



COURT OF APPEAL FOR ONTARIO

CITATION: Popack v. Lipszyc, 2018 ONCA 635

DATE: 20180712

DOCKET: C64359

Doherty, Brown and Nordheimer JJ.A.

BETWEEN

Jospeh Popack, United Northeastern Retail
    Portfolio Inc., United Burlington Retail Portfolio Inc., Capture Real Estate
    LLC, Miriam Popack, Ephriam Piekarski, Mendel Hendel, Schneur Zalmen Hendel,
    Sholom Ber Hendel, Rivka Feldman and Deborah Zissy Raskin

Applicants (Appellants)

and

Moshe Lipszyc and Sara Lipszyc

Respondents (Respondents)

Marvin J. Huberman and Daniel Sheppard, for the
    appellants

Colin P.
    Stevenson and Neil G. Wilson, for the respondents

Heard: February 8, 2018

On appeal from the order of Justice Grant R. Dow of the
    Superior Court of Justice, dated August 28, 2017, with reasons reported at 2017
    ONSC 4581.

Brown J.A.:

I.

OVERVIEW

[1]

This appeal concerns when an international commercial arbitration award
    becomes binding on the parties for the purposes of judicial recognition and
    enforcement.

[2]

In Ontario, the recognition and enforcement of international commercial
    arbitration awards is governed by the
International Commercial Arbitration
    Act,

2017
, S.O. 2017, c. 2, Sched. 5 (the 
ICAA
),
[1]
the successor to the
International Commercial
    Arbitration Act
, R.S.O. 1990, c. I.9
, the legislation in
    effect at the time of the arbitration in this case.

[3]

The
ICAA
states that two international instruments concerning
    international commercial arbitration have the force of law in Ontario: (i) the
Convention
    on the Recognition and Enforcement of Foreign Arbitral Awards
, adopted by
    the United Nations Conference on International Commercial Arbitration in New
    York on June 10, 1958 (the Convention); and (ii) the
UNCITRAL Model Law
    on International Commercial Arbitration
, adopted by the United Nations
    Commission on International Trade Law on June 21, 1985, as amended on July 7, 2006,
    (the Model Law). The Supreme Court of Canada has described the Model Law as a
    codification of best practices:
Yugraneft Corp. v. Rexx Management Corp.
,
    2010 SCC 19, [2010] 1 S.C.R. 649, at paras. 10-11.

[4]

In August 2013, the appellants obtained an international commercial
    arbitration award against the respondents. It was in an amount significantly
    lower than the appellants had sought in the arbitration. The appellants applied
    to set aside the award under art. 34 of the Model Law on the basis that the
    arbitrators had followed an improper procedure. In February 2016, this court
    affirmed the dismissal of the appellants set aside application.

[5]

The appellants thereupon applied under arts. 35 and 36 of the Model Law
    for the recognition and enforcement of the award.

[6]

The application judge dismissed the application, holding that the award
    was not yet binding on the parties because the respondents were seeking to
    raise further issues before the arbitral panel and the panel had expressed its
    willingness to consider the further issues.

[7]

The appellants appeal. I would allow the appeal. The application judge
    erred in law in interpreting the recognition and enforcement provisions of the
    Model Law and made palpable and overriding errors in applying the Model Law to
    the circumstances of this case.


II.

THE EVENTS CONCERNING THE ARBITRATION

[8]

The appellant, Joseph Popack, and the respondent, Moshe Lipszyc, jointly
    invested in commercial real estate in the Greater Toronto Area. In 2005,
    disputes arose between them.

[9]

After disagreeing for several years about how to resolve their
    differences, they submitted their disputes to arbitration before the Beth Din
    (or Bais Din) of Mechon LHoyroa (the Beth Din), a rabbinical court in New
    York, pursuant to an Agreement to Submit to Arbitration dated November 10,
    2010, as amended by an addendum dated January 11, 2011 (collectively the
    Arbitration Agreement).

[10]

At
    the time the parties entered into the Arbitration Agreement, Mr. Popack resided
    in New York State and Mr. Lipszyc lived in Ontario.

[11]

In the Arbitration Agreement, the parties agreed that the
    Beth Din was a tribunal subject to the
ICAA
.

[12]

The
    rest of the appellants are corporations controlled by Mr. Popack, or
    individuals aligned in interest. The respondent Sara Lipszyc is the spouse of Moshe
    Lipszyc.

[13]

Under
    the Arbitration Agreement, the arbitral panel was free to choose the
    appropriate procedures by which to conduct the arbitration, no record was to be
    kept of the evidence or the submissions, and no reasons for decision were
    required from the panel.

[14]

Following
    an eight-week arbitration, held between January 2011 and March 2013 in Toronto,
    the arbitral tribunal issued an award, styled a Rabbincial Court Ruling, dated
    August 15, 2013 (the Award). The Award described the appellants as Party A
    and the respondents as Party B. The Award stated:

[T]he following Rabbincal Court Ruling was issued by us:

1) The funds escrowed with the Rabbincal Court [i.e., the
    sum of $440,000] shall be returned to Party A.

2) Party B shall pay Party A the sum of $400,000, whereby
    the parties are released from each other.

[15]

Mr.
    Popack thereupon brought an application under art. 34 of the Model Law to set
    aside the Award on the ground that the panel had breached the procedure agreed
    upon by the parties by holding an
ex parte
meeting with a rabbi
    who initially had been appointed to arbitrate the parties dispute.

[16]

Justice
    Matheson found that although the
ex parte
meeting breached
    the agreed upon procedure, providing a basis to set aside the Award, she would exercise
    her discretion under art. 34(2)(a)(iv) of the Model Law to refuse to set aside
    the Award. She dismissed Mr. Popacks application: 2015 ONSC 3460.

