from suit so long as they act in a judicial or quasi-judicial manner while fulfilling his or her function as an independent party, in compliance with the mandatory provisions of the applicable legislation. While an arbitrator is immune from suit for negligence, conduct amounting to wilful or intentional acts or bad faith may attract liability (Flock v. Beattie, 2010 ABQB 193).
6.7 Do the national courts have jurisdiction to deal with procedural issues arising during an arbitration?
Generally, under the Model Law, courts do not have jurisdiction to intervene in interim procedural issues that arise during an arbitration (Inforica Inc. v. CGI Information Systems Management Consultants, 2009 ONCA 642).
7. Preliminary Relief and Interim Measures
7.1 Is an arbitral tribunal in your jurisdiction permitted to award preliminary or interim relief? If so, what types of relief? Must an arbitral tribunal seek the assistance of a court to do so?
The Model Law empowers a tribunal to make orders for interim injunctions, the preservation or sale of assets and in an appropriate case, to appoint a receiver, as part of the powers given to the tribunal by the agreement of the parties, without the assistance of the courts (Model Law, Article 17).
7.2 Is a court entitled to grant preliminary or interim relief in proceedings subject to arbitration? In what circumstances? Can a party's request to a court for relief have any effect on the jurisdiction of the arbitration tribunal?
The Model Law permits a party to request from a court an interim measure of protection and permits the court to grant such a measure (Model Law, Article 9). The provincial courts will grant interim relief in support of arbitration proceedings, particularly where it is necessary to bind third parties over whom the arbitral tribunal has no jurisdiction. Before the court will hear the matter there must be some evidence that the arbitration has commenced or that there is an undertaking to immediately commence it. A court may decline to exercise its jurisdiction where it would have the effect of adjudicating the substance of the dispute (African Mixing Technologies (PTY) Ltd. v. Canamix Processing Systems Ltd., 2014 BCSC 2130).
7.3 In practice, what is the approach of the national courts to requests for interim relief by parties to arbitration agreements?
Canadian courts will determine whether an interim measure of protection is appropriate using the test applicable under the relevant procedural law of the arbitration. This generally includes the requirement to meet the following test:
a) there is a serious case to be tried;
b) the applicant would suffer irreparable harm if the application were refused; and
c) the balance of convenience favours the granting of an interlocutory injunction.
Additionally, the party seeking interim relief must give an undertaking to the court that if it turns out that the interim relief should not have been granted, the moving party will be liable for any damages occasioned by the granting of the order.
7.4 Under what circumstances will a national court of your jurisdiction issue an anti-suit injunction in aid of an arbitration?
If the arbitration is proceeding in Canada, then the relevant supervisory court has jurisdiction to consider if it is appropriate to grant an anti-suit injunction if a party to the arbitration commences legal proceedings in another jurisdiction. In Amchem Products Inc. v. British Columbia (Worker's Compensation Board) [1993] 1 S.C.R. 897, the Supreme Court indicated that a court would likely grant an anti-suit injunction where a foreign court did not accept jurisdiction in a manner that is consistent with the New York Convention, Canadian law or the arbitration agreement.
A Canadian court may grant an anti-suit injunction before the foreign action has commenced. The court may do so to support an arbitral tribunal's anti-suit injunction, granted on the grounds that a threatened foreign action would be abusive and disruptive (BG International Limited v. Grynberg Production Corporation, 2009 ABQB 452).
7.5 Does the law of your jurisdiction allow for the national court and/or arbitral tribunal to order security for costs?
The provincial international arbitration acts and the Model Law provide for security for costs when a party is seeking an "interim measure of protection" relating to the subject matter of the dispute. They otherwise do not deal with the specific concept of security for costs. Instead, the power must be found either expressly or impliedly in the arbitration agreement or the rules under which the parties have agreed to arbitrate. (See Casey, s. 5.11.)
7.6 What is the approach of national courts to the enforcement of preliminary relief and interim measures ordered by arbitral tribunals in your jurisdiction and in other jurisdictions?
Pursuant to the Model Law, courts consider "award" to mean a final award. Accordingly, courts generally may not enforce interim awards. However, in Ontario, the legislation empowers the courts to enforce interim measures ordered by a tribunal.
8. Evidentiary Matters
8.1 What rules of evidence (if any) apply to arbitral proceedings in your jurisdiction?
Domestic rules of evidence do not apply to international arbitration proceedings. Under both the domestic and international arbitration legislation, the parties can agree on the rules of evidence. Article 19(2) of the Model Law permits the tribunal to determine all matters relating to the admissibility, relevance, materiality and weight of any evidence. It is relatively common for an arbitral tribunal in an international arbitration in Canada to adopt or take guidance from the IBA Rules on the Taking of Evidence in International Commercial Arbitration.
