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October 10, 2018 article

Canada Readies Itself for a Larger Role as a Seat for International Arbitration

By Melinda Jayson

In recent years, the Canadian Government recognized that there was an opportunity to expand Canada’s role in international arbitration by revising the provinces’ international arbitration statutes to more closely match the 2006 version of the Model Law (2006 Model Law) enacted by the United Nations Commission on International Trade Law (UNCITRAL). Key Canadian provinces now have taken the necessary legislative steps to improve Canada as a site for international arbitration.

The Canadian government’s focus on international arbitration began soon after the Canadian Supreme Court issued its 2014 decision in Sattva Capital v. Creston Moly (2014 SCC 53). Sattva is a significant decision that addresses contract interpretation and resolution through arbitration. Since Sattva was decided, the three most commercially active provinces have amended their arbitration statutes to attract businesses seeking a site for international arbitration. The remaining provinces are less likely to obtain a meaningful role in international arbitration and have not yet amended their arbitration laws.

 Post-Sattva revisions to the provincial laws in British Columbia, Quebec, and Ontario now make each a more inviting seat for resolution of international disputes through arbitration, melding many benefits of the 2006 Model Law with the sophisticated business environments of Vancouver, Montreal, and Toronto.

Most recently, effective May 17, 2018, British Columbia’s outdated International Arbitration Act, which was based on the 1985 version of the UNCITRAL Model Law, was amended to reflect current best practices in international arbitration and be consistent with the 2006 Model Law. The amendments are significant and substantial—among other things, they (1) provide clearer standards for arbitrator challenges than did the former law, (2) specifically acknowledge that third-party funding of an arbitration case is consistent with British Columbia public policy, and (3) provide guidance for challenges to arbitrator appointment on the bases of independence and impartiality.

Ontario took its own approach by enacting the International Commercial Arbitration Act (ICAA), which took effect on March 22, 2017. The ICAA now provides that its words and expressions “have the same meaning as the corresponding words and expressions” in the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards (NY Convention) and the 2006 Model Law. Both are specifically stated in the ICAA to have “force of law in Ontario.” By so clearly incorporating the NY Convention and the Model Law into its provincial laws, Ontario has established itself as a place where disputants from around the world can feel comfortable seating an international arbitration.

Significantly, Ontario’s 2017 law empowers a tribunal to grant interim relief that will be enforced as binding in Ontario’s courts and provides a lengthy limitations period of 10 years for the enforcement of an arbitration award, calculated from the award date or the date on which an action to set the award aside terminates if the award is challenged.

Quebec, a civil law jurisdiction, adopted a new Code of Civil Procedure as of January 1, 2016, containing a chapter that echoes the 2006 Model Law. Quebec set a goal of simplifying the arbitration process by making the default for the number of arbitrators of disputes below $2 million (Canadian) one rather than the three provided for in the 2006 Model Law. This may make Quebec a particularly desirable seat for international disputes with less than $2 million in damages at issue. Quebec’s current law also has a unique aspect: It treats an arbitration as “international” when both Quebecois and non-Quebecois Canadians are the only parties; in the other provinces, arbitrations with solely Canadian citizens/entities as parties are governed by a province’s domestic arbitration statute even when the parties are domiciled in different provinces. Because arbitrations that would be treated as “domestic” in the rest of Canada may be treated as “international” if seated in Quebec, a party may have a greater incentive to designate a Quebecois city as the seat if it wants international arbitration law to be applied to the case.

The provinces that are less involved in international commerce have not yet followed the leads of British Columbia, Ontario, and Quebec. Notwithstanding Alberta’s role in the world of energy production, Alberta’s 2000 Arbitration Act applies the 1985 Model Law and has not been updated to adopt the 2006 Model Law. Saskatchewan’s and Nova Scotia’s current arbitration laws also incorporate the 1985 Model Law and have not been amended. The provinces of Manitoba, New Brunswick, Newfoundland, Labrador, and Prince Edward Island, along with the territories of Yukon, Nunavut, and Northwest Territories, do not have a significant role in international arbitration, and they also have not sought to amend their arbitration laws.

The Canadian government’s efforts to develop the nation’s reputation as a center for international arbitration have resulted in statutory changes in the provinces most likely to appeal to international businesses. While it may take more time to assess the success of the government’s efforts, these legislative changes should enlarge Canada’s role as a place for international arbitration.

Melinda Jayson is the founder of Melinda G. Jayson, P.C., in Dallas, Texas.

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