[17]

Mr.
    Popack appealed. By a decision dated February 18, 2016, this court dismissed
    Mr. Popacks appeal: 2016 ONCA 135, 129 O.R. (3d) 321. Mr. Popack paid all
    costs of the set aside proceedings ordered by the Ontario courts.

[18]

On
    April 11, 2016 appellants counsel wrote to the respondents counsel stating:
    [N]ow that the setting aside litigation has been finally concluded, and the
    costs issue now resolved, we would appreciate prompt payment of the
beth
    din
s award (italics in original).

[19]

Respondents
    counsel replied by letter dated April 22, 2016, stating:

[Y]our client should already be aware that my client will be
    asking the Beth Din to reduce the award by the amount he has wasted responding
    to Mr. Popacks failed court proceedings, including all related, uncompensated
    costs and damages. This matter is, as I understand it, currently before the
    Beth Din. Consequently, I will leave this to be dealt with between the
    rabbinical lawyers.

[20]

On
    June 24, 2016 the appellants commenced this application under arts. 35 and 36
    of the Model Law seeking an order recognizing and enforcing the Award and
    requiring the respondents to pay them the Canadian dollar equivalent of
    US$400,000.

[21]

In
    responding to the application, Mr. Lipszyc deposed that his claim for costs and
    damages, referred to in his counsels April 22, 2016 letter, would exceed
    $400,000. He took the position the Award was denominated in Canadian, not
    American, dollars. Mr. Lipszyc understood that the Beth Din was willing to
    address these issues only if and when Mr. Popack attended before it, which he
    refused to do.

[22]

On
    September 18, 2016 the Beth Din wrote to the parties in respect of its Award,
    stating:

The $400,000.00 Dollars award issued pertained to business
    transactions that [were] transacted in Canadian currency.

At no time during the proceedings did any of the parties raise
    the issue of distinguishing between United Sates Dollars and Canadian Dollars. However,
    as a matter of standard practice, claims asserted regarding business dealings
    transacted in Canadian funds result in awards that are calculated in Canadian
    Funds.

Accordingly, should any of the parties have claims and/or
    proofs that relate to the currency issue and for that matter any other claims
    that the parties wish to be resolved by the Rabbincal Court, please contact the
    Court Clerk, to schedule a hearing before the Rabbincal Court.

[23]

The
    Beth Din wrote the parties a further letter dated June 7, 2017, which stated:

The Bais Din has ordered that the [Award] is stayed until
    Popack comes back to the Bais Din for a hearing to determine Lipszycs claim,
    that Popack continuously breached the Arbitration Agreement, and what are the
    consequences for breaching the Arbitration Agreement.


III.

THE REASONS OF THE APPLICATION JUDGE

[24]

The
    application judge heard the application to recognize the Award at the same time
    as a motion by the respondents to stay recognition of the Award.

[25]

The
    respondents opposed the application to enforce on the basis the Award had not
    yet become binding on the parties within the meaning of art. 36(1)(a)(v) of
    the Model Law and art. V(1)(e) of the Convention.

[26]

The
    application judge accepted the respondents position. He identified three reasons
    why the Award was not binding on the parties: (i) he disagreed with Mr.
    Popack that at the time of his application to enforce there was an absence of
    any pending proceeding to appeal the award; (ii) he found that Mr. Lipszyc had
    expressed an intention to pursue further issues related to the subject matter
    arbitrated (para. 12); and (iii) the two post-Award statements from the Beth
    Din indicated that the arbitration process was not yet complete and the
    arbitral tribunal was not
functus officio
: at para. 13.

[27]

The
    application judge dismissed both the appellants application for recognition
    and the respondents motion to stay recognition of the Award.


IV.

POSITIONS OF THE PARTIES

The appellants

[28]

Mr.
    Popack submits the application judge erred in finding that the Award had not
    yet become binding on the parties within the meaning of art. 36(1)(a)(v) of the
    Model Law. In making that finding, the application judge committed three
    errors: (i) he ignored the mandatory rules in arts. 32 and 33 of the Model Law
    concerning the termination of arbitral proceedings; (ii) he improperly deferred
    to the Beth Dins view about the nature of the Award when, under the Model Law,
    it is the courts who determine whether an award is binding; and (iii) he failed
    to recognize that the matters raised by Mr. Lipszyc following this courts 2016
    order were new issues, which did not affect the binding nature of the Award.

The respondents

[29]

The
    respondents submit the application judge reasonably concluded that the Award
    was not yet binding because after the release of this courts 2016 decision it
    was apparent both sides were asking the tribunal for an interpretation of the
    currency in which the Award was denominated and to decide the post-Award cost
    issues.

[30]

The
    respondents contend an award cannot be binding when it is ambiguous and the
    tribunal has not yet declared the proceedings terminated. A partys request for
    costs or clarification of the currency of an award should be treated in the
    same fashion as a court challenge to set aside an award. Therefore, it was
    reasonable for the application judge to conclude the award was not yet binding
    because the tribunal had not yet determined whether it had fully adjudicated
    all issues.


V.

STANDARD OF REVIEW

[31]

The
    interpretation of a statute, such as the
ICAA
and its schedules,
    involves a question of law reviewable on a correctness standard:
Housen v.
    Nikolaisen,
2002 SCC 33, [2002] 2 S.C.R. 235, at para. 8; and
Wilk v.
    Arbour
, 2017 ONCA 21, 135 O.R. (3d) 708, at para. 18. Deference, however,
    is shown to a courts determination of mixed questions of fact and law, such as
    the application of the statute to the circumstances of the case or the
    interpretation of an arbitration agreement:
6524443 Canada Inc. v. Toronto
    (City)
, 2017 ONCA 486, 415 D.L.R. (4th) 475, at para. 11.

