Québec – No clean hands, no security despite stay of homologation application – #677

In Specter Aviation v United Mining Supply, 2022 QCCS 3643, Justice Castonguay granted a stay of an application by the successful party in a foreign arbitration to homologate the award, but denied the applicants’ alternative request for security, pending the unsuccessful party’s annulment application to the Paris Court of Appeal. Despite recognizing that a court should be reluctant to interfere with a successful party’s enforcement efforts, Justice Castonguay found that the annulment application was, “neither futile nor frivolous” and that the successful party did not have clean hands and had resorted to a self-help remedy. He also ordered costs against the successful party.

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Ontario – Court of Appeal upholds “single proceeding” insolvency model over recourse to arbitration – #660

In Mundo Media Ltd. (Re), 2022 ONCA 607, Court of Appeal for Ontario Justice Julie Thorburn dismissed a motion for leave to appeal a decision denying a motion to stay a receiver’s court proceeding. The Appellant/Moving Party sought the stay on the basis of an international arbitration agreement. Justice Thorburn found no reversible error in the motion judge’s choice to apply the “single proceeding model”, applicable in insolvency proceedings, with the effect that the Appellant/Moving Party, one of the insolvent company’s debtors, could not require the receiver to arbitrate its claim rather than litigate it. Together with the Superior Court’s decision below, this decision provides important guidance on the interplay between arbitration agreements and claims advanced in the bankruptcy and insolvency context.

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England – Court clarifies requirements for validly appointing arbitrators – #646

As our readers know, Canadian courts have been generating a wealth of jurisprudence on many international arbitration-related issues of late. However, there are still some lacunae in Canadian jurisprudence, which courts will often fill by referring to jurisprudence from other leading arbitral jurisdictions, including England and UNCITRAL Model Law on International Commercial Arbitration jurisdictions such as Australia, New Zealand and Singapore. Article 2A(1) of the Model Law explicitly provides for this: “In the interpretation of this Law, regard is to be had to its international origin and to the need to promote uniformity in its application and the observance of good faith.” Because of this, Arbitration Matters will occasionally report on interesting cases from other jurisdictions which could be applied in Canada if the issue were to present itself here. One such case made our radar this week, because it deals with an issue that is seldom fought about in Canada: whether an arbitrator was validly appointed. In ARI v. WXJ, [2022] EWHC 1543 (Comm), Justice Foxton of the English Commercial Court rejected the Claimant’s argument that the Respondent’s appointee was invalidly appointed, and that the arbitrator appointed by the Claimant should therefore decide the dispute as sole arbitrator.

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Québec – 10-year limitation for foreign award recognition and enforcement– #644

In Itani v. Société Générale de Banque au Liban SAL, 2022 QCCA 920, the Québec Court of Appeal (Schrager, Moore, and Kalichman JJA) considered the limitation period for recognition and enforcement of an arbitral award rendered outside Québec. The Court applied the Supreme Court of Canada’s decision in Yugraneft Corp. v. Rexx Management Corp., 2010 SCC 19, confirming that recognition and enforcement of a foreign arbitral award is governed by the rules of procedure applicable in the territory in which the application is made―so it differs from province to province. The Court of Appeal considered the applicable provisions of the Québec Civil Code and ruled that the application to recognize and enforce the arbitral award was subject to a 10-year limitation period, upholding the decision of Justice Poulin at first instance.

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Québec – Court prevents “improper attempt to circumvent” final ICC award – #634

In Eurobank Ergasias v. Bombardier inc., 2022 QCCA 802, a majority of the Québec Court of Appeal (Mainville and Baudouin, JJ.A.): (1) confirmed the homologation of an ICC Arbitral Tribunal Final Award (“Final Award”); (2) confirmed the trial judge’s decision that a Québec bank did not have to pay under a Letter of Counter-Guarantee that was called upon, the purpose of which was the evasion of the binding ICC arbitration process; and (3) overturned the trial judge’s decision to direct the Hellenic Ministry of National Defence (“HMOD”), a branch of the Greek government,  to comply with the Final Award because HMOD was not an entity domiciled in Québec and homologation is for the purpose of rendering the Final Award legally binding in Québec, not in Greece.

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Québec – Court extends arbitrator’s immunity to appointing authority – #619

In B Smart Technology inc. v. American Arbitration Association, 2022 QCCS 1526, Justice Mark Phillips granted the Defendants’ Application for dismissal of the Plaintiff’s Request for Provisional Interlocutory Injunction and Order to Safeguard the Rights of Plaintiff. The Defendants were the American Arbitration Association (“AAA”) and the arbitrator it had appointed. In its Request, Plaintiff sought orders: (1) to recuse and replace the arbitrator; (2) to review the arbitration proceedings, including the costs of the proceedings, the reimbursement for arbitrator’s fees paid to date; and (3) alternatively, the annulment of the arbitration clause and referral of the dispute to the Superior Court. Justice Phillips’s judgment was mainly based on the application of two well-known principles in arbitration law: arbitrator protection against prosecution/immunity (sec. 621 CCP); and the exclusion of court review except as provided by law (sec. 622 CCP). Justice Phillips reaffirmed that the arbitrator’s protection against prosecution is broad and applies both to the arbitrator’s liability and to any challenges against the conduct of the arbitration process itself. He found that the institute offering arbitration services is covered by the protection as well. Justice Phillips also confirmed the exclusion of court review principle, which prevents courts from interfering in an arbitration process other than within the strict and limited occasions provided by law. In this case, the law did not provide for court intervention. Finally, the issue was moot because the arbitrator terminated the arbitration for the Plaintiffs’ failure to pay his costs, as he was entitled to do under the AAA Rules.

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