1.1 Describe the prevalence of commercial arbitrations as a method of settling disputes, both domestic and international.
Since the mid-1980s, the importance of domestic and international commercial arbitration in Canada has grown markedly. This is attributable to legal and economic developments. On the legal front, adoption of the UNCITRAL Model Law on International Commercial Arbitration (the Model Law), the United Nations Convention on the Recognition and Enforcement of Arbitral Awards 1958 (the New York Convention) (both in 1986) and a dramatic increase in judicial deference towards arbitral tribunals has made arbitration far more attractive. On the economic front, globalisation, increased participation by Canadian business in cross-border activity and the implementation of the North American Free Trade Agreement (NAFTA) underlie the growth of arbitration. NAFTA, Chapter 11, which permits private investors to challenge certain inappropriate host-state activity before NAFTA panels, has the potential to propel the growth of international arbitrations in Canada.
2.1 What are the principal sources of law and regulation relating to domestic and international arbitration? (Describe the role of federal or state laws and relevance of court decisions.)
Canada is a federal state whose constitutional peculiarities give the appearance of complexity to the legislation governing commercial arbitration. Although legislation has been enacted federally and by each of Canada’s ten provinces and three territories, the complexity is more apparent than real. As a matter of practice, the laws of the various jurisdictions are remarkably similar. Differences that do exist are not sufficiently material to encourage forum shopping.
The applicable federal statute, the Commercial Arbitration Act (RSC 1985, c C-34.6), governs both domestic and international commercial arbitrations but is limited to disputes involving the federal government, federal crown corporations and certain enumerated federal agencies. All other arbitrations are governed by provincial or territorial law.
With the exception of Quebec, each of Canada’s provinces and territories has two arbitration statutes: one for domestic arbitrations and another for international arbitrations. Although Quebec is governed by civil law and the rest of Canada by common law, any differences between the two with respect to arbitration are differences of form, not substance.
Court decisions are important sources of law governing arbitrations, especially in so far as the decisions interpret the legislation. Although Quebec is a civil law jurisdiction, court decisions tend to play a larger role in Quebec than they do in other civil law jurisdictions. At the same time, the civil law notion of doctrine plays a more important role in Quebec than in the remainder of Canada.
The superior court of each province is the relevant judicial body. Although the superior courts are provincially administered, their judges are federal appointees. In addition, Canada has a federal court with narrow jurisdiction over certain federal agencies and federally regulated issues like patents. In arbitration matters, its jurisdiction is limited to arbitrations involving the federal government, crown corporations or certain federal government agencies and is concurrent with the jurisdiction of the provincial superior courts. Decisions of the federal court do not bind provincial courts. Similarly, decisions of one province do not bind the courts of another. Nevertheless, decisions of a Court of Appeal in one province are influential in the courts of another. The Supreme Court of Canada exists, inter alia, to resolve important conflicts that arise between the courts of different provinces.
2.2 List and briefly describe relevant arbitration statutes, international treaties and conventions.
Two federal statutes govern international and domestic arbitrations as well as implement the Model Law and the New York Convention – the Commercial Arbitration Act (RSC 1985, c C-34.6) and the United Nations Foreign Arbitral Awards Convention Act (RSC 1985 (2nd Supp) c16). In the various provinces and territories, other than Quebec, reference should be had in each case to the International Commercial Arbitration Act, the Arbitration Act, and the Reciprocal Enforcement of Judgments Act (citations are too extensive for this publication). In Quebec see the Code of Civil Procedure (Quebec Civil Code), arts 234–242, 280–284, 382–394 and 940–951. Because of ongoing jurisdictional wrangling between the federal government and the provinces, Canada is not a contracting state to the Convention on the Settlement of Investment Disputes between States and Nationals of Other States 1965 (the ICSID Convention).
3.1 What are/describe the principal institutions and/or government agencies that assist in the administration or oversight of international and domestic arbitrations?
The American Arbitration Association (AAA), the International Chamber of Commerce (ICC) and the London Court of International Arbitration (LCIA) all maintain a direct or indirect presence in Canada: the LCIA through Canadian representation on its North American Users’ Council, the ICC through its Canadian National Committee and the AAA through the inclusion of Canadian members on its panel of distinguished neutrals.