[32]

The
    respondents contend that deference is owed to the application judges
    interpretation of the
ICAA
and its schedules, including the Model Law.
    They point out that in its endorsement in
6524443 Canada
this court
    stated, at para. 11, that the reasonableness standard applied to the motion
    judges interpretation of an arbitration agreement because her interpretation
    involved, as an integral part of the interpretation process, consideration of
    the meaning of the provisions of the relevant arbitration statutes. This was
    not however an extricable legal issue, that would be reviewable on a standard
    of correctness.

[33]

I
    read the endorsement in
6524443 Canada
in a different way. This
    courts statement was directed to the specific circumstances of that case,
    which did not call for an interpretation of the applicable domestic arbitration
    legislation but turned on the interpretation of the language of the particular
    arbitration agreement.

[34]

By
    contrast, the present case is concerned with the interpretation of the
    recognition and enforcement provisions of the Model Law, in conjunction with
    the provisions of the Model Law concerning the termination of proceedings (art.
    32) and the correction of awards (art. 33). These are issues with a high degree
    of generality, having implications beyond the parties and their specific
    Arbitration Agreement. Consequently, they are questions of law and the
    correctness standard applies:
Sattva Capital Corp. v. Creston Moly Corp.
,
    2014 SCC 53, [2014] 2 S.C.R. 633, at para. 51. As this court recently stated,
    the standard of review applicable to the interpretation of the Model Law and
ICAA
,
    as an issue of law, is correctness:
Trade Finance Solutions Inc. v.
    Equinox Global Limited
, 2018 ONCA 12, 420 D.L.R. (4th) 273, at para. 31.


VI.

THE GOVERNING PRINCIPLES

A.

The recognition and enforcement of awards under the Model Law

[35]

International
    and provincial instruments have established, in Ontario, a strong
    pro-enforcement legal regime for the recognition and enforcement of
    international commercial arbitration awards: see Gary B. Born,
International
    Commercial Arbitration
, 2d ed. (The Netherlands: Kluwer Law International,
    2014), vol. 3 at p. 3410. Article 35(1) of the Model Law mandates the
    recognition or enforcement of an arbitral award, subject to specified
    exceptions. Article 35(1) states:

35 (1) An arbitral award, irrespective of the country
    in which it was made, shall be recognized as binding and, upon application in
    writing to the competent court, shall be enforced subject to the provisions of
    this article
[2]
and of article 36.

[36]

In
    the present case, the respondents opposed recognition of the Award on the basis
    that it had not yet become binding on the parties, an exception to recognition
    or enforcement contained in art. 36(1)(a)(v) of the Model Law, which states:

36 (1) Recognition or enforcement of an arbitral
    award, irrespective of the country in which it was made,
may be refused only
:

(a) at the request of the party against whom it is
    invoked, if that party furnishes to the competent court where recognition or
    enforcement is sought proof that:



(v) the award has not
    yet become binding on the parties or has been set aside or suspended by a court
    of the country in which, or under the law of which, that award was made

(The full text of arts. 32-36 of the Model Law are
    reproduced in Appendix A to these reasons.)

[37]

The
    provisions of the Model Law regarding the recognition and enforcement of awards
    work together with those in art. 34 that specify the grounds upon which a party
    may have recourse against an arbitral award in the place of arbitration.
    Article 34(1) states that recourse to a court against an arbitral award may be
    made only by an application for setting aside in accordance with arts. 34(2)-(3).

[38]

Article
    34(3) pertains to timing requirements for bringing an application for setting
    aside an award: within three months from receipt of the award or, if a request
    was made under art. 33, within three months of when the request was disposed of
    by the tribunal.

[39]

Under
    art. 34(2), the grounds for setting aside an award mirror those for refusing to
    recognize and enforce an award found in art. 36(1), with one exception  they do
    not include that the award has not yet become binding on the parties, as
    provided in art. 36(1)(a)(v).

[40]

The
    general rule of interpreting the recognition and enforcement provisions of the
    Convention and Model Law is that the grounds for refusal of enforcement are to
    be construed narrowly:
Corporacion Transnacional de Inversiones S.A. de
    C.V. v. STET International S.p.A.
(1999), 45 O.R. (3d) 183 (S.C.), at para.
    26, affd (2000), 49 O.R. (3d) 414 (C.A.), leave to appeal refused, [2001] 1
    S.C.R. xi.

B.

The meaning of not yet binding on the parties

[41]

In
    his treatise, Born provides a useful commentary on the origins and possible
    meaning of the term binding used in both art. V(1)(e) of the Convention and art.
    36(1)(a)(v) of the Model Law.

[42]

Born
    observes, at pp. 3607-08, that one of the principal innovations of the Convention
    was its abandonment of the double
exequatur
 procedure, which
    required obtaining judicial confirmation of the award in the local court of the
    place of arbitration before seeking judicial enforcement abroad. As well, the
    Convention specifically abandoned the finality requirement contained in the
Geneva
    Convention on the Execution of Foreign Arbitral Awards of 1927
in favour
    of permitting the non-recognition of an award that has not yet become binding
    on the parties.

[43]

However,
    as Born notes at p. 3610, there remains considerable uncertainty surrounding
    the meaning of the [Conventions] new requirement that an award be binding. He
    observes, at p. 3611, that [i]n the words of one commentator, frustrated after
    a detailed review of Article V(1)(e)s drafting history, the meaning of this
    term [
i.e.
, binding] has always been a mystery (citations
    omitted).

[44]

Born
    offers, at p. 3610, a possible range of meanings for the term binding as a
    matter of pure textual construction:

[A]n arbitral award might be considered binding under the
    Convention when the award: (a) is made by the arbitral tribunal, without regard
    to possible or pending judicial, institutional, or other review under any
    foreign law; (b) is made by the tribunal, provided that no available internal
    appellate review within the relevant arbitral institution has been invoked; (c)
    is made by the arbitral tribunal, provided that no application for judicial
    review has been filed in an arbitral seat; (d) is made by the arbitral
    tribunal, and the time for pursuing an ordinary judicial challenge to the award
    in an action to annul under local law in the seat has expired, or any
    application for such review has been denied; (e) is made by the tribunal, and
    the time for seeking extraordinary judicial review under local law in the seat
    has expired, or any application for such review has been denied; (f) is made by
    the tribunal, and the award has been confirmed by a local court in the seat; or
    (g) is made by the tribunal, and all of the avenues of judicial review in
    paragraphs (a)-(f) have been exhausted, or the time for doing so has expired.

