The Ontario international arbitration regime has received a major upgrade. On March 22, 2017, Bill 27, Burden Reduction Act, 2017, received Royal Assent.[1] Schedule 5 of the Bill addressed amendments to the Ontario International Commercial Arbitration Act (the “Old Act”), repealing the 1990 law and substituting it with the International Commercial Arbitration Act, 2017 (the “2017 Act”).[2] The amendments were enacted with immediate enforcement,[3] as “part of a government initiative to reduce the regulatory burden on business and to achieve a cost savings for government.”[4] What “relief” has the 2017 Act provided to the participants of the provincial international arbitration regime? The amendments are numerous and important, ranging from the alignment of limitation periods among various legislation to the direct application of international arbitration law in the province. The purpose of the 2017 Act is also to clarify the rules of engagement for courts in international commercial arbitration.
The highlights of the 2017 Act, which applies to all international commercial arbitrations with their place of arbitration in Ontario, include the following:
- Availability for parties to opt in to the international arbitration regime in Ontario by expressly agreeing that the subject matter of the arbitration agreement relates to more than one country;
- Certainty around the availability and scope of interim measures and how they can be enforced;
- Updated form of arbitration agreements, which still need to be in writing, but the definition of writing has been modernized to include current forms of communication;
- Alignment of limitation periods for enforcement of awards with those for domestic arbitration awards;
- The act also fixes a bug in the Old Act by expressly including the New York Convention as part of the international arbitration regime in Ontario.
The changes bring clarity and a modernized regime for Ontario as an international arbitration forum. The 2017 Act is a further step in a continuum of Canadian provinces’ efforts to make Canada a better “safe haven”[5] for international commercial arbitration.
New UNCITRAL Arbitration regime implemented: Arbitration Agreement and Interim Measures
Schedule 5 repealed the 1990 Ontario International Commercial Arbitration Act [6] in its entirety, including its Schedule on the 1985 UNCITRAL Model Law on International Commercial Arbitration.[7] The 2017 Act incorporates all of the developments brought about by the amendment of the 1985 Model Law on July 7, 2006.[8]
The 2006 Model Law was designed to reflect developments in international contract practices with respect to arbitration agreements. Preserving arbitration agreements’ traditional form in writing, the Model Law added a new provision that regards an arbitration agreement in writing “if its content is recorded in any form, whether or not the arbitration agreement or contract has been concluded orally, by conduct, or by other means.”[9] The written requirement is met, for example, if the agreement is concluded via email[10] or “is contained in an exchange of statements of claim and defence in which the existence of an agreement is alleged by one party and not denied by the other.” [11]
The 2006 Model Law also established a comprehensive interim measures regime applicable to international commercial arbitration. Arbitral tribunals have been granted the authority similar to courts to award interim measures, provided that monetary damages would not be an adequate remedy in the circumstances, that on balance, greater harm to the party requesting relief would result if the measure were not ordered, and that the requesting party’s position had merits and a reasonable prospect of success.[12] This test is in line with the Supreme Court of Canada law on interim measures.[13]
The Model Law on International Commercial Arbitration as amended on July 7, 2006, is appended to the 2017 Act as its Schedule 2, and is specifically provided to be the law of Ontario applicable “to international commercial arbitration agreements and awards made in international commercial arbitrations, whether made before or after the coming into force of this Act.”[14]
Limitation Periods clarified and aligned
Another important development is the alignment in the 2017 Act of the limitation periods legislated with respect to the enforcement of domestic arbitration awards (governed by the Ontario Arbitration Act, 1991), the periods prescribed in the Limitations Act, 2002, and these set for the enforcement of international arbitral awards in the 2017 Act. The 2017 Act provides that limitation periods applicable to the enforcement of awards made under the Arbitration Act, 1991 (which the 2017 Act amends) and awards made under the 2017 Act apply instead of the limitation periods provided in the Limitations Act, 2002.
The 2017 Act grants 10 years to a party to enforce a domestic or international arbitral award. The 10-year period starts from the date when the award was released or if there was a proceeding challenging the award, the date on which the proceeding concluded.[15] This is significant not only for international awards, but also for domestic, which were subject to a two-year cut-off enforcement regime under the Arbitration Act, 1991.[16]
International Rules on Enforcement directly applicable in Ontario
A further fundamental development has been made in the 2017 Act. The Act provides for direct application in the province of the most authoritative source of international commercial arbitration law applicable to the recognition and enforcement of international arbitral awards — the Convention on the Recognition and Enforcement of Foreign Arbitral Awards adopted by UNCITRAL in New York on 10 June 1958 (known as “the New York Convention”).