Three provinces host active arbitration institutions with the experience, staff and facilities to administer either domestic or international arbitrations. In Ontario, see the ADR Institute of Canada, Ottawa, www.adrcanada.ca, and ADR Chambers, Toronto, www.adrchambers.com. In Quebec, see The Quebec National and International Arbitration Centre, Montreal, www.cacniq.org. In British Columbia, see the British Columbia International Commercial Arbitration Centre, Vancouver, www.bcicac.com.
4.1 What is the relationship between agreements to arbitrate and access to the courts? Is there a presumption of arbitrability/policy support for arbitration? Will the courts stay court actions in favour of agreements to arbitrate?
Since implementation of the Model Law, Canadian courts have demonstrated a ‘clear shift in policy’ in favour of arbitrations over court proceedings. On at least two occasions – in Automatic Systems Inc v Bracknell Corpn [1994] 18 OR (3d) 257 and Canadian National Railway Co v Lovat Tunnel Equipment Inc [1999] 174 DLR (4th) 385 – the Ontario Court of Appeal has stated that any ambiguities in the interpretation of arbitral legislation or agreements should be resolved in favour of arbitration. Canadian courts regularly implement art 8(1) of the Model Law which requires the stay of a judicial proceeding in favour of an arbitration where one party wishes to enforce the arbitration agreement (see Automatic Systems Inc v Bracknell Corpn [1994] 18 OR (3d) 257). Moreover, if a party to a foreign arbitration agreement commences Canadian judicial proceedings, notwithstanding the arbitration agreement, the opposing party may still apply to the Canadian court for a stay of the Canadian judicial proceedings on the basis of the arbitration agreement. The Canadian court would then have to determine and apply the law governing the arbitration agreement itself. If that law, like Canadian law, gives primacy to arbitrations and provides for stays of conflicting judicial proceedings, a Canadian court would be likely to exercise its discretion to stay the conflicting Canadian proceeding.
Although without rational justification, it appears easier to stay a domestic arbitration than an international arbitration. The trend emerges from Deluce Holdings Inc v Air Canada [1992] 12 OR (3d) 131 (Gen Div), where the court held that a party cannot rely on an arbitration agreement where its conduct destroyed the very underpinning of the arbitration structure. While the result may have been appropriate in Deluce, given the narrow wording of the arbitration agreement in that case, the principle has been applied in cases with substantially broader arbitration agreements where it interferes with the arbitrator’s ability to determine his or her own jurisdiction and is arguably inappropriate. See eg Jaffa Suite Juices Ltd v Michael J Firestone & Associates [1996] 45 CPC (3d) 350 (Ont Ct Gen Div) and Ontario Federation of Labour v Ontario [1996] 31 OR (3d) 302 (Gen Div).
Recent jurisprudence reflects some reluctance to stay mass consumer litigation on the basis of standard form arbitration agreements apparently designed to thwart class actions. The British Columbia courts have ruled that, where a consumer class action is the ‘preferable’ procedure for determining consumer complaints, and individual arbitrations would be unwieldy and inefficient, the class members’ individual arbitration agreements are ‘incapable of being performed’ and are therefore incapable of supporting a defence motion to stay the legal proceedings. See Ruddell v BC Rail Ltd [2005] Carswell BC 2506 (BCSC) and MacKinnon v National Money Mart Co [2004] BCJ No 1961 (BCCA).
4.2 May an arbitral tribunal rule on a party’s challenge to its own jurisdiction (‘competence-competence’)? Need a tribunal suspend its proceedings if a party seeks to test jurisdiction in the courts?
All Canadian jurisdictions have adopted art 16 of the Model Law thereby permitting the arbitral tribunal to determine its own jurisdiction, including objections with respect to the existence of an arbitration agreement. Domestic arbitrations are governed by similar principles. For example, s 17(1) of the Ontario Arbitration Act provides that ‘an arbitral tribunal may rule on its own jurisdiction to conduct the arbitration and may in that connection rule on objections with respect to the existence or validity of the arbitration agreement’.
An older body of case law suggests that an arbitral tribunal may not deal with the issue if one party alleges that the entire contract is void (Canadian Motion Picture Productions Ltd v Maynard Film Distributing Co [1949] 4 DLR 458). More recent law demands that the party asserting invalidity of a contract establish a prima facie case before a court will assume jurisdiction – see ING Canada Ltd v Melitta Canada Inc [2001] 18 BLR (3rd) 78.
