In Metso Minerals Canada Inc. v. Arcelormittal exploitation minière Canada, 2020 QCCS 1103, Madam Justice Marie-Anne Paquette issued an order recognizing an international commercial arbitration award despite prior compliance with the payment obligations in the award. She underlined that recognition and enforcement were distinct aspects: although an award will not be enforced if it is not recognized, it can be recognized without being enforced. She further noted that the award once recognized could serve other purposes between the same parties, including their other ongoing arbitrations regarding the same grinding mill.
Metso Minerals Canada Inc. and Metso Minerals Industries Inc. (“Metso”) and ArcelorMittal Exploitation Minière Canada and ArcelorMittal Canada Inc. (“ArcelorMittal”) undertook arbitration seated in New York and conducted in accordance with the International Chamber of Commerce’s Arbitration Rules. The arbitration resulted in an award (“Award”) in which the majority of the arbitral tribunal issued the following dispositive:
“ON THE BASIS OF THE ABOVE THE ARBITRAL TRIBUNAL DECIDES BY MAJORITY AS FOLLOWS:
1. [ArcelorMittal]’s claim as to the payment by [Metso] of sums resulting from the AG Mill’s defects dismissed;
2. [ArcelorMittal] must bear 80% and [Metso] 20 % of the Fees and Expenses of the Arbitrators and of the ICC’s Administrative Expenses fixed by the ICC International Court of Arbitration at USD 863,000.00. [ArcelorMittal are consequently ordered to pay [Metso] USD 258,900;
3. [ArcelorMittal] must bear 80% of the reasonable Legal Costs incurred by [Metso] as determined by the Arbitral Tribunal, plus the full amount relating to the Vibrating Feeders Claim I.e. USD 4,503,797.32 and are consequently ordered to pay that amount to [Metso];
4. All other requests and claims from the Parties [(Metso and ArcelorMittal)] are dismissed”.
Despite objections by ArcelorMittal, the court in New York, having jurisdiction to do so, confirmed the Award. ArcelorMittal complied with the payment obligations stated at paras 2 and 3 of the Award and obtained at Declaration of Satisfaction of Judgment which was filed in the court in New York.
Metso applied in Québec to the Superior Court to have the Award recognized and enforced as a judgment of the Québec Superior Court under article 652 of Québec’s Code of Civil Procedure, CQLR c C-25.01 (“C.C.P.”) contained in Chapter IX “Recognition and Enforcement of Arbitration Awards Made Outside of Québec”:
“Article 652 C.C.P. An arbitration award made outside Québec, whether or not confirmed by a competent authority, may be recognized and declared to have the same force and effect as a judgment of the court if the subject matter of the dispute is one which could be submitted to arbitration in Québec and if recognition and enforcement of the award are not contrary to public order. The same applies for a provisional or safeguard measure.
The application for recognition and enforcement must be accompanied by the arbitration award or measure concerned and the arbitration agreement and by a translation certified in Québec of those documents if they are drawn up in a language other than French or English.
Consideration may be given, in interpreting the rules in this matter, to the Convention on the Recognition and Enforcement of Foreign Arbitral Awards adopted by the United Nations Conference on International Commercial Arbitration at New York on 10 June 1958”.
ArcelorMittal resisted, arguing that recognition and enforcement would serve no purpose as the Award has been fully executed. It argued that the court should exercise its discretion and refuse to issue an order “on a theoretical question”. Paquette J. stated that, following ArcelorMittal’s payments, Metso amended its application to seek only recognition of the Award and not enforcement.
ArcelorMittal did not dispute that Metso met its burden to establish that (i) the subject matter of the dispute was one which could be submitted to arbitration in Quebec and (ii) recognition and enforcement of the Award was not contrary to public order. ArcelorMittal further acknowledged that none of the exceptions to recognition and enforcement of international arbitral awards, reproduced at article 653(2) C.C.P. applied.
“Article 653 The court examining an application for recognition and enforcement of an arbitration award or a provisional or safeguard measure cannot review the merits of the dispute.
A party against which an award or a measure is invoked cannot oppose its recognition and enforcement unless the party proves 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 the law of the place where the award was made or the measure decided;
(3) the procedure for the appointment of an arbitrator or the arbitration procedure was not in accordance with the arbitration agreement or, failing such an agreement, with the law of the place where the arbitration proceedings were held;
(4) the party against which the award or the 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;
(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 recognized and declared enforceable if it can be dissociated from the rest; or
(6) the award or measure has not yet become binding on the parties or has been annulled or stayed by a competent authority of the place where or under whose law the arbitration award was made or the measure decided.
The court may also deny an application for recognition and enforcement of a provisional or safeguard measure if the arbitrator’s decision to require a suretyship was not complied with, if the measure was revoked or stayed by the arbitrator or if the measure is incompatible with the powers conferred on the court unless, in the latter case, the court decides to reformulate the provisional measure to adapt it to its own powers and procedures without modifying its substance”.
Paquette J. dismissed as ill-founded ArcelorMittal’s opposition to Metso’s application for recognition of the Award. She observed that recognition and enforcement are refused only in exceptional cases, underlining in particular that recognition and enforcement were distinct aspects of the proceeding, being “distinguishable and independent terms”.