The Convention is appended to the 2017 Act as Schedule 1, and is legislated to have “force of law in Ontario in relation to arbitral awards or arbitration agreements in respect of differences arising out of commercial legal relationships.”[17] It applies “to arbitral awards and arbitration agreements whether made before or after the coming into force of this Act.”[18]
The Superior Court of Justice, the designated court under the 2017 Act, has the authority to apply the Convention directly as part of Ontario law “for the purpose of seeking recognition and enforcement of an arbitral award pursuant to the Convention.” This may be seen as a new development in the common law approach, where traditionally international law has not had direct application.
This integration of the international law standards is welcomed, and has been much awaited by the arbitration bar, for it brings greater certainty and clarity to Ontario’s enforcement regime of international arbitral awards.
Conclusion
The 2017 Act brings important updates to the Ontario arbitration regime. All Canadian provinces have been reviewing their international arbitration legislation and adopting (or not) the proposed model approved by the Uniform Law Conference of Canada. The goal has been to update the provisions in line with the 2006 amendments to the UNCITRAL Model Law, as provincial legislation is based on the old 1985 Model Law version. With the enactment of a renewed international arbitration law, Ontario places itself at the forefront of improving its arbitration regime. Parties who designate Toronto or other places of arbitration within Ontario in their agreements can be assured that their arbitrations will be governed by legislation that meets international best practice. International arbitration participants are reminded to adopt appropriate arbitration rules in addition to designating a supportive jurisdiction, such as Ontario, as their place of arbitration in their arbitration agreements in order to take full advantage of the benefits offered by international arbitration.
[1] An Act to reduce the regulatory burden on business, to enact various new Acts and to make other amendments and repeals (“Burden Reduction Act, 2017”), SO 2017, c 2.
[2] Burden Reduction Act, 2017, SO 2017, c 2, Sched 5 [“International Commercial Arbitration Act, 2017”], s 17.
[3] International Commercial Arbitration Act, 2017, s 16: “The Act set out in this Schedule [Schedule 5 of Burden Reduction Act, 2017, SO 2017, c 2] comes into force on the day the Burden Reduction Act, 2017 receives Royal Assent [i.e. on March 22, 2017].”
[4] Explanatory Note to Bill 27, Burden Reduction Act, 2017, Legislative Assembly of Ontario, 2nd Session, 41st Legislature, Ontario, 66 Elizabeth II, 2017, pg i, online at <www.ontla.on.ca/bills/bills-files/41_Parliament/Session2/b027ra_e.pdf>.
[5] Claude R. Thomson, QC, FCI Arb, and Annie M.K. Finn, “International Commercial Arbitration: A Canadian Perspective”, (2002) 18:2 Arbitration International 205 at 205; online at <www.fasken.com/files/Publication/ffbb09b8-3486-4ef9-a0df-814fabd2f9da/Presentation/PublicationAttachment/1cfd2145-1af0-4b90-897a-f3290c7cf99a/International_Commercial_Arbitration_Finn.pdf >.
[6] International Commercial Arbitration Act, RSO 1990, c I 9.
[7] International Commercial Arbitration Act, 2017, s 15.
[8] UNCITRAL, UNCITRAL Model Law on International Commercial Arbitration 1985, with amendments as adopted in 2006 (United Nations, Vienna, 2008); online at <www.uncitral.org/pdf/english/texts/arbitration/ml-arb/07-86998_Ebook.pdf>.
[9] UNCITRAL Model Law on International Commercial Arbitration, as amended on July 7, 2006, Article 7(3) - Schedule 2 to International Commercial Arbitration Act, 2017.
[10] UNCITRAL Model Law on International Commercial Arbitration, as amended on July 7, 2006, Article 7(4) - Schedule 2 to International Commercial Arbitration Act, 2017.
[11] UNCITRAL Model Law on International Commercial Arbitration, as amended on July 7, 2006, Article 7(5) - Schedule 2 to International Commercial Arbitration Act, 2017.
[12] UNCITRAL Model Law on International Commercial Arbitration, as amended on July 7, 2006, Article 17A(1) - Schedule 2 to International Commercial Arbitration Act, 2017.
[13] RJR Macdonald Inc v Canada (Attorney General), [1994] 1 SCR 311.
[14] International Commercial Arbitration Act, 2017, ss 5(1), 5(3) [emphasis added].
[15] International Commercial Arbitration Act, 2017, ss 10, 13.
[16] Section 52(3) of the Arbitration Act, 1991, SO 1991, c 17, which the International Commercial Arbitration Act, 2017 repealed, allowed an applicant to commence an application for enforcement of an award made under the Arbitration Act, 1991 within a two-year period from the day on which the applicant received the award. In turn, the new law -- s 14(1) of the International Commercial Arbitration Act, 2017 -- also repealed a provision in the Limitations Act, 2002, SO 2002, c 24, Sched B, s 16(1)(d), that provided that no limitation period was applicable to a proceeding to enforce an award in an arbitration to which the Arbitration Act, 1991 applied.
[17] International Commercial Arbitration Act, 2017, s 2(1).
[18] International Commercial Arbitration Act, 2017, s 2(2) [emphasis added].