[45]

In
    Borns view, an award should be considered binding when the parties
    arbitration agreement provides that it is either final or binding, regardless
    of the possibility of subsequent judicial challenges of any sort: at p. 3617.

[46]

A
    number of national courts do not share Borns view. They interpret an award as
    binding when it is no longer open to recourse on its merits. This position
    finds expression, for example, in the decision of the Belgian Cour de
    Cassation, in
Inter-Arab Investment Guarantee Corporation v. Banque Arabe
    et Internationale dInvestissements
, (1999) XXIV Y.B. Comm. Arb. 603
    (Belgian Cour de Cassation), at para. 17, where that court stated:

It appears from the set-up of Art. V(1)(e) of the New York
    Convention [mirroring Art. 36(1)(a)(v) of the Model Law] that the award is
    binding on the parties, within the meaning of this provision, when it is no
    longer open to recourse on the merits. The question whether the award is open
    to such recourse is to be solved by referring, successively and one in the
    absence of the other, to the arbitration agreement, the law that it designates
    for such purpose, and, last, the law of the country in which the award was
    rendered.

[47]

Some
    national courts have divided avenues of recourse on the merits into ordinary
    and extraordinary ones, with a significant number of courts taking the view
    that an award becomes binding when a party has exhausted avenues of ordinary
    recourse.

[48]

For
    example, in
Diag Human SE v. Czech Republic
, [2014] EWHC 1639 (Comm),
    [2014] 1 C.L.C. 750, the English Queens Bench Division, Commercial Court,
    considered the meaning of binding within the context of the Convention. The
    court discussed the distinction between ordinary and extraordinary means of
    recourse in respect of an international arbitration award. In broad terms,
    ordinary recourse denotes a genuine appeal on the merits of an award to a
    second, review arbitral tribunal or a court; extraordinary recourse encompasses
    what the Convention and Model Law describe as set aside proceedings: at pp.
    760-63; see also
Dowans Holdings SA v. Tanzania Electric Supply Co. Ltd.
,
    [2011] EWHC 1957 (Comm), at paras. 17-27. In
Diag Human
, the court
    concluded that the arbitration agreement involved in the case permitted the appeal
    of a tribunals award to a review panel, which made the tribunals award
    subject to ordinary recourse. Consequently, the award was not binding for the
    purposes of the Convention pending the determination of that review: at pp. 779-80.
    See also J. Brian Casey,
Arbitration Law of Canada: Practice and Procedure
,
    3d ed. (Huntington, NY: JurisNet, 2017), at pp. 550-51.

[49]

A
    number of national courts regard set aside proceedings under art. 34 of the
    Model Law as a form of extraordinary recourse, the availability or initiation
    of which does not render an award non-binding. The Supreme Court of Canada is
    not one of them.

[50]

In
Yugraneft
, the Supreme Court of Canada took a different view. Although
    the Supreme Court did not employ the distinction between ordinary recourse
    and extraordinary recourse, it held, at paras. 54-55, that an award is
    notbinding under art. V(1)(e) of the Convention (or art. 36(1)(a)(v) of the
    Model Law) if it is open to being set aside under art. 34 of the Model Law,
    either because the three-month period in which to bring a motion to set aside
    has not expired or the set aside proceedings have not yet come to an end.

[51]

Moreover,
    the Supreme Courts treatment of the impact of the availability of a route of
    appeal or review on the recognition or enforcement of an award suggests that an
    award would not be binding while an ordinary recourse review or appeal
    remained outstanding. This result seems implicit in para. 57 of the courts
    reasons, where it stated:

A second consideration in the context of a recognition and
    enforcement of foreign arbitral awards is whether non-performance of the
    arbitral debtors obligation to pay arises when the award becomes final or only
    when an actual refusal to pay the award becomes apparent to the arbitral
    creditor. In my opinion,
the obligation to
    pay the award becomes exigible on the date the appeal period expires or, if an
    appeal is taken, the date of the appeal decision
. Failure to make
    payment on that date would constitute non-performance of the obligation. Thus,
    the injury has occurred and the conditions set out in s. 3(1)(a)(i) and (ii)
    are satisfied on that date. [Emphasis added.]

[52]

In
    any event, it is not necessary for the purposes of this appeal to express any
    definitive view on whether an award is not binding while an avenue of
    ordinary recourse, such as a review or appeal, remains open to a party. In
    the present case, the Award was issued on August 15, 2013. By the terms of the Arbitration
    Agreement, the arbitral tribunals decision [was] not open for appeal neither
    in any religious court nor in any secular court. Accordingly, by its terms the
    Arbitration Agreement did not provide for ordinary recourse against the Award
    on its merits.


VII.

APPLICATION
    OF THE GENERAL PRINCIPLES

[53]

Under
    the terms of the Arbitration Agreement, the Beth Din was operating as an
    arbitral tribunal to which the
ICAA
regime applied. Mr. Popack applied
    under art. 34 of the Model Law, within the stipulated three months from his
    receipt of the Award, to set aside the Award. His application was finally
    disposed of by the February 18, 2016 order of this court. In those
    circumstances, the principles in
Yugraneft
would suggest that the
    Award became binding on the parties on that date, for the purposes of
    recognition under arts. 35 and 36 of the Model Law.