It appears that the shift in legislative and judicial policy in favour of arbitrability has made the validity of the arbitration agreement subject to arbitration. (See Ontario v Abilities Frontier Co-operative Homes Inc [1996] 5 CPC (4th) 81 (Gen Div) suggesting in obiter, that the straightforward wording of the domestic statute applied to the issue. Leave to appeal refused [1997] OJ No 238 (CA)). However, this is not yet a firmly established position and the question may be affected by the grounds alleged to vitiate the arbitration agreement. Where eg the agreement to arbitrate is allegedly void because it is invalid under the proper law of the contract, it may be easier to stay an arbitration in favour of a court proceeding.
5.1 Provide a selected bibliography of the most influential publications in or relied upon in the jurisdiction – books, journals, newsletters and pamphlets.
Books
B Barin Carswell’s Handbook of International Dispute Resolutions Rules (Scarborough, Ont: Carswell, 1999) Canadian Encyclopaedic Digest (Ontario) (Scarborough, Ont: Carswell, 3rd edn 2001) vol 1A, ‘Arbitration’ J B Casey International and Domestic Commercial Arbitration (Scarborough: Carswell, 1993) J B Casey and J Mills Arbitration Law of Canada: Practice and Procedure (Huntington, NY: Juris Publishing Inc, 2005)
International Commercial Arbitration in the New Millennium/Continuing Education Program (Toronto, Ont: Canadian Bar Association, 2001) E Larry (ed) Domke on Commercial Arbitration (St Paul: Thomson/West, 3rd edn, 2003)
P D McCutcheon and C B Todgham The Canadian Experience: Second Generation Legislative Improvements: Modern Statutory Enactments Provide the Tools for Change and the Starting Point for the Generation of Improvements
(Toronto, Ont, 1990) S A Obeidat Exceptions to the Enforcement of Foreign Arbitral Awards under the New York Convention (Ottawa, Ont: National Library of Canada, 1994)
Journals H Alvarez ‘Recent Trends in International Commercial Dispute Resolution’ (1999) 57 Advocate 691 J E C Brierley ‘Equity and Good Conscience and Amiable Composition in Canadian Arbitration Law’ (1991) 19 Can Bus LJ 461 J B Casey ‘International and Domestic Commercial Arbitration: An Introduction’ (1994) 13(1) Advocates’ Soc J 11 J G Castel ‘The Enforcement of Agreements to Arbitrate and Arbitral Awards in Canada’ (1991) 17 Can-US LJ 491 J J Chapman ‘Judicial Scrutiny of Domestic Commercial Arbitral Awards’ (1995) 74 Can Bar Rev 401 E C Chiasson ‘A Precipice Avoided: Judicial Stays and Party Autonomy in International Arbitration’ (1996) 54 Advocate (Van) 63 L Y Fortier ‘Delimiting the Spheres of Judicial and Arbitral Power: “Beware, My Lord, of Jealousy”’ (2001) 80 Can Bar Rev 143 G W Ghikas ‘The Independence and Impartiality of Arbitrators: A Perspective from British Columbia’ (1999) 57 Advocate 9 (Van) 677 D R Haigh, A K Kunetzki and C M Antony ‘International Commercial Arbitration and the Canadian Experience’ (1995) 34 Alta L Rev 137 J Soloway and J Broadhurst ‘What’s in the Medicine Chest for Chapter 11’s Ills’ (2002) 36 Can Bus LJ 388 E D D Tavender ‘Considerations of Fairness in the Context of International and Commercial Arbitrations’ (1996) 34 Alta L Rev 509 J C Thomas ‘Investor-State Arbitration under NAFTA’ (1999) 37 Can YB Int’l L 99 T Weiler ‘NAFTA Investment Arbitration and Growth of International Economic Law’ [2002] BKI 158 See also various papers at www.naftalaw.org
6.1 Are there form and/or content requirements for an enforceable agreement to arbitrate? How may they be satisfied?
Article 7 of the Model Law applies to the formal requirements of arbitration agreements throughout Canada in respect of international arbitrations. With respect to domestic arbitrations, the situation is more varied. The federal statute and the Quebec Civil Code require written agreements to arbitrate. The statutes of several common law provinces permit oral agreements (Ontario, Alberta and British Columbia, for example). The provincial arbitration statutes contain no content requirements for arbitral agreements. Certain provincial legislation contains default provisions which apply if the agreement to arbitrate does not speak to an issue. For example, the domestic statutes of Ontario, British Columbia and Alberta provide that, if an agreement is silent on the right of appeal, a party may appeal an award to the court with leave.
