December 31, 2024
The Ontario Court of Appeal has confirmed that the scope for refusal to recognize an international arbitration is narrow.
In Xiamen International Trade Group Co., Ltd. v. Link Global Food Inc., the Superior Court judge who first heard the request to recognize the award in Ontario denied a request by the Respondent for an adjournment to allow evidence in China that the award failed to conform to principles of natural justice.
As noted by the Superior Court Judge:
[24] In Ontario, foreign arbitral awards are enforceable through the International Commercial Arbitration Act, 2017, S.O. 2017, c. 2, Sched. 5 (“ICAA”). The ICAA provides that the Model Law has force of law in Ontario. The Model Law is set out in Schedule 2 to the ICAA. The Model Law applies to international commercial arbitration and is applicable in this case given that the parties have their places of business in different countries: see Articles 1(1) and 1(3)(a) of the Model Law.
[25] The Model Law restricts the ability of national courts to interfere with international arbitration proceedings. Articles 35 and 36 of the Model Law relate to the recognition and enforcement of arbitral awards. Article 36 limits the grounds on which enforcement of an international arbitral award may be refused.
The SCJ relied upon an earlier judgment of a judge at the same level regarding the grounds to grant an adjournment:
[34] In Ariston Realty Corp. v. Elcarim Inc., 2007 CanLII 13360 at para. 34 (Ont. S.C.J.), Justice Perell listed the following relevant factors that a judge may consider when exercising the discretion to grant or refuse an adjournment:
- the overall objective of a determination of the matter on its substantive merits;
- the principles of natural justice;
- that justice not only be done but appear to be done;
- the particular circumstances of the request for an adjournment and the reasons and justification for the request;
- the practical effect or consequences of an adjournment on both substantive and procedural justice;
- the competing interests of the parties in advancing or delaying the progress of the litigation;
- the prejudice not compensable in costs, if any, suffered by a party by the granting or the refusing of the adjournment;
- whether the ability of the party requesting the adjournment to fully and adequately prosecute or defend the proceeding would be significantly compromised if the adjournment were refused;
- the need of the administration of justice to orderly process civil proceedings; and
- the need of the administration of justice to effectively enforce court orders.
On the appeal, the Court of Appeal approved of the application of these factors in considering a request for adjournment. This is significant because their approval gives the Ariston factors the same force as if it had been decided by the Court of Appeal. It therefore provides guidance to all parties at the SCJ level, where cases, including recognition of arbitration awards, begin. It is not limited to applications to recognize arbitration awards.
It does emphasize that if you are drawn into an international arbitration, pursuing justice at the arbitration is crucial. It is foolish to ignore the international proceeding and hope for a better hearing from your “home court”. Ontario courts will defer not only to Ontario arbitration awards, but also to foreign awards.
TAKEAWAYS
- Ontario courts will enforce foreign arbitration awards.
- It is dangerous to rely upon a request for adjournment.
- Obtaining an adjournment may require a lawyer’s advocacy skills.
WHAT WEILERS LLP CAN DO FOR YOU
If you want Ontario to determine your arbitration, provide for that in your contract if possible.
If you do sign a contract requiring arbitration in a foreign jurisdiction, Weilers lawyers can work with foreign counsel to target a fair hearing abroad.
If you do not get a fair hearing, we can ensure that the Ontario court considers your objections fairly.
In all cases, we are aware of the requirements of an adjournment, and apply that knowledge to the benefit of our clients.
If you need a lawyer with these skills, give us a call. We may be the right lawyers for you.