[54]

That
    was not the view taken by the application judge. He identified three reasons
    why the Award was not binding on the parties: (i) he disagreed with Mr.
    Popack that at the time of his application to enforce there was an absence of
    any pending proceeding to appeal the award; (ii) he found that Mr. Lipszyc had
    expressed an intention to pursue further issues related to the subject matter
    arbitrated (para. 12); and (iii) the two post-Award statements from the Beth
    Din indicated that the arbitration process was not yet complete and the
    arbitral tribunal was not
functus officio
.

A.

Whether
    there was a pending proceeding to appeal the Award

[55]

Dealing
    with the first reason, the application judge appeared to take the view that Mr.
    Lipszyc enjoyed some right to further recourse against the Award. In para. 12,
    the application judge stated:

Joseph Popack also relies on the absence of
any pending proceeding to appeal the award
. 
    I disagree.  Moshe Lipszyc made it clear within the three months permitted
    following the release of the Court of Appeal reasons dealing with Joseph
    Popacks efforts to set aside the award of its intention to pursue further
    issues related to the subject matter arbitrated that were not identified as
    dealt with in the Beth Dins communication of August 15, 2013 which could
    affect the obligation and amount one of the parties is to pay the other.
    [Emphasis added.]

[56]

To
    the extent this passage suggests that Mr. Lipszyc was entitled to take steps to
    appeal the Award, the application judge made a palpable and overriding error in
    interpreting the Arbitration Agreement, which specifically precluded any right
    of appeal from the Award.

[57]

The
    application judge referred to Mr. Lipszycs expression of his intention to take
    further steps within the three months permitted following the release of the
    Court of Appeal reasons. The application judge did not explain to what
    three-month period he was referring. The Arbitration Agreement contained no
    provision entitling a party to take steps against the Award within a
    three-month period.

[58]

If
    the application judge was referring to the three-month period to initiate set
    aside proceedings under art. 34(3) of the Model Law, then the application judge
    committed a palpable and overriding error in finding such recourse was
    available to Mr. Lipszyc. It clearly was not. Recourse against an award under
    art. 34 is only available where a party seeks to set aside the award. Mr.
    Lipszyc expressed no intention to do so.

B.

The
    correction or interpretation of the Award

[59]

Consideration
    of the application judges second and third reasons requires a review of the
    provisions of the Model Law dealing with the correction or interpretation of
    awards and the termination of arbitration proceedings.

[60]

In
    concluding that the Award was not yet binding on the parties, the application
    judge relied not only on Mr. Lipszycs intention to pursue further issues
    related to the subject matter arbitrated (para. 12), but also on statements
    issued by the arbitral tribunal. He wrote, at para. 13 of his reasons:

My conclusion that the communication by the arbitral tribunal
    or here, the Beth Din that the sum of $400,000.00 was to be paid by Moshe
    Lipszyc to Joseph Popack is not yet binding relies on the fact the Beth Din has
    released statements on two subsequent occasions, September 18, 2016 and June 7,
    2017.  On September 18, 2016 the Beth Din stated its willingness to consider
    additional issues.  On June 7, 2017 the Beth Din stayed the award until Joseph
    Popack appears before it.  Both statements are an indication that the
    arbitration process the parties committed to is not yet complete.  As a result
    enforcement proceedings are premature.  The Beth Din is not yet at the stage of
    being functus officio.

[61]

The
    respondents contend that the application judges conclusion was reasonably supported
    by the Model Law and the language of the Arbitration Agreement. They advance two
    main arguments: (i) the respondents request that the tribunal consider new
    issues falls within the procedure under art. 33 of the Model Law enabling a
    tribunal to correct or interpret an award or make an additional award; and
    (ii) their request falls within the continuing jurisdiction of the Beth Din
    under the Model Law and the language of the Arbitration Agreement.

(i)

First argument: Correcting or interpreting the Award

[62]

The
    respondents invoke art. 33 of the Model Law, which permits a party to apply to
    a tribunal, within 30 days of receipt of an award, to: correct in the award
    any errors in computation, any clerical or typographical errors or any errors
    of similar nature (art. 33(1)(a)); give an interpretation of a specific point
    or part of the award(art. 33(1)(b)); or make an additional award as to claims
    presented in the arbitral proceedings but omitted from the award (art. 33(3)).
    All such requests require notice to the other party. An interpretation can only
    be requested if so agreed by the parties.

[63]

The
    application judge did not identify which provisions of the Model Law, if any,
    he applied to reach his conclusion that Mr. Lipszycs intention to pursue
    further issues related to the subject matter arbitrated (para. 12) meant the
    Award was not binding. However, contrary to the submission of the
    respondents, art. 33 did not offer a route to reach that conclusion.

[64]

The
    respondents submit the dispute about whether the Award was denominated in
    Canadian or American dollars would fall within art. 33(1)(b) as a request for
    the arbitral tribunal to give an interpretation of a specific point or part of
    the Award. Whether it would or not need not be decided on this appeal. At the
    hearing of the appeal, the appellants unequivocally acknowledged, for all
    purposes, that the Award is denominated in Canadian dollars. As a result, the
    currency of the Award is not in dispute. No interpretation from the arbitral
    tribunal is required.

[65]

The
    respondents next submit that their intention to seek from the arbitral tribunal
    a reduction in the Award by the amount Mr. Lipszck has wasted responding to
    Mr. Popacks failed court proceedings would fall within art. 33(1)(a)  a
    correction  or 33(3)  an additional award. As a result, the application judge
    did not err in concluding the Award was not binding in the face of Mr.
    Lipszcks stated intention.

[66]

I
    am not persuaded by that submission. Born, at pp. 3126-27, described the narrow
    and limited scope of those provisions as follows:

The Model Laws provisions regarding corrections reflect the
    prevailing approach towards corrections in most jurisdictions  essentially, as
    a necessary evil that is tolerated, but not encouraged, and narrowly regulated.
    Notably, corrections are only available within a very limited time period (for
    both requesting and making a correction) following notification of the award
    and for only very limited reasons. These restrictions are imposed in order to safeguard
    the finality of awards, to limit uncertainty and to prevent ongoing disputes
    after an award has been made.