8.2 What powers does an arbitral tribunal have to order disclosure/discovery and to require the attendance of witnesses?
An arbitral tribunal has the power to order disclosure or discovery from the parties, save for the production of privileged documents. However, an arbitral tribunal does not have the power to order a third party to disclose documents, and a party must seek court assistance if it seeks the disclosure of documents from a third party.
The Model Law does not provide an arbitral tribunal with the power to compel witnesses to attend an arbitration. However, Article 27 of the Model Law provides that the arbitral tribunal or a party, with the approval of the arbitral tribunal may request the assistance of the court in the taking of evidence. Canadian courts have held that Article 27 of the Model Law is broad enough to give the court power to compel a non-party to disclose documents or be deposed prior to the arbitral hearing (Jardine Lloyd Thompson Canada Inc. v. SJO Catlin, (2006) 264 DLR. (4th) 358 (A.B.C.A.)).
8.3 Under what circumstances, if any, can a national court assist arbitral proceedings by ordering disclosure/discovery or requiring the attendance of witnesses?
As stated above, the arbitral tribunal, or a party with the approval of the arbitral tribunal, can request court assistance in the taking of evidence (Model Law, Article 27).
8.4 What, if any, laws, regulations or professional rules apply to the production of written and/or oral witness testimony? For example, must witnesses be sworn in before the tribunal and is cross-examination allowed?
Canadian arbitration legislation does not set out specific rules governing the production of written or oral witness testimony. The Model Law empowers a tribunal to determine evidentiary matters, absent the agreement of the parties (Model Law, Article 24). It is common in international arbitration in Canada to produce witness statements and expert reports. The hearing tends to only deal with cross-examination and oral argument. The witness statements stand as the direct evidence of the witness. The Model Law does not require that an oath be administered for a witness giving oral evidence at a hearing.
8.5 What is the scope of the privilege rules under the law of your jurisdiction? For example, do all communications with outside counsel and/or in-house counsel attract privilege? In what circumstances is privilege deemed to have been waived?
In Canada, solicitor-client privilege protects the direct communications, both oral and documentary, prepared by the lawyer or client and flowing between them, in connection with the provision of legal advice. Privilege also attaches to documents prepared for the dominant purpose of actual or contemplated litigation. Privilege may, in certain circumstances, extend to third parties who are performing functions that are central to the existence or operation of the lawyer-client relationship.
9. Making an Award
9.1 What, if any, are the legal requirements of an arbitral award? For example, is there any requirement under the law of your jurisdiction that the award contain reasons or that the arbitrators sign every page?
An award must be final, certain, consistent, and must decide the matters submitted, and no more than the matters submitted (see Mullins v. Mullins (1983), 42 O.R. (2d) 208 (Div. Ct.)). The arbitral award:
must be in writing;
state the reasons for the decision unless the decision was on consent, or the provision is waived;
give the place and date the award is made;
be signed by all the arbitrators or a majority of them so long as any omission is explained; and
be delivered to each party.
9.2 What powers (if any) do arbitral tribunals have to clarify, correct or amend an arbitral award?
Under the Model Law, the arbitral tribunal has the power, upon request and only if the arbitral tribunal considers the request to be justified, to (a) correct in the award any errors in computation, any clerical or typographical errors or any errors of similar nature, (b) give an interpretation of a specific point or part of the award, and (c) make an additional award as to claims presented in the arbitral proceedings but omitted from the award (Model Law, Article 33).
10. Challenge of an Award
10.1 On what bases, if any, are parties entitled to challenge an arbitral award made in your jurisdiction?
A party can only challenge an award by bringing an application to set it aside on one of the stated grounds set out in the Model Law (Model Law, Article 34). Generally, the specific grounds relate to lack of jurisdiction of the tribunal, excess of jurisdiction of the tribunal, and lack of proper conduct or procedure.
10.2 Can parties agree to exclude any basis of challenge against an arbitral award that would otherwise apply as a matter of law?
There is an interesting tension in some of the jurisprudence in Ontario regarding this issue (e.g. see http://www.constructionlawcanada.com/arbitration/can-the-parties-contract-out-of-the-uncitral-model-law/). In particular, questions have been raised as to whether Article 34 of the Model Law is a mandatory provision that cannot be contracted out of. While there has yet to be any controlling appellate authority on this issue, the idea that parties could contract out of rights that are granted by statute seems more problematic than the idea that the parties could expand their rights by agreement. Of course, if it is ultimately concluded by a binding appellate authority that Article 34 is indeed a mandatory provision, it would effectively preclude parties from being stripped of rights that are granted by the provision. If a right of appeal or challenge is based in statute, the parties should not be able to exclude it.
