Canada is one of the many jurisdictions that has adopted the 1985 UNCITRAL Model Law on International Commercial Arbitration. In Quebec, most of the provisions of the Model Law were adopted through amendments to the Civil Code of Québec and the Code of Civil Procedure. Each of Canada’s other provinces and territories adopted the Model Law with minor modifications in their respective statutes on international arbitration.
In the common law provinces (particularly Ontario and British Columbia), Articles 9 and 17 of the Model Law, which address the jurisdiction of courts and the arbitral tribunal to grant interim measures, apply without reservation in the context of an international arbitration. However, in Quebec, the situation is less clear. First, Article 17 of the Model Law (empowering arbitral tribunals to order interim relief) was never incorporated into Quebec law. The legislative debates show that Article 17 was left out because the interim relief that it contemplated, namely, relief from the arbitral tribunal, was “unenforceable”. The legislators also reasoned that parties could always provide for the possibility of such relief in their contract. Second, although Article 9 of the Model Law (empowering courts to order interim relief) was incorporated into Quebec law through Article 940.4 C.C.P., a recent lower court decision raises some doubt over its interpretation and application in the province, as explained below.
Article 940.4 provides that “a judge or the Court may grant provisional measures before or during arbitration proceedings on the motion of one of the parties.” Moreover, Article 3138 C.C.Q. provides that in international cases a Quebec court “may order provisional or conservatory measures even if it has no jurisdiction over the merits of the dispute.” (Article 3148, para. 2, C.C.Q. confirms that a Quebec court does not have jurisdiction over a dispute “where the parties, by agreement, have chosen to submit all existing or future disputes … to an arbitrator …”).
Notwithstanding the clear language of Article 940.4 and Article 3138, in a recent judgment of the Quebec Superior Court, Ekinciler Demir Ve Celik San, a.s. v. Bank of New York (in French only), the judge interpreted the arbitration clause in the parties’ contract as excluding recourse to the Quebec courts, even for provisional or conservatory measures. The judge held that, in the circumstances, Article 3148, para 2 took precedence over Article 3138.
The relevant part of the arbitration clause that was at issue in Ekinciler reads as follows: “All disputes arising in connection with this contract shall exclusively be settled by arbitration in Zurich in accordance with the arbitration rules applicable.” There is no additional or specific language in the clause that expressly excludes the possibility of seeking interim relief from state courts (although the judge gave some weight to the use of the term “exclusively”). Nor is such relief expressly excluded by Chapter 12 of Switzerland’s Federal Code on Private International Law, which contains the default rules that would be applicable to the Zurich arbitration. As such, the reasoning of the judge in Bank of New York could apply to most standard arbitration clauses.
The reasoning in Bank of New York, however, should not be embraced too readily, since it seems questionable in at least two respects.
First, there is no mention in the judgment of Article 940.4 C.C.P., which, as already mentioned, specifically empowers a court to grant provisional measures “before or during arbitration proceedings on the motion of one of the parties.” This omission is particularly troublesome given the fact that Article 940.6 stipulates that, “where matters of extraprovincial or international trade are at issue in an arbitration, the interpretation of this Title, where applicable, shall take into consideration the Model Law on International Commercial Arbitration as adopted by the United Nations Commission on International Trade Law on 21 June 1985”. In its recent judgment in Dell Computer Corp. v. Union des consommateurs, the Supreme Court of Canada held that Article 940.6 “attaches considerable interpretive weight to the Model Law in international arbitration cases.” Since Bank of New York concerned an international arbitration, Article 9 of the Model Law, according to which a party to an arbitration may request and obtain from a court an interim measure of protection, should have been given effect through Article 940.4 C.C.P.
Second, the judge in Bank of New York based her reasoning on the decision of the Supreme Court in GreCon Dimter Inc. v. J.R. Normand Inc., which, on close examination, would seem to favour the opposite outcome to Bank of New York. In GreCon Dimter, a German manufacturer who was sued in warranty by a Quebec supplier in an action for damages, moved to have the action in warranty dismissed on the basis of a choice-of-forum clause in the contract between the German manufacturer and the Quebec supplier that gave exclusive jurisdiction to the German courts. The Supreme Court had to decide whether the valid choice-of-forum clause in favour of the German courts (which removed the jurisdiction of a Quebec court under Article 3148, para. 2, C.C.Q.) should take precedence over Article 3139 C.C.Q., which confers jurisdiction on a Quebec court to hear an action in warranty if it has jurisdiction over the principal action. The Supreme Court, dismissing the action in warranty by giving effect to the choice-of-forum clause, reasoned that Article 3148, para. 2, C.C.Q., which recognizes the fundamental substantive rule of the primacy of the autonomy of the parties in situations involving conflicts of jurisdiction, should be interpreted broadly and prevail over Article 3139, which is essentially procedural in nature.
The reasoning in GreCon, however, cannot be applied mutatis mutandis to give precedence to Article 3148, para. 2 over Article 3138 C.C.Q. (and over Article 940.4 C.C.P.). While the Supreme Court held that Article 3139, at issue in GreCon Dimter, was in “fundamental conflict” with the recognition granted to the parties’ choice-of-forum clause by Article 3148, para. 2, no such conflict exists between the recognition granted to an arbitration agreement by Article 3148, para. 2 and the limited jurisdiction granted to courts by Article 3138 C.C.Q. and Article 940.4 C.C.P. Indeed, Article 9 of the Model Law (which has been incorporated into Quebec law through Article 940.4) expressly states that “It is not incompatible with an arbitration agreement for a party to request, before or during arbitral proceedings, from a court an interim measure of protection and for a court to grant such measure” (our emphasis). The analysis in GreCon Dimter thus does not seem to be an appropriate foundation for the decision in Bank of New York.
Although there is authority in Quebec that, in our view, properly interprets and applies Article 940.4, including an earlier decision of the Quebec Court of Appeal denying leave to appeal from a lower court decision that gave effect to Article 940.4, the issue seems somewhat unsettled given the Bank of New York decision. Until this question is unequivocally resolved, parties contemplating the need to turn to the Quebec courts for provisional measures in the context of an arbitration would be well advised to include express language in their arbitration clauses empowering those courts to grant interim relief. Furthermore, since Article 17 of the Model Law was not adopted in Quebec law, parties contemplating an arbitration in Quebec should include express language in their arbitration clauses granting the arbitral tribunal the power to order interim relief.