It is clear that only very narrow categories of errors may be
    corrected under the Model Law. In particular, only 
errors in computation
,
clerical or typographical errors
or
errors of similar nature

    may be corrected. Article 33(1) is directed towards simple arithmetic mistakes
    in calculation or typographical errors (
e.g.
, failure to include one
    of a number of categories of damages which have been found payable in the
    dispositive section of the award, when this was clearly intended).

In contrast, errors in the tribunals reasoning in the body of
    its award are not subject to correction. As courts in some Model Law
    jurisdictions have reasoned, an arbitral tribunal is not authorized by Article
    33 to correct errors of judgment, whether of law or fact.

Even if a tribunal demonstrably misunderstands or overlooks
    some critical provision of the parties agreement or some essential piece of
    evidence, the remedy is not generally correction of the award under Article 33,
    but rather an application to annul. [Italics in original and citations
    omitted.]

[67]

According
    to Nigel Blackaby and Constantine Partasides,
Redfern and Hunter on
    International Arbitration
, 6th ed. (Oxford: Oxford University Press,
    2015), at p. 565, the purpose of art. 33(3) dealing with additional awards is
    to ensure that the arbitrators may complete their mission if they have omitted
    from their award decisions in relation to any of the claims presented in the
    proceedings.

[68]

The
    respondents stated intention to seek costs relating to the set aside and
    enforcement proceedings Mr. Popack took in the Ontario courts certainly does
    not constitute a computational, clerical or typographical error in the Award,
    nor a request to make an additional award as to claims presented in the
    arbitral proceedings but omitted from the award.

[69]

The
    respondents stated intention is based on events that took place after the
    Award was made; it raises a new issue. I note that respondents counsel, in
    cross-examination of Mr. Popack on his affidavit, accepted that Mr. Lipszycs
    claim for costs incurred after the issuance of the Award in the Ontario court
    proceedings was a new issue. Article 33 does not apply in those
    circumstances.

[70]

The
    respondents point to the decision of the Federal Court, Trial Division, in
Relais
    Nordik Inc. v. Secunda Marine Services Ltd.
, 1990 CarswellNat 1320 (F.C.T.D.)
    to support their position. Although in that case the court refused recognition
    of an award on the ground it was not yet binding on the parties, the facts of
    that case bear no resemblance to those in this case. The
Relais Nordik
case concerned an arbitration governed by the
Commercial Arbitration Code
(the Code), adopted by the
Commercial Arbitration A
ct, R.S.C. 1985, c.
    17 (2d. Supp.). The Code is based on the Model Law. At issue was a request to
    correct an obvious computational error of $500, in the context of an award of
    over $1 million. As well, the requesting party had complied with the 30-day
    time period in which to seek a correction to a computational error. Given those
    facts, that decision does not assist the respondents in this case.

(ii)

Second argument: The continuing jurisdiction of the arbitral tribunal

[71]

The
    respondents further submit there was no error in the application judges
    conclusion that the Award was not binding in light of the September 18, 2016
    and June 7, 2017 statements from the tribunal indicating its willingness to
    consider further claims by the parties.

[72]

The
    tribunals first letter dealt largely with the issue of the Awards currency.
    As mentioned, that no longer is an issue.

[73]

However,
    the Beth Dins first letter also stated that the parties could contact the
    rabbinical court clerk if the parties had any other claims that the parties
    wish to be resolved. The second letter purported to stay the Award until Mr.
    Popack returned to the Beth Din for a hearing to determine Lipszycs claim,
    that Popack continuously breached the Arbitration Agreement, and what are the
    consequences for breaching the Arbitration Agreement. The application judge
    regarded those letters from the arbitral tribunal as an indication that the
    arbitration process the parties committed to is not yet complete: at para. 13.

[74]

The
    application judge did not explain which provisions of the Model Law or
    Arbitration Agreement led him to regard the tribunals statements as supporting
    his conclusion that the Award was not binding. Nevertheless, in my respectful
    view, the application judge erred in law by conflating two distinct issues:
    first, whether the Award was binding for purposes of recognition or enforcement
    pursuant to the Model Law; and, second, whether the Beth Din had jurisdiction
    under the Arbitration Agreement to accept new claims from a party following the
    issuance of the Award. The application judge seemed to reason that if a party
    approached the arbitral tribunal with a request to consider a new issue some
    three years after the Award had issued, the Award was not binding for purposes
    of the Model Law.

[75]

With
    respect, the application judge fell into error by adopting such an approach. It
    ignored the operation of art. 32 of the Model Law.  Article 32(1) of the Model
    Law states, in part, that arbitral proceedings are terminated by the final
    award. Article 32(3) provides that [t]he mandate of the arbitral tribunal
    terminates with the termination of the arbitral proceedings, subject to the
    provisions of articles 33 and 34(4)  i.e., subject to a request for a
    correction or interpretation of an award, an additional award, or a suspension
    of setting aside proceedings by a court.

[76]

As
    Born points out at p. 3117, arts. 32(1) and (3)

of the Model
    Law are subject only to specific, carefully-defined exceptions for corrections
    and interpretation:

[S]ave for the particular statutory authorizations contained in
    the Model Law for corrections or interpretations of the award, a tribunal loses
    its capacity to act in an arbitration after the final award has been made.
    Thus, under the Model Law, the rule that an arbitral tribunal becomes 
functus
    officio
 is expressly mandated, but with specified and
    carefully-delineated residual statutory authority. [Italics in original and
    citations omitted.]

[77]

As
    noted, on its face the Award was framed as a final award  the arbitral
    tribunal ordered the respondents to pay the appellants the sum of $400,000,
    whereby the parties are released from each other. In the Award, the Beth Din
    did not identify any other matter that required determination in the
    arbitration before the parties were released from each other.