10.3 Can parties agree to expand the scope of appeal of an arbitral award beyond the grounds available in relevant national laws?
There is no clear appellate authority as to whether parties to an arbitration agreement can expand the scope of an appeal beyond the applicable legislation. However, the Newfoundland Supreme Court Trial Division recently confirmed that sophisticated parties may create arbitration agreements that deviate from the structures of provincial and federal legislation, as long as the agreed process does not unduly infringe on the courts' inherent jurisdiction and provides for a process that protects the principles of fundamental justice. In the result, the court dismissed an application for an order setting aside an arbitral award under domestic arbitration legislation in Newfoundland and Labrador v. ExxonMobil Canada Properties, 2017 NLTD(G) 147. The legislation empowered a court to set aside an award where an arbitrator has misconducted themselves, or where an arbitration or award has been improperly procured. By contrast, the parties' arbitration agreement included Article 34(2) of the Model Law as the grounds on which the award could be set aside. In this particular case, the court held that the tribunal did not make a jurisdictional error and its interpretations were justifiable in fact and law.
10.4 What is the procedure for appealing an arbitral award in your jurisdiction?
Under the Model Law, there are no rights of appeal respecting errors of fact or errors of law. A party can only challenge an award by bringing an application to set it aside on one of the stated grounds set out in Article 34 of the Model Law. The application must be brought within three months since the date of the arbitral award or from the date that the arbitral tribunal was requested to correct an award under Article 33, though the rules of procedure may vary between the provinces.
11. Enforcement of an Award
11.1 Has your jurisdiction signed and/or ratified the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards? Has it entered any reservations? What is the relevant national legislation?
In 1986, Canada ratified the New York Convention, and passed the United National Foreign Awards Convention Act, implementing the New York Convention. Canada has adopted the reservation to limit recognition only to arbitral awards considered to be "commercial", except in the case of Québec. Each province and territory has enacted legislation recognising or otherwise incorporating the New York Convention.
11.2 Has your jurisdiction signed and/or ratified any regional Conventions concerning the recognition and enforcement of arbitral awards?
Canada has not signed or ratified any regional Conventions concerning the recognition and enforcement of arbitral awards other than the New York Convention.
11.3 What is the approach of the national courts in your jurisdiction towards the recognition and enforcement of arbitration awards in practice? What steps are parties required to take?
A party seeking recognition and enforcement must file an application in accordance with the provincial rules of procedure. The court must enforce an arbitral award unless the defendant can satisfy the court that it meets the criteria to refuse enforcement under Article 36 of the Model Law. The grounds upon which a foreign award may not be recognised are limited, and the onus of proof is on the party resisting enforcement. Enforcement proceedings must be brought within the relevant limitation period, which varies from province to province.
11.4 What is the effect of an arbitration award in terms of res judicata in your jurisdiction? Does the fact that certain issues have been finally determined by an arbitral tribunal preclude those issues from being re-heard in a national court and, if so, in what circumstances?
Canadian courts will apply res judicata to final arbitration decisions. Courts will not permit parties to re-litigate an issue that was finally determined by an arbitral tribunal (Chriscan Enterprises Ltd. v. St. Pierre, 2016 BCCA 442; Nordion Inc. v. Life Technologies Inc., 2015 ONSC 99).
11.5 What is the standard for refusing enforcement of an arbitral award on the grounds of public policy?
In Canada, the standard for refusing enforcement of an arbitral award on the grounds of public policy is whether enforcing the award "offends our local principles of justice and fairness in a fundamental way". This is a difficult threshold to meet and typically will require that the moving party demonstrate that the award was made in a jurisdiction where the procedural or substantive rules diverge markedly from those in Canada, or where there was corruption on the part of the tribunal (Corporacion Transnacional de Inversiones, S.A. de C.V. v. Stete International, S.P.A.,[2000] O.J. No. 3408 (Ont. C.A.); Schreter v. Gasmac Inc., (1992) 7 O.R. (3rd) 608 (Gen. Div.), at p. 623).
12. Confidentiality
12.1 Are arbitral proceedings sited in your jurisdiction confidential? In what circumstances, if any, are proceedings not protected by confidentiality? What, if any, law governs confidentiality?
