Developments in commercial arbitration in Canada

By Earl Cherniak

After many years and much consultation, reform of commercial arbitration legislation, international and domestic, is underway across Canada. The existing acts, federal and provincial, were passed many years ago, in Ontario domestically in 1991, and internationally in Ontario and Canada in 1986.

While the various federal and provincial acts, both domestic and international, have many similarities, significant differences still cause confusion. The aim of reform is both updating and uniformity.

The first initiative has been in the international sphere. Following extensive consultation by the Working Group on New Uniform Arbitration Legislation under the chairmanship of Gerald Ghikas, Q.C. of Vancouver, a report was issued in March 2014. It contained its findings, recommendations and a draft of a new proposed uniform International Commercial Arbitration Act (ICAA). The report was submitted to the Uniform Law Conference of Canada (ULCC), a body of provincial and federal authorities charged with the task of obtaining uniformity of legislation of a variety of kinds across Canada.

The Working Group report met with approval by the ULCC and was accepted with minor modifications. The next step is its implementation by several provinces, territories and Canada.

Ontario has given first reading to a bill (ICAA 2016) to replace the existing International Commercial Arbitration Act. It closely parallels the draft accepted by the ULCC. British Columbia is considering doing the same. Since the majority of international commercial arbitrations in Canada take place in Ontario, B.C. and Quebec, this is progress.

The stated purpose of ICAA 2016 is to make Ontario a more attractive jurisdiction for resolving cross-border disputes. It provides that the Convention on the Recognition and Enforcement of Arbitral Awards adopted by the United Nations Conference on International Arbitration in New York in 1958 (the New York Convention) and the Model Law on International Commercial Arbitration adopted by the United Nations Commission on International Trade Law (UNCITRAL) in 1985, as amended in 2006, have the force of law in Ontario. With respect to the New York Convention, ICCA 2016 provides that it applies “to arbitral awards and arbitral agreements whether made before or after the coming into force of this Act”. This eliminates doubt that has arisen as to whether the New York Convention was applicable in Ontario, having regard to Ontario’s earlier repeal of implementing provisions in the belief that the Model Law had that effect. While the New York Convention was assumed to be applicable in Ontario, ICCA 2016 will now confirm it.

The chief benefit of the New York Convention is to make international commercial arbitration awards, wherever made, easily enforceable in Ontario, subject to the terms of the Convention, in contrast to the far more cumbersome enforcement of a foreign judgment, which requires fresh litigation. It formalizes the application of the New York Convention into Ontario law “in relation to arbitral awards or arbitration agreements…arising out of commercial legal relationships.” It clarifies when the New York Convention applies, and does not apply, to arbitral awards made in Canada.

The Model Law provides a complete code of practice and procedure to international arbitrations and addresses the treatment of international arbitrations by Ontario courts. ICAA 2016 imports the 2006 Model Law amendments, which provide more detailed and broader definitions and form of what constitutes an “arbitration agreement,” by adopting option one of the 2006 amendments, in particular providing that an arbitration agreement can be found in electronic communications and in the pleadings alleged by one party, if not denied by the other.

The 2006 amendments provide an international arbitral tribunal with the authority to make orders for interim measures of protection, including confirming the ability of an arbitral tribunal to make limited forms of preliminary ex parte orders.

ICCA 2016 updates the United Nations commentary and reports on the Model Law to which recourse may be had in applying the Model Law by the courts. It clarifies the power of the Ontario courts to consolidate different arbitration proceedings, where the parties have so agreed. It provides for an appeal to the court where an arbitral tribunal rules on a pleading that it does have not (or does have) jurisdiction and that the order of the court is not subject to further appeal.

Importantly as well, ICCA 2016 provides for limitation periods for the enforcement of awards to be the later of Dec. 31, 2018 and the 10th anniversary of the day the award was released or the date upon which an application to set aside the award was finally determined, and provides that the Ontario Limitations Act does not apply to the enforcement of such awards.

No date has been set for ICAA 2016 to be enacted into law, but there does not appear to be any reason why it will be delayed.

A similar undertaking to provide uniformity of the provincial and territorial domestic arbitration acts is currently underway by the Working Group. A recommended draft of a new Uniform Arbitration Act for domestic arbitrations was submitted to the ULCC earlier this year. The ULCC is expected to deal with the recommendations in August 2016.

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