“[19] The first aspect, the recognition of an award, refers to its authority or binding effect. Recognition makes the award binding and gives it the same legal weight and authority as any other judgment of the Court.
[20] The second aspect, the enforcement of an award, goes a step further. It ensures that the award is carried out, that it is executed”.
Paquette J. identified the effect of the distinction: “Although an award will not be enforced if it is not recognized, it can be recognized without being enforced”. She excerpted from Alan Redfern and Martin Hunter, “Redfern and Hunter on International Arbitration”, 6th edition, New York, Oxford University Press, 2015, paras11.19, 11.20, 11.21 and 11.23, which underlined the role recognition played as a condition precedent to enforcement and other practical uses to which a recognized award could be put in further disputes involving the same claims or issues.
In closing, Paquette J. noted that Mesto and ArcelorMittal did have further disputes relating to the same grinding mill and could be used in other arbitrations between the parties.
“[23] Metso and ArcelorMittal are currently parties to two pending cases before the Superior Court of Quebec relating to the performance of the same AG Mill at issue in the arbitration. Metso intends to invoke the Award in its defence in the context of these two other cases. The determination as to whether or not the Award actually settles a live controversy between the parties or has a practical effect on the claims of the parties in these two Quebec Superior Court case shall be made in the context of these two cases.
[24] Until these questions are addressed and decided, the Court cannot rule on the practical utility of the Award. However, this debate does not belong to the recognition of the Award under article 652 of the Code of Civil Procedure and shall be addressed in the proper context, in the two above-mentioned Superior Court cases. Hence, the doctrine of mootness does not preclude recognition of the Award”.
In her own dispositive, Paquette J. issued an order which recognized the Award and declared that it had the same force and effect of a judgment of the court.
“RECOGNIZES in the Province of Québec the Arbitral Award issued on March 20, 2019 by the International Court of Arbitration of the International Chamber of Commerce, in New York, New York, United States of America (ICC case n° 22034/RD), of which the conclusions read:
ON THE BASIS OF THE ABOVE THE ARBITRAL TRIBUNAL DECIDES BY MAJORITY AS FOLLOWS:
1. Claimant’s claim as to the payment by Respondents of sums resulting from the AG Mill’s defects dismissed;
2. Claimants must bear 80% and Respondents 20% of the Fees and Expenses of the Arbitrators and of the ICC’s Administrative Expenses fixed by the ICC International Court of Arbitration at USD 863,000.00. Claimants are consequently ordered to pay Respondents USD 258,900;
3. Claimants must bear 80% of the reasonable Legal Costs incurred by Respondents as determined by the Arbitral Tribunal, plus the full amount relating to the Vibrating Feeders Claim I.e. USD 4,503,797.32 and are consequently ordered to pay that amount to Respondents;
4. All other requests and claims from the Parties are dismissed.
DECLARES the Arbitral Award dated March 20, 2019 (ICC case n° 22034/RD) to have the same force and effect as a judgment of the Superior Court of Québec”[.]
urbitral note – First, for related issues involving arbitration and either of the parties, see the Arbitration Matters notes:
“Québec court outlines and upholds confidentiality of what is “said, written or done during” arbitration” – In SNC-Lavalin Inc. v. ArcelorMittal Exploitation minière Canada, 2018 QCCS 3024, the court maintained the confidentiality of materials prepared for use in an arbitration limited to two parties and prevented communication of those materials to other parties involved in litigation involving related, overlapping disputes. By maintaining the arbitral parties’ objections based on the confidentiality of arbitration as established by legislation and the arbitral parties’ agreement, the court held that third parties seeking access to those materials must demonstrate necessity and not merely relevance and convenience of obtaining access. The legislated protection applied only to what is “said, written or done during” arbitration and did not shield access to relevant, admissible documents which existed independent of the arbitration; and,
“Québec court offers reminder that arbitration agreements only bind parties” – The Quebec Court of Appeal in Metso Minerals Canada Inc. v. BBA inc. 2017 QCCA 1544 firmly resolved irreconcilable procedural demands created when only some of the parties to a dispute had agreed to submit to arbitration. Weighing the competing inconveniences to the parties, the Appeal Court upheld a Quebec Superior Court decision and subordinated one party’s access to arbitration to another party’s reliance on court rules.
Second, see Paquette J.’s decision in 79411 USA Inc. v. Mondofix Inc., 2020 QCCS 1104, and the Arbitation Matters note “Québec – judicial protection of parties’ confidentiality promotes public interest in arbitration”.
In homologating an award issuing from a consensual, administered arbitration, Paquette J. ordered that the award be kept confidential because (i) doing so encourages the use of arbitration as a dispute resolution mechanism and (ii) the public interest favors confidentiality orders to promote arbitrations and protect the expectations of the parties to the arbitration. Paquette J. also held that the burden rests on the party seeking the disclosure of otherwise confidential information to demonstrate that the good effects of disclosure outweigh the bad effects of infringing on the confidentiality expectations of parties to an arbitration. Her approach emphasizes the public interest in arbitration and does not rely merely on the private interests peculiar to the parties.