If the arbitration agreement deals with confidentiality then, subject to court intervention, the agreement of the parties will govern. If nothing is said in the arbitration agreement directly, there may be a provision for confidentiality in any procedural rules that have been agreed to. However, there is no legal duty of confidentiality implied or inherent in an arbitration agreement.
12.2 Can information disclosed in arbitral proceedings be referred to and/or relied on in subsequent proceedings?
There are no explicit legislative provisions that prevent information that is disclosed in an arbitration from being relied on in subsequent proceedings; however, information should generally not be disclosed without the consent of the parties. Even with a confidentiality agreement in place, or an order of the tribunal, a court may still determine that the agreement is subject to exceptions including considerations of public policy and the necessity to protect the interests of a party to the arbitration which may result in the disclosure of documents or evidence disclosed in an arbitration.
13. Remedies / Interests / Costs
13.1 Are there limits on the types of remedies (including damages) that are available in arbitration (e.g., punitive damages)?
The arbitral tribunal is not restricted to granting only a monetary award. Injunctions, declarations, specific performance, restitution and statutory remedies are all remedies that are available to the arbitral tribunal, provided the remedy is asked for and comes within the scope of the arbitral agreement.
If the substantive law to be applied to the dispute provides for punitive damages, then unless the parties have removed this power from the arbitrators or there is a restriction under the rules of an institution, the arbitral tribunal may award punitive damages.
13.2 What, if any, interest is available, and how is the rate of interest determined?
British Columbia's legislation expressly empowers a tribunal to award interest. The Model Law is silent as to whether a tribunal may award interest, and therefore generally the availability of interest would depend on the agreement between the parties, the rules governing the arbitration and the substantive law. Pre-judgment interest rates that are recognised in Canadian law are set out in provincial regulations.
13.3 Are parties entitled to recover fees and/or costs and, if so, on what basis? What is the general practice with regard to shifting fees and costs between the parties?
The legislation in Ontario and British Columbia empowers a tribunal to award costs. Since the Model Law makes no provision for costs, regard must be had to the contract, the arbitration agreement, any rules agreed to by the parties, or, if necessary, the lex arbitri. Most institutional rules provide for awarding costs, as such parties should refer to the institutional rules of the arbitration.
The discretion in awarding costs is not unfettered and must be exercised "judicially" (Azurix North America Engineering Corp. v. Deep River [2006] O.J. No. 2143 (S.C.J.)). The imposition of costs may also be imposed by the courts to deter parties for "baseless" attempts to challenge an award or an arbitrator's impartiality (Jacob Securities Inc. v. Typhoon Capital B.V., 2016 ONSC 1478).
13.4 Is an award subject to tax? If so, in what circumstances and on what basis?
An award may be subject to taxation in Canada or another jurisdiction depending on the nature of the award and applicable law. In Canada, arbitrators fees are subject to the applicable taxes depending on the location of the arbitrator. It follows that taxes payable may be included in the costs of arbitration. (Casey, ch. 8.9.)
13.5 Are there any restrictions on third parties, including lawyers, funding claims under the law of your jurisdiction? Are contingency fees legal under the law of your jurisdiction? Are there any "professional" funders active in the market, either for litigation or arbitration?
The jurisprudence on third-party funding has been shaped by the class actions context and by cases concerning contingency fee arrangements. In deciding whether to approve a litigation funding agreement, the court will examine the motives of the funder and whether the agreement is fair and reasonable as between the parties. The courts have retained a significant supervisory role over such agreements in the class actions context. In the private commercial litigation and arbitration context, the policy concerns that inform strict judicial supervision of third-party funding agreements are somewhat different but remain subject to judicial oversight. The tort of maintenance and champerty remains in force to prevent a third party from improperly inserting itself into litigation.
Contingency fees are legal in Canada, except in certain circumstances outlined in the law society rules within each province (e.g. criminal and quasi-criminal cases). Third-party funding agreements may be structured like a contingency fee agreement where payment depends on success. Unlike a contingency agreement, however, the agreement is not between counsel and the party and is thus not governed by the rules of professional conduct bearing on legal counsel. Third-party agreements in the commercial litigation and arbitration contexts more closely resemble private commercial transactions (see Anthony Duggan, Jacob Ziegel & Jassmine Girgis, "Beyond Access to Justice: Litigation Funding Agreements Outside the Class Actions Context" (2017) 50:65 CBLJ).
Canada has recently seen a marked increase in professional funders in arbitration and complex commercial litigation, and we expect to see a further increase as demand for funding continues to grow.