[78]

However,
    the respondents argue that costs were one such matter. They contend that an
    arbitral tribunal possesses the jurisdiction to issue cost awards and therefore
    their request for costs relating to the Ontario court proceedings fell within
    the continuing jurisdiction of the arbitral tribunal.

[79]

As
    Casey notes, at p. 227: The Model Law does not address costs or scale of
    costs. As Born points out at pp. 3093-95, most international arbitration
    institutional rules grant the tribunal broad powers to award legal costs; even
    where they do not, the arbitration agreement should be interpreted to grant
    impliedly such authority.

[80]

In
    the present case, the Arbitration Agreement does not address the issue of
    costs. Even if the power to grant costs is to be implied, no evidence was filed
    on the recognition application that either party had asked the Beth Din to
    include costs in the Award. Even if they had and the Beth Din simply overlooked
    that claim, arts. 33(1) and (3) required any such request to be made within
    30-days of receipt of the Award. The respondents made no request in that period
    of time.

[81]

The
    evidence is clear why the respondents did not. Their request that the Beth Din
    consider a claim for court costs incurred after the issuance of the Award does
    not involve a matter of correction or an additional award as to claims
    presented in the arbitral proceedings but omitted from the award within the
    meaning of art. 33 of the Model Law. It is a request to adjudicate a new issue.

[82]

Even
    if it is a new issue, the respondents submit that the language of the Arbitration
    Agreement supports the application judges conclusion that the arbitral
    tribunal was not
functus officio
and the Award therefore was not
    binding.

[83]

The
    Arbitration Agreement provides: In the event that after an award is made a
    dispute between the parties arises as to the interpretation of the award,
    compliance of the parties, or if a party motions for reargument due to their
    claim of a judicial error or new evidence etc. the parties agree that the
    arbitrators shall have jurisdiction on the matters
to the extent permitted by law
 (emphasis
    added). The respondents contend that since the Beth Din indicated its
    willingness to entertain Lipszycs new issue about post-Award costs, it was
    exercising its jurisdiction within this language of the Arbitration Agreement,
    with the result the Award was not binding.

[84]

I
    make no comment on whether, under the Arbitration Agreement, the Beth Din would
    have jurisdiction to consider Lipszycs request for costs incurred in the
    Ontario court proceedings following issuance of the Award. That is a matter for
    the tribunal to decide. However, in regard to an application for the
    recognition and enforcement of an award, arts. 35-36 of the Model Law make it
    clear that it is up to the competent court to determine whether to recognize
    and enforce an award, including determining whether the award is binding on
    the parties. The final determination of any issue that may be raised under art.
    36, including whether the award is binding, rests with the court, not the
    arbitral tribunal:
Dalimpex Ltd. v. Janicki
(2003), 64 O.R. (3d) 737
    (C.A.), at para. 47.

[85]

On
    the facts of this case, the potential jurisdiction of the Beth Din to entertain
    a new issue about post-Award events does not affect the binding nature of the
    Award. The Award is framed as a final one. The Arbitration Agreement did not
    permit any review or appeal from the Award. Mr. Popacks set aside proceeding
    under art. 34 is at an end. Mr. Lipszycs request for post-Award costs does not
    fall within the categories of matters covered by art. 33 of the Model Law. The
    Award therefore is binding for the purposes of arts. 35 and 36 of the Model
    Law and should be recognized and enforced.

[86]

That
    conclusion is not affected by the Beth Dins June 7, 2017 statement that the
    Award is stayed. Under art. 36(1)(a)(v) of the Model Law, recognition or
    enforcement may be refused only if the award has been suspended by a court of
    the country in which, or under the law of which, that award was made. No such
    court order has been made  the application judge dismissed the respondents
    motion for a stay, and the respondents have not cross-appealed from that order.

[87]

Moreover,
    as the respondents conceded in their factum, [t]he Beth Din's stay order does
    not tell the courts how to behave  the Beth Din has its own religious
    enforcement procedures, e.g., a contempt order called a sirov. The award got
    stayed for purposes of Torah law.

VIII.

DISPOSITION

[88]

For
    the reasons set out above, I would allow the appeal, set aside the order of the
    application judge, and substitute an order recognizing and enforcing the Award.

[89]

In
    accordance with the agreement of the parties, the appellants are entitled to
    their costs of the appeal fixed in the amount of $25,000, inclusive of
    disbursements and applicable taxes. As well, the appellants are entitled to
    their costs of the proceeding before the application judge, fixed in the amount
    of $15,000, inclusive of disbursements and all applicable taxes.

Released: DD      Jul 12 2018

David Brown J.A.
Doherty J.A.
I.V.B. Nordheimer J.A.






APPENDIX A

THE MODEL LAW

Article 32. Termination of proceedings

(1) The arbitral proceedings are
    terminated by the final award or by an order of the arbitral tribunal in
    accordance with paragraph (2) of this article.

(2) The arbitral tribunal shall
    issue an order for the termination of the arbitral proceedings when:

(a) the
    claimant withdraws his claim, unless the respondent objects thereto and the
    arbitral tribunal recognizes a legitimate interest on his part in obtaining a
    final settlement of the dispute;

(b) the
    parties agree on the termination of the proceedings;

(c) the
    arbitral tribunal finds that the continuation of the proceedings has for any
    other reason become unnecessary or impossible.

(3) The mandate of the arbitral
    tribunal terminates with the termination of the arbitral proceedings, subject
    to the provisions of articles 33 and 34(4).

Article 33. Correction and interpretation of award;
    additional award

(1) Within thirty days of receipt
    of the award, unless another period of time has been agreed upon by the
    parties:

(a) a
    party, with notice to the other party, may request the arbitral tribunal to
    correct in the award any errors in computation, any clerical or typographical
    errors or any errors of similar nature;

(b) if so
    agreed by the parties, a party, with notice to the other party, may request the
    arbitral tribunal to give an interpretation of a specific point or part of the
    award.

