In 2024, parties raised various novel and creative grounds (and also some more traditional grounds) to seek annulment or resist the homologation of arbitral awards in Québec.
Parties notably sought to challenge arbitral awards based on:
- An argument that an arbitral award had purely declaratory conclusions Société des établissements de plein-air du Québec c. Station Mont-Ste-Anne inc., 2024 QCCS 2, covered in Québec – Arbitral award with declaratory relief no bar to homologation – #819 (“SEPAQ c. Ste-Anne”);
- An argument that an international arbitral award should not be homologated because it ran counter to foreign court decisions Eurobank Ergasias S.A. v. Bombardier inc., 2024 SCC 11, covered in Québec – Attempt to circumvent ICC Tribunal order amounts to fraud (in Canada) – #834
- An argument that an arbitral award offended public policy by violating a municipal by-law (Bélanger c. Beauchamp, 2024 QCCS 3118, covered in Québec – Award that violates municipal by-law does not offend public policy – #871)
- A (more traditional) argument that an arbitrator ruled on a claim beyond his jurisdiction Gaston Gagné inc. c. Gagné, 2023 QCCS 4552, covered in Quebec – No abuse of process where parallel arbitration and court proceedings – #815
These were all rejected by the Québec courts. In Québec, the grounds to annul an arbitral award or to resist homologation are set out in articles 646 and 648 of the Code of civil procedure (“C.P.C.”), which mirror the grounds in the UNCITRAL Model Law. Article 646 C.P.C. provides:
“the court cannot refuse to homologate an arbitration award or a provisional or safeguard measure unless it is proved that:
(1) one of the parties did not have the capacity to enter into the arbitration agreement;
(2) the arbitration agreement is invalid under the law chosen by the parties or, failing any indication in that regard, under Québec law;
(3) the procedure for the appointment of an arbitrator or the applicable arbitration procedure was not observed;
(4) the party against which the award or measure is invoked was not given proper notice of the appointment of an arbitrator or of the arbitration proceedings, or it was for another reason impossible for that party to present its case; or
(5) the award pertains to a dispute not referred to in or covered by the arbitration agreement, or contains a conclusion on matters beyond the scope of the agreement, in which case only the irregular provision is not homologated if it can be dissociated from the rest.
The court cannot refuse to homologate the arbitration award on its own initiative unless it notes that the subject matter of the dispute is not one that may be settled by arbitration in Québec or that the award or measure is contrary to public order.”
In the four above cases, the Courts assessed the challenges to the arbitral awards based on the grounds of art. 646 C.P.C. and prior case law, recalling various basic principles, such as:
- The party opposing an application for homologation has the burden to establish that one of the grounds of art. 646 C.P. C. is met (Gaston Gagné, para. 42);
- The list of grounds at art. 646 C.P.C. is exhaustive (SEPAQ c. Ste-Anne, para. 4);
- Applications for homologation are aimed at the dispositive part of the award, not its reasons (Gaston Gagné, para. 43);
- The Court hearing an application for homologation cannot review the merits of the dispute (Gaston Gagné, para. 43);
- The arbitration agreement must receive a large and liberal interpretation (Gaston Gagné, para. 44).
Contributor’s Notes
Beyond the basics, 2024 saw four new and significant developments in relation to the challenge of arbitral awards in Québec.
First, the most significant development is the Supreme Court of Canada decision of Eurobank to confirm the homologation of an ICC award by the Québec courts despite an argument that the arbitral award ran contrary to foreign court decisions. The Supreme Court’s conclusion that, despite the principle of comity, the foreign court’s decisions should be disregarded because they held that a party can disregard an order of an arbitral award, demonstrates that Canadian courts will uphold and support the integrity of the international commercial arbitration system when necessary.
Second, the conclusion that homologation will not be refused on public policy grounds merely because the arbitral award misapplied a law (here, a municipal by-law). To successfully resist an application for homologation on public policy grounds a party must show that the arbitral award breaches “the fundamental values of the Québec legal order” (Bélanger c. Beauchamp, paras. 19 and 34).
Third, the confirmation that purely declaratory arbitral awards may be homologated. The fact that an award is declaratory is not a ground listed at art. 646 C.P.C, and thus not a ground to resist homologation or seek annulment (SEPAQ c. Ste-Anne). This was a departure from older Québec case law holding that homologation was only possible when the award could be enforced, and was thus not possible for purely declaratory awards.
Fourth, the first consideration by Québec courts of art. 648(3) C.P.C., which provides for the possibility to stay an application for annulment of an award to give the arbitrator the opportunity to correct it: ADRAQ (CSD) Laurentides c. Hamelin, 2024 QCCS 2324, covered in Québec – First consideration of test for stay application for annulment application – #860. The Court ruled that it had broad discretion in deciding a motion for a stay under section 648(3) and developed the list of factors to be considered on such motions:
- When the stay is sought within the annulment proceedings;
- The effort and resources invested by the parties in the arbitration;
- The nature of the grounds alleged against the arbitration award; and
- Whether the impartiality of the arbitrator is challenged.
The Québec decisions on challenges to arbitral awards in 2024 confirm the pro-arbitration stance of Québec courts and the difficulty in challenging arbitral awards based on novel arguments that depart from the exhaustive grounds provided for at art. 646 C.P.C The Supreme Court’s Eurobank decision in particular demonstrates that Québec and Canadian courts will uphold and support the integrity of the international commercial arbitration system when necessary.