14. Investor State Arbitrations
14.1 Has your jurisdiction signed and ratified the Washington Convention on the Settlement of Investment Disputes Between States and Nationals of Other States (1965) (otherwise known as "ICSID")?
Canada ratified the ICSID in 2013, and passed the Settlement of International Investment Disputes Act, S.C. 2008, ch. 8 shortly thereafter.
14.2 How many Bilateral Investment Treaties (BITs) or other multi-party investment treaties (such as the Energy Charter Treaty) is your jurisdiction party to?
In Canada, BITs are known as Foreign Investment Promotion and Protection Agreements ("FIPA"). Canada is currently party to 37 FIPAs and 14 free trade agreements ("FTA") that are in force. For a full listing of FIPAs and FTAs to which Canada is a party, visit: https://www.international.gc.ca/trade-commerce/trade-agreements-accords-commerciaux/agr-acc/index.aspx?lang=eng.
14.3 Does your jurisdiction have any noteworthy language that it uses in its investment treaties (for example in relation to "most favoured nation" or exhaustion of local remedies provisions)? If so, what is the intended significance of that language?
Canada's investment treaties provide relatively standard investor protections, including national treatment, most favoured nation treatment, and protection against expropriation.
Notably, NAFTA and subsequent Canadian investment treaties include a reference to "fair and equitable treatment" which does not impose any higher standard of treatment than the customary minimum standard of treatment of aliens in international law. Also, the fair and equitable treatment standard in CETA is limited to situations where a specific promise or representation is made by the state.
14.4 What is the approach of the national courts in your jurisdiction towards the defence of state immunity regarding jurisdiction and execution?
Under the State Immunity Act, RSC 1985, c S-18 foreign states (including their agencies and property) are immune from jurisdiction of Canadian courts, with certain exceptions. Where a state has entered into a commercial agreement that is subject to arbitration, the consent to arbitrate would likely negate a claim to state immunity (Collavino Inc. v. Tihama Development Authority, 2007 ABQB 212). The "commercial activity" exception to state immunity is strictly interpreted based on the nature and purpose of the endeavour (Steen et al. v. Islamic Republic of Iran et al. 2013 ONCA 30).
15.1 Are there noteworthy trends or current issues affecting the use of arbitration in your jurisdiction (such as pending or proposed legislation)? Are there any trends regarding the type of disputes commonly being referred to arbitration?
The Uniform Law Commission of Canada ("ULCC") recently published a review of the existing international arbitration legislation in Canada with the objective of modernising and harmonising the legislation. Ontario and British Columbia updated their legislation and responded to two of the ULCC's core proposals and adopted the 2006 amendments to the Model Law, which offers a flexible interpretation of some of the more rigid requirements of the New York Convention. Implementation of the 2006 Amendments in other provinces will likely follow.
On March 8, 2018, 11 countries including Canada signed the Comprehensive and Progressive Agreement for Trans-Pacific Partnership ("CPTPP"). The CPTPP, which is expected to be ratified by 2019, includes investor-state dispute resolution provisions.
The Investment Court System established by CETA has a number of notable attributes, including a permanent investment court, an appeal mechanism, fast-track rejection of unfounded claims, and a "loser-pays" regime. However, in light of the European Court of Justice's ruling in Slovak Republic v. Achmea B.V. (Achmea), the future of the ICS is uncertain.
Similarly, Chapter 11, the investor-state dispute settlement regime of NAFTA is a significant sticking point in the ongoing negotiations between Canada, the United States and Mexico.
15.2 What, if any, recent steps have institutions in your jurisdiction taken to address current issues in arbitration (such as time and costs)?
In March 2017, the International Chamber of Commerce, which is represented in Canada by the Canadian Chamber of Commerce, adopted the amendments to its Rules of Arbitration. Notably, the new ICC Rules incorporate an emergency arbitrator provision and expedited procedures, which will be the default for claims under US$2 million and may be used in other circumstances on consent.
Similarly, in June 2014, the ICDR (which has a Canadian branch, ICDR Canada) updated its International Arbitration Rules which include emergency measures of protection and expedited procedures, which are the default for claims under US$250,000.
The authors would like to acknowledge the third author of this chapter, Glenn Gibson.
Glenn Gibson is an associate in Baker McKenzie's Toronto office, where she practises international arbitration and complex commercial litigation. She is a contributor to www.globalarbitrationnews.com, and the Baker McKenzie International Arbitration and Litigation Newsletter. Glenn has appeared before all levels of the Ontario courts and before international arbitral tribunals.
Tel: +1 416 865 2317 / Email: glenn.gibson@bakermckenzie.com.
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