On February 19, 2020, the British Columbia (“BC”) Government introduced Bill 7 – 2020: Arbitration Act (the “Bill 7”) to modernize and streamline the arbitration regime in BC.
The current BC regime involves two statutes:
- The Arbitration Act, R.S.B.C. 1996, c. 55 (the “Current Act”) governs domestic arbitral proceedings. If Bill 7 comes into force, it will replace the Current Act.
- The International Commercial Arbitration Act, R.S.B.C. 1996, c. 233 (the “ICAA”) governs arbitral proceedings where the parties are based in different jurisdictions.
In 2018, the ICAA was amended to make BC a more desirable venue for international arbitrations by aligning its rules with international best practices. Bill 7 aims to enhance BC’s profile for domestic arbitrations, and to better harmonize international and domestic arbitration practices.
Key Changes Proposed in Bill 7
Currently, Bill 7 is on second reading at the BC Legislature. If it comes into force, it will revamp the arbitration regime in BC and bring it in line it with international best practices in the following ways:
Bill 7 clarifies how parties to an arbitration agreement can commence arbitral proceedings. If parties have expressly agreed on how an arbitration will be started when a dispute arises, then proceedings must be started in accordance with the agreement. If the arbitration agreement does not prescribe how proceedings begin, a party may start a proceeding by sending one of several types of notice to another party, including:Commencing Arbitral Proceedings
- Notice that an arbitrator has been appointed, if authorized by the arbitration agreement to do so;
- Notice requesting the other party participate in appointing an arbitrator; or
- Notice demanding arbitration.
Powers of the Designated Appointing Authority
Bill 7 grants authority to a “Designated Appointing Authority” to dispose of disputes that may occur within arbitral proceedings quickly and efficiently. We expect that the British Columbia International Arbitration Centre (the “BCIAC”) will be appointed by regulation as the Designated Appointing Authority. The BCIAC is set to be renamed the Vancouver International Arbitration Centre (the “VIAC”) when Bill 7 comes into force.
In particular, the VIAC will handle two kinds of secondary disputes:
- The appointment of an arbitrator. Under the Current Act, if parties disagree on the arbitrator, a party may apply to the BC Supreme Court for a court appointed arbitrator. Under Bill 7, a party will be able to apply to the VIAC to appoint the arbitrator.
- The arbitrator’s fees. Under the Current Act, parties apply to a registrar or officer of the BC Supreme Court for a review of the account. Under Bill 7, parties or an arbitrator will apply to the VIAC for summary determination of the arbitrator’s fees and expenses.
Parties will not be able to appeal appointment decisions or fee determinations made by the VIAC.
Direct Evidence of Witnesses
Bill 7 requires that the direct evidence of witnesses be in written form unless otherwise agreed by the parties or directed by the arbitrator. No such requirement exists under the Current Act. Oral hearings will be confined to cross-examination, which will expedite proceedings.
Bill 7 sets out a clear process for obtaining and enforcing interim measures. The Current Act does not provide any such process.
Bill 7 provides that parties may request, as interim measures, orders for provision of security, disclosure, costs and damages, or modification of existing orders. If an arbitrator grants an interim measure, it is binding on other parties. Parties may enforce interim measures by applying to the BC Supreme Court, which may refuse only on limited procedural grounds.
Bill 7 also establishes a specific regime under which parties may request interim measures as a preliminary order – that is, without notice to any other party. The arbitrator may grant the request if disclosure of the request risks frustrating the purpose of the interim measure. Interim orders are not considered to be an arbitral award, nor are they enforced by the BC Supreme Court.
Bill 7 transforms the appeal process. It transfers the jurisdiction to grant leave to appeal from the BC Supreme Court to the BC Court of Appeal. This change is intended to avoid subjecting parties to years of appeals in court. In addition, Bill 7 allows parties to opt out of their right to appeal by express provision in the arbitration agreement.
A party to an arbitration may seek leave to appeal on any question of law arising out of an arbitral award (within 30 days of the award). The legal test for leave will not change, and remains a high bar: (1) the question of law must be “sufficiently important” to the final result and have “arguable merit”; (2) if those requirements are satisfied, the BC Court of Appeal can still exercise its residual discretion to deny leave. If the BC Court of Appeal grants leave, it may confirm, amend, or set aside the arbitral award, or it may remit the arbitral award to the arbitrator for reconsideration.
Bill 7 preserves the BC Supreme Court’s jurisdiction to set aside an arbitral award, but only based on certain enumerated grounds related to procedural unfairness. Such grounds include, for example, that an arbitration agreement is inoperative or that the award dealt with a dispute outside the scope of the agreement. If the BC Supreme Court sets aside an arbitral award, a party may appeal the decision with leave.
Bill 7 cements the principle of confidentiality in BC arbitration practice. While the Current Act is silent on confidentiality, Bill 7 provides that unless the parties agree otherwise, proceedings will be conducted in private and kept confidential. It prohibits the parties and arbitrator from disclosing information about the proceedings, evidence, documents, or the award.
The proposed changes are intended to offer clarity, predictability, and efficiency in arbitration:
- Bill 7 furnishes a clearer picture of the manner by which an arbitral proceeding will unfold, from commencement to the eventual award.
- The delegation of power to the VIAC quickens proceedings and lessens the risk of drawn-out “disputes within disputes”.
- The presumption that the direct evidence of witnesses will be in written form expedites proceedings.
- The appeal process is more efficient; and parties can agree to give up their appeal rights by express provision.
- The unequivocal confidentiality requirement increases the security of sensitive information.
- Parties to commercial agreements who wish to invoke arbitration to resolve disputes between them should give careful consideration to:
- Whether it is appropriate, depending on the nature of the agreement, to designate an arbitrator and the manner in which arbitration may be commenced;
- Whether to remove the parties’ appeal rights; and
- Whether the VIAC Rules offer the appropriate procedure for governing disputes between the parties.