Arbitration is not mandated for any type of normal commercial dispute in Canada.
7.2 Is arbitration prohibited for certain types of dispute (restraints of fundamental public policy)?
As a general rule, there are no restrictions on the types of normal commercial matters that may be referred to arbitration. However, certain provinces have matters dealing with divorce, family law, personal status or capacity or public order removed from the ambit of arbitration (see eg British Columbia Commercial Arbitration Act and Quebec Civil Code).
Moreover, at least one province has rendered arbitration agreements in consumer contracts invalid unless ratified by the consumer after the dispute has arisen – see Ontario Consumer Protection Act 2002 (SO 2002, c 30 (proclaimed in force July 30, 2005)) and Smith v National Money Mart Co [2005] Carswell Ont 4882 (Ont CA). Some courts have also suggested that statutory rights or remedies that are to be determined or granted on application to the courts are, by implication, meant to be solely adjudicated in the courts and are therefore not arbitrable – see eg Armstrong v Northern Eyes [2000] 48 OR (3d) 442 (CA) and University of Toronto v John N Harbinson Ltd [2005] CanLII 47089 (Ont SC).
8.1 May an arbitral clause be considered valid even if the rest of the contract in which it is embedded is invalid?
All Canadian jurisdictions have adopted art 16 of the Model Law which provides that the arbitration agreement is independent of the contract in which it is found. Canadian courts have also long held that, for domestic purposes, arbitration clauses are severable from the contract in which they are found (see Heyman v Darwins Ltd [1942] AC 356, HL). The issue arises most frequently where it is asserted that the agreement to arbitrate is void because the contract containing the agreement is, in whole or in part, void ab initio. This issue is discussed in greater detail in section 4.2 above.
9. QUALIFICATION/APPOINTMENT/LIABILITY OF ARBITRATORS
9.1 Are there specific provisions regulating the qualifications of arbitrators? Are there requirements (including disclosure) for ‘impartiality’ and ‘independence’, and do such requirements differ as between domestic and international arbitrations?
As a general rule, there are no formal citizenship, residency or professional requirements for arbitrators. All arbitrators must, however, be independent and impartial. Although the Model Law and the various Canadian statutes are worded slightly differently in this regard, it is unlikely that a court would ascribe any difference in meaning to the difference in wording. The Model Law imposes a continuing obligation on an arbitrator to disclose any circumstances likely to give rise to justifiable doubts as to his or her ‘impartiality or independence’. Domestic legislation also imposes a continuing obligation to disclose any circumstances giving rise to a ‘reasonable apprehension of bias’. It is most likely that reasonable apprehension of bias is simply the Canadian common law articulation of impartiality and independence. The test under this rubric is not whether the arbitrator is biased but whether an objective observer could reasonably apprehend that the arbitrator is biased. A blatant example would include communicating with one party to the exclusion of the other. Less obvious examples extend to conduct that demonstrates that the arbitrator is closed-minded or is acting as an advocate on behalf of one party. Understandably, the line between aggressive but acceptable questioning and unacceptable advocacy is blurred and fact-specific.
9.2 Are there provisions governing the challenge or removal of arbitrators? Do the courts or other jurisdictions play/have a role in any such challenge?
Canadian jurisdictions have adopted art 13 of the Model Law with respect to international arbitrations.
With respect to domestic arbitrations, an arbitrator may generally be challenged or removed on the following grounds:
Grounds (3)–(5) are referred to in domestic legislation as grounds for removing, as opposed to challenging, an arbitrator. Such applications are made directly to the court of superior jurisdiction in the province where the arbitration is seated. Where it is alleged that the arbitrator committed a corrupt or fraudulent act or delayed unduly in conducting the arbitration, the arbitrator is entitled to be heard by the court.
Of all five grounds, the issue of reasonable apprehension of bias has given rise to the most disputes.
9.3 Does legislation govern, or have the courts developed rules regarding the liability of arbitrators for acts related to their decision-making function?
