Enforcement of Foreign Arbitral Awards in Canada
Canada is a party to the New York Convention, which is implemented at a Federal level through the United Nations Foreign Arbitral Awards Convention Act 1985. Each common law province and territory in Canada has adopted the New York Convention into its provincial law. Quebec, as Canada's only civil law jurisdiction, refers to the New York Convention in its Civil Code when dealing with arbitral awards made outside of the Quebec province.
Both money awards and final injunctions will be awarded across Canada. Currently only British Columbia and Ontario will enforce interim injunctions.
Grounds for Refusing Enforcement
Canadian courts have generally refused to overturn foreign arbitral awards, except in limited circumstances. In Canada recognition of a foreign arbitral award will be refused if the party against whom the order is being enforced is able to establish proper grounds, which include:
- Incapacity of a party to the arbitration agreement. Invalidity of the underlying arbitration agreement.A party was not given proper notice of the proceedings or was unable to present its case.
- The recognition of the award would be contrary to Canadian public policy. For this ground to apply the arbitral award must contravene a fundamental principle of justice or fairness in either a procedural or substantive respect.
For example, where enforcement would lead to the double recovery of damages.
Procedure for Enforcement
The enforcing party is required to bring proceedings in the relevant federal or provincial court. The limitation periods for commencing proceedings apply to the enforcement of international arbitration awards.
A recent case from Ontario confirmed the restrictive approach adopted by the Canadian courts in setting aside foreign arbitral awards, holding that such an award should be set aside for a breach of an arbitration agreements procedure only if it causes real unfairness or real practical injustice.
In the case of Popack v Lipsyzc (2016 ONCA 135) the Ontario Court of Appeal had to decide whether to uphold the judgment at first instance to enforce an arbitral award issued by a New York Rabbinical Court where it was common ground that arbitral panel had failed to comply with the procedure that had been agreed under the arbitration agreement.
The Court of Appeal dismissed the appeal and upheld the original judgment to enforce the arbitral award. The court noted the well-established preference in favour of maintaining arbitral awards rendered in consensual private arbitrations and that the parties' selection of their forum (arbitration by Rabbinical Court) implied both a preference for the outcome arrived at in that forum and a limited role for judicial oversight of the arbitral award made.
The court noted that there is an element of judicial discretion in deciding whether to set aside an arbitration award on account of procedural errors at the arbitration. The court went on to find that, in the event of a procedural error of the nature arising in this case, the question to task was what effect the error had on the reliability of the result, or the fairness or appearance of fairness of the process.
Take Away Points
Popack v Lipsyzc shows that the Canadian courts will generally uphold foreign arbitral awards. The Courts have a degree of judicial discretion when being asked to set such awards aside and will do so on the basis of procedural breach only where upholding the award will cause real unfairness or real practical injustice. That is a high threshold to meet.