If the arbitral tribunal considers the request
    to be justified, it shall make the correction or give the interpretation within
    thirty days of receipt of the request. The interpretation shall form part of
    the award.

(2) The arbitral tribunal may
    correct any error of the type referred to in paragraph (1)(a) of this article
    on its own initiative within thirty days of the date of the award.

(3) Unless otherwise agreed by the
    parties, a party, with notice to the other party, may request, within thirty
    days of receipt of the award, the arbitral tribunal to make an additional award
    as to claims presented in the arbitral proceedings but omitted from the award.
    If the arbitral tribunal considers the request to be justified, it shall make
    the additional award within sixty days.

(4) The arbitral tribunal may
    extend, if necessary, the period of time within which it shall make a
    correction, interpretation or an additional award under paragraph (1) or (3) of
    this article.

(5) The provisions of article 31
    shall apply to a correction or interpretation of the award or to an additional
    award.

CHAPTER VII.
RECOURSE AGAINST AWARD

Article
    34. Application for setting aside as exclusive recourse against arbitral award

(1) Recourse to a court against an
    arbitral award may be made only by an application for setting aside in
    accordance with paragraphs (2) and (3) of this article.

(2) An arbitral award may be set
    aside by the court specified in article 6 only if:

(a) the party
    making the application furnishes proof that:

(i) a party to the arbitration agreement referred to in
    article 7 was under some incapacity; or the said agreement is not valid under
    the law to which the parties have subjected it or, failing any indication
    thereon, under the law of this State; or

(ii) the party making the application was not given proper
    notice of the appointment of an arbitrator or of the arbitral proceedings or
    was otherwise unable to present his case; or

(iii) the award deals with a dispute not contemplated by or
    not falling within the terms of the submission to arbitration, or contains
    decisions on matters beyond the scope of the submission to arbitration,
    provided that, if the decisions on matters submitted to arbitration can be
    separated from those not so submitted, only that part of the award which
    contains decisions on matters not submitted to arbitration may be set aside; or

(iv) the composition of the arbitral tribunal or the
    arbitral procedure was not in accordance with the agreement of the parties,
    unless such agreement was in conflict with a provision of this Law from which
    the parties cannot derogate, or, failing such agreement, was not in accordance
    with this Law; or

(b) the court
    finds that:

(i) the subject-matter of the dispute is not capable of
    settlement by arbitration under the law of this State; or

(ii) the award is in conflict with the public policy of
    this State.

(3) An application for setting
    aside may not be made after three months have elapsed from the date on which
    the party making that application had received the award or, if a request had
    been made under article 33, from the date on which that request had been
    disposed of by the arbitral tribunal.

(4) The court, when asked to set
    aside an award, may, where appropriate and so requested by a party, suspend the
    setting aside proceedings for a period of time determined by it in order to
    give the arbitral tribunal an opportunity to resume the arbitral proceedings or
    to take such other action as in the arbitral tribunals opinion will eliminate
    the grounds for setting aside.

CHAPTER VIII.
RECOGNITION AND ENFORCEMENT OF AWARDS

Article
    35. Recognition and enforcement

(1) An arbitral award,
    irrespective of the country in which it was made, shall be recognized as
    binding and, upon application in writing to the competent court, shall be
    enforced subject to the provisions of this article and of article 36.

(2) The party relying on an award
    or applying for its enforcement shall supply the original award or a copy
    thereof. If the award is not made in an official language of this State, the
    court may request the party to supply a translation thereof into such language.

Article 36.
    Grounds for refusing recognition or enforcement

(1) Recognition or enforcement of an arbitral award, irrespective
    of the country in which it was made, may be refused only:

(a) at the request of the party
    against whom it is invoked, if that party furnishes to the competent court
    where recognition or enforcement is sought proof that:

(i) a party
    to the arbitration agreement referred to in article 7 was under some
    incapacity; or the said agreement is not valid under the law to which the
    parties have subjected it or, failing any indication thereon, under the law of
    the country where the award was made; or

(ii) the
    party against whom the award is invoked was not given proper notice of the
    appointment of an arbitrator or of the arbitral proceedings or was otherwise
    unable to present his case; or

(iii) the
    award deals with a dispute not contemplated by or not falling within the terms
    of the submission to arbitration, or it contains decisions on matters beyond
    the scope of the submission to arbitration, provided that, if the decisions on
    matters submitted to arbitration can be separated from those not so submitted,
    that part of the award which contains decisions on matters submitted to
    arbitration may be recognized and enforced; or

(iv) the
    composition of the arbitral tribunal or the arbitral procedure was not in
    accordance with the agreement of the parties or, failing such agreement, was
    not in accordance with the law of the country where the arbitration took place;
    or

(v) the
    award has not yet become binding on the parties or has been set aside or
    suspended by a court of the country in which, or under the law of which, that
    award was made; or

(b) if the court finds that:

(i) the
    subject-matter of the dispute is not capable of settlement by arbitration under
    the law of this State; or

(ii) the
    recognition or enforcement of the award would be contrary to the public policy
    of this State.

(2) If an application for setting aside or suspension of an award
    has been made to a court referred to in paragraph (1)(a)(v) of this article,
    the court where recognition or enforcement is sought may, if it considers it
    proper, adjourn its decision and may also, on the application of the party
    claiming recognition or enforcement of the award, order the other party to
    provide appropriate security.





[1]
Section 5(3) of the
ICAA
provides that [t]he Model Law applies to
    international commercial arbitration agreements and awards made in
    international commercial arbitrations, whether made before or after the coming
    into force of [the ICAA] (which was March 22, 2017).



[2]
Art. 35(2) states: The party relying on an award or applying for its
    enforcement shall supply the original award or a copy thereof. If the award is
    not made in an official language of this State, the court may request the party
    to supply a translation thereof into such language.