Canadian legislation is silent on the civil liability of arbitrators both in the international and domestic context. However, the legislation of certain provinces (eg Alberta, British Columbia and Ontario) provides that an arbitrator who is removed for a fraudulent or corrupt act or for undue delay may be denied payment for services and may be required to compensate the parties for all or part of the costs incurred in connection with the arbitration before the arbitrator’s removal.
As a general rule, Canadian civil and common law jurisdictions hold that arbitrators are immune from claims of negligence or breach of contract (Zittrer v Sport Mask Inc [1988] 1 SCR 564 (SCC)). In recent years the law has evolved to limit immunity only to arbitrators who exercise ‘judicial’ functions such as hearing evidence and making determinations of fact and law. Those who act in a capacity more like a valuator or an expert may not enjoy immunity (see Zittrer).
10. PARTY REPRESENTATION
10.1 Are there particular qualification requirements for representatives (‘counsel’) appearing in the jurisdictions?
Arbitration legislation does not impose any formal requirements for party representatives who act as ‘counsel’ on an arbitration. However, most provinces have rules that restrict the ability to practise law in the province to lawyers who are licensed to practise law in Canada. In domestic arbitrations applying Canadian law, ‘counsel’ who are not licensed to practise law in Canada may run into difficulty with these rules. In international arbitrations, particularly those applying the law of another state, this is not likely to be the case.
11. PLACE OF ARBITRATION/PROCEDURES
11.1 Are there provisions governing the place (seat) of arbitration, or any requirement for arbitral proceedings to be held at the seat?
Canadian law leaves the location of the arbitral proceedings to a combination of the parties and the arbitral tribunal. The laws governing domestic arbitrations generally provide that the tribunal shall determine the place of arbitration and that it may meet at any place it considers appropriate for its own consultations and for hearing witnesses, experts or parties (see eg Ontario Arbitration Act, s 22). The parties’ general right to agree to vary or exclude most legislative provisions also applies to these provisions, meaning that the parties may agree to a specific arbitral seat rather than leaving the matter to the tribunal’s discretion. For international arbitrations, Canadian laws generally provide expressly that the parties may agree on the place of arbitration and that, failing such agreement, the tribunal may do so instead (Model Law, art 20).
All the provincial/territorial laws regarding international arbitrations provide that an award shall be deemed to have been made at the place of arbitration selected. The laws governing domestic arbitrations simply provide that the award shall indicate the place where it is made. To be safe, that place should be the arbitral seat.
11.2 Are specific procedures mandated in particular cases, or in general?
Subject to the parties’ contrary agreement, arbitrators in domestic arbitrations may determine the procedure to be followed in the arbitration. There are few specified procedures for domestic arbitrations and all may generally be waived by the parties.
The relatively few procedures specified for international arbitrations are also generally subject to any agreement by the parties to the contrary. However, parties must submit statements outlining the relevant facts, points at issue and relief sought together with relevant documents (Model Law, art 23(1)) and the arbitrator must provide the parties with sufficient advance notice of any hearing or meeting (Model Law, art 24(2)).
12. EVIDENCE GATHERING
12.1 What is the general approach to the gathering and tendering of evidence at the pleading stage and at the hearing stage (production, discovery, privilege, use of witness statements etc)? Are there differences between domestic and international arbitrations?
In domestic arbitrations, the parties must generally either submit or refer to documents or other evidence they intend to submit in their initial written statements (see eg Ontario Arbitration Act, s 25(2) and (3)). Parties to international arbitrations may, but are not obliged to, submit such materials with their statements (Model Law, art 23).
In domestic arbitrations it is common for the parties to agree to abide by the local rules of practice for civil litigation with respect to both the discovery and hearing stages of an arbitration. Such rules typically impose a positive obligation to produce all documents relating to the matters at issue and permit each party to examine for discovery at least one representative of each opposing party. Whether or not local judicial rules are adopted, no party is required to disclose privileged documents or information at either the discovery or hearing stage of the arbitration.
Hearings in domestic arbitrations also tend to mimic domestic judicial proceedings. Nevertheless, there are few formal requirements and some parties opt for the more streamlined procedures of international arbitrations.
Procedures in international arbitrations tend to follow international norms. Oral examinations for discovery tend to be discouraged and documentary production may be circumscribed. The production requirements of the IBA Rules of Evidence are increasingly relied upon. Hearings, too, tend to be more streamlined in international arbitrations, eg evidence introduced by way of pre-filed witness statements, agreed time limits and the exchange of written submissions.
12.2 What powers of compulsion or court assistance are there for arbitrators to require attendance of witnesses or production of documents, either prior to or at the substantive hearing? Is there a difference between domestic and international tribunals or as between parties and non-parties? Do special provisions exist for arbitrators appointed pursuant to international treaties (ie bilateral or multilateral investment treaties)?
In domestic arbitrations, an arbitrator may issue a notice that can be served by a party on a potential witness, requiring that witness to attend and give evidence at the arbitral hearing. The arbitrator’s directions and notices may be enforced by the courts as though they were directions or notices issued by the courts. Moreover, a party or the arbitrator may apply to a court for other orders or directions with respect to the taking of evidence as if the arbitration were a court proceeding (see eg Ontario Arbitration Act, s 29).
Arbitrators in international arbitrations have fewer express powers regarding witnesses and production. Articles 23, 24, 25 and 27 of the Model Law apply to evidence in international commercial arbitrations. Thus an arbitrator or a party (with the approval of the arbitrator) may request the assistance of a domestic court in taking evidence and the court may act on that request according to its own rules on taking evidence.
13. INTERIM MEASURES/ROLE OF THE TRIBUNAL
13.1 Are there special provisions relating to the granting of interim and preliminary relief? Have the courts recognised and/or limited any such authority? Do the courts themselves play a role in interim relief in arbitration proceedings?
In domestic arbitrations, an arbitrator generally may make orders for the detention, preservation or inspection of property or documents (eg Ontario Arbitration Act, s 18(1)). Arbitrators may also make one or more interim awards (eg Ontario Arbitration Act, s 41). Detention, preservation and inspection orders may be enforced by the courts. Other interlocutory relief (eg injunctions) must be sought from the courts.
In international arbitrations, art 17 of the Model Law permits an arbitrator to order a party to take whatever interim measures of protection are considered to be necessary in respect of the subject matter of the dispute.
14. TAXATION OF ARBITRATORS’ FEES
14.1 Does the state, or any of its sub-divisions, purport to tax domestically the fees of foreign arbitrators conducting hearings in the state? Is there a difference if the arbitration is ‘seated’ in the state or elsewhere?
Canada does not treat foreign arbitrators differently from any other foreign persons earning income from activities in Canada. The extent of any arbitrator’s liability for Canadian taxes on his or her arbitration fees will turn on the extent of arbitration activity in Canada, the degree to which the arbitrator is resident in Canada and the existence and provisions of any tax treaties between Canada and the arbitrator’s country of residence. Theoretically, Canadian tax laws may require a portion of any arbitration fees paid to a non-resident arbitrator for work carried out in Canada to be withheld and remitted to the Canadian tax authority on account of the arbitrator’s potential income tax liability, subject to the arbitrator’s right to claim a refund of the amount withheld in appropriate circumstances. However, as a practical matter, most foreign arbitrators will not pay – and Canada and the provinces will not seek – Canadian taxes on fees from occasional arbitrations in Canada.
15. DEFAULT PROCEEDINGS
15.1 Are there provisions governing a tribunal’s ability to determine the controversy in the absence of a party who, on appropriate notice, fails to appear at or seek adjournment of the arbitral proceedings?
In both domestic and international arbitrations, the tribunal may continue the proceedings and make an award on the evidence before it if a party fails to appear at a hearing or to produce documentary evidence without providing a satisfactory explanation (see eg Ontario Arbitration Act, s 27(3) and Model Law, art 25(c)).
16. THE ARBITRAL AWARD
16.1 Must an award take any particular form, eg in writing, signed, dated, place, the need for reasons, delivery etc?
Awards in both domestic and international arbitrations must be made in writing. Awards must be signed, dated and indicate the place where they were made. Unless the parties agree otherwise, awards must state the reasons upon which they are based. A copy of the award must be delivered to each party. See eg Ontario Arbitration Act, s 38 and Model Law, art 31.
16.2 Are there limits on arbitrators’ powers to fashion appropriate remedies, eg punitive or exemplary damages, rectification, injunctions, interest and costs?
In domestic arbitrations the tribunal must determine disputes in accordance with law, including equity, and may order equitable remedies. In other words, unless limited by the parties’ agreement, domestic arbitrators may impose a wide range of remedies including punitive or exemplary damages, rectification and injunctions. However, there is some doubt as to whether an arbitrator can award a statutory remedy which is expressly reserved to the courts. See Armstrong v Northern Eyes [2000] 48 OR (3d) 442. The parties may also expand the range of remedies available by permitting an arbitrator to resolve disputes or rewrite agreements on the basis of eg the arbitrator’s own notions of fairness. Arbitrators in domestic arbitrations may also award both costs and interest (see eg Ontario Arbitration Act, ss 54 and 57).
In international arbitrations, the tribunal may impose such remedies as are permitted by the rules of law determined to apply to the substance of the dispute (Model Law, art 28). These remedies must be in accordance with the terms of the underlying contract and must take into account any usages of the trade applicable to the transaction. International tribunals may impose remedies on the basis of decisions made ex aequo et bono or as amiable compositeur, but only if expressly authorised to do so by the parties. Canadian legislation governing international arbitrations contains no specific provisions with respect to interest or costs, and the tribunal’s power to award interest or costs will turn on the arbitration agreement between the parties.
17. RECOURSE FROM AN AWARD
17.1 Are there provisions governing modification, clarification or correction of an award?
In both domestic and international arbitrations a party may request the tribunal to explain or interpret any aspect of the award within 30 days of receipt of the award. Domestic tribunals must, and international tribunals may, provide the explanation or interpretation sought (see eg Ontario Arbitration Act, s 40 and Model Law, art 33(1)(b)). Tribunals in both domestic and international arbitrations may also, either on their own initiative or at the request of any party, correct errors in the nature of typographical, computation or similar errors (see eg Ontario Arbitration Act, s 44(1)(a) and Model Law, art 33(1)). Domestic arbitrators may also amend the award to correct an injustice caused by any oversight on the part of the tribunal (see eg Ontario Arbitration Act, s 44(1)(b)). Finally, the tribunals in both domestic and international arbitrations may make an additional award to deal with claims presented in the arbitration but omitted from the earlier award (see eg Ontario Arbitration Act, s 44(2) and Model Law, art 33(3)).
17.2 May an award be appealed to or set aside by the courts? If so, on what grounds and by what procedures?
Awards in domestic arbitrations may be appealed to domestic courts (eg Ontario Arbitration Act, s 45). If the arbitration agreement so provides, an appeal lies to the court on a question of law, a question of fact or a question of mixed fact and law. Otherwise, an appeal lies only on a question of law and only with leave of the court. Leave shall be granted only if the court is satisfied that the importance to the parties of the matters at stake in the arbitration justify an appeal and the determination of the question of law at issue will significantly affect the rights of the parties. The appellate court may confirm, vary or set aside the award or may remit the award back to the tribunal in the case of an appeal on a question of law and give directions about the further conduct of the arbitration.
Awards in domestic arbitrations may also be set aside on the basis of a series of enumerated grounds dealing largely with issues of jurisdiction and procedural fairness (eg Ontario Arbitration Act, s 46). For example, an award may be set aside if the arbitration agreement is invalid, if the award deals with a dispute beyond the scope of the arbitration agreement, if the arbitrator was corrupt or fraudulent or if a party was not treated equally or fairly (eg Ontario Arbitration Act, s 46).
Awards arising from international arbitrations may not be appealed but may be set aside by the court on certain enumerated grounds (Model Law, art 34). Again, these grounds relate principally to issues of jurisdiction and process. They include eg the invalidity of the arbitration agreement, the arbitration of a dispute which was beyond the scope of the arbitration clause or if the arbitral procedure was not in accordance with the parties’ agreement.
There is some conflict in the jurisprudence as to whether or not a party may seek judicial review of an arbitration decision using generally available judicial review procedures and outside the ambit of the relevant arbitration statute. British Columbia’s Supreme Court has ruled that such a procedure is unavailable, as the arbitration statutes are a complete code, but Ontario’s Court of Appeal has expressly left the issue open. See Freshway Specialty Foods Inc v Map Produce LLC [2005] Carswell BC 2505 (BCSC) and Rea International Inc v Muntwyler [2005] Carswell Ont 3186 (Ont CA).
Reviews have generally been seen to be much more limited than appeals, with considerable respect being shown to the concept of finality of an international tribunal’s award. However, one Canadian superior court judge interpreted his jurisdiction to review a NAFTA panel’s decision to include an ability to review and criticise the panel’s interpretation of the NAFTA itself on the theory that, in effect, the panel’s ‘error’ took the dispute beyond the scope of the arbitration clause. In the result, the judge set aside most of the panel’s decision. Although the case has attracted considerable criticism, it raises questions about whether international arbitration decisions will now be subject to appeals disguised as reviews. See Mexico v Metalclad Corpn [2001] BCSC
664. However, the Ontario Court of Appeal has more recently stated that courts reviewing NAFTA panel decisions should give deference to the arbitration decision ‘at the high end of the spectrum of judicial deference’ – United Mexican States v Karpa (2005) 193 OAC 216 (Ont CA).
18. ENFORCEMENT OF AWARD
18.1 What are the procedures and standards for enforcing an award? Is there a difference between ‘domestic’ and ‘non-domestic’ awards?
The enforcement of foreign arbitral awards in Canada is governed by the New York Convention. The enforcement of a domestic award in a province other than in the province in which the award was issued is governed by specific reciprocal enforcement of judgments legislation in Canada’s common law provinces. In Quebec, the New York Convention also applies to the enforcement of domestic arbitral awards from another province.
Domestic awards, ie those made in Canada in respect of ‘non-international’ arbitrations, are enforceable by the domestic courts (eg Ontario Arbitration Act, s 50). The party entitled to enforcement may make an application to a Canadian court (either in the jurisdiction in which the award was made or in another Canadian jurisdiction) and the court will grant judgment enforcing the award. No such judgment will be granted when the time for appealing an award has not yet expired or an appeal has been launched or where the subject matter of an award is not capable of being the subject of arbitration under the law of the jurisdiction in which the enforcement application is made. If an award grants a remedy which the enforcing court does not have the jurisdiction to grant or would not grant in a proceeding based on similar circumstances, the court may instead grant a different remedy requested by the applicant. Once an enforcement judgment has been rendered, the enforcing party may have recourse to the same rights and remedies as any other judgment creditor.
Whether rendered in Canada or elsewhere, awards in ‘international’ arbitration cases may also be enforced in Canadian jurisdictions by application to the domestic courts (Model Law, arts 35 and 36). The applying party must supply the award and the original arbitration agreement, translated into French or English if necessary. The domestic court must then render an enforcement judgment unless any of the grounds for setting aside an international arbitral award exist (see section 17.2 above).
19.1 What are the confidentiality requirements of the arbitral process, ie existence of the arbitration, pleadings, documents produced, hearing, award?
Historically, arbitrations have been regarded as confidential to the parties. However, there are no specific legislative provisions requiring that any particular part of the arbitration be conducted confidentially, nor have Canadian courts dealt definitively with the differences that have arisen on this subject in the UK, on the one hand (inherent confidentiality), and the US, Australia and Sweden (no inherent confidentiality), on the other. Nevertheless, the decision in 887574 Ontario Inc v Pizza Pizza [1994] OJ No 3112 lends support for confidentiality by holding that arbitral proceedings are in the ‘ … private confidential sectors’. In any event, it is common for the parties to agree that some or all aspects of the arbitration are to be confidential and such an agreement is enforceable. Moreover, even without such arrangements, an arbitration is private in the sense that members of the public may not insist on attending hearings. If any matter is referred to a court, however, any confidentiality arrangement must give way to the court’s rules with respect to public access to judicial proceedings. Generally speaking, court records and proceedings are open to the public unless sealed, and sealing orders are granted only in exceptional cases. See eg Ontario’s Courts of Justice Act (RSO 1990, c C-43), ss 135 and 137 and CTV Television Inc v Ontario Superior Court of Justice [April 2, 2002] Docket CA C35819 (Ont CA).
20. Unique Jurisdictional attributes
20.1 Is there any particular aspect of the approach to arbitration in the jurisdiction which bears special mention?
Canadian law and practice have evolved to the point where arbitration agreements and arbitral awards are accorded a high degree of respect, protection and enforcement. Canadian courts have become increasingly vigilant in preventing parties from escaping their agreements to arbitrate and also increasingly deferential to arbitral awards on appeal and on applications to review. Commercial arbitrations are becoming increasingly common, and there is a growing number of arbitral institutions and affiliated and unaffiliated arbitrators of considerable expertise. Arbitrations appear likely to become increasingly important as a preferred method for resolving business disputes.
