Overview
Arbitration is increasingly becoming the preferred form of dispute resolution for cross-border and international disputes. The process offers valuable benefits, including greater flexibility, enhanced finality, the ability to select decision makers with subject matter expertise, privacy and confidentiality, process and cost efficiencies, and a more readily enforceable decision.
The value proposition of arbitration has become even more pronounced in the current cross-border and global climate, which is now fraught with more risks, conflicts, and uncertainty than it has been in recent history. These risks and uncertainties may lead more parties to opt for the arbitration of existing or potential commercial disputes, rather than litigating in the domestic courts of another country (including the United States).
Deciding to submit a dispute to arbitration is an important decision, but it is only the first step. Once parties decide to arbitrate, a number of other strategic decisions and procedural choices need to be made in order to fully realize the benefits of arbitration. One of the key strategic decisions that needs to be made relates to selecting the seat (or the legal place) of arbitration.
There are more reasons than ever for business executives and legal counsel to choose a Canadian seat for the arbitration of disputes. This bulletin explains the significance of seat selection and outlines the case for choosing a Canadian seat.
Significance of Seat Selection
Selecting an appropriate seat is significant because it determines the law that will govern the arbitration procedure. Among other things, the choice of seat may determine or impact:
- What subject matter can be arbitrated;
- The jurisdiction of the court(s) that will have a supervisory role over the arbitration and the scope of the role of the courts;
- Factors impacting recognition and enforcement of arbitration agreements;
- Circumstances in which an arbitral award may or may not be recognized, enforced or set aside;
- Who has the power to grant interim measures and how that power is regulated; and
- The manner in which an arbitration is conducted.
The arbitral tribunal will typically use the law of the seat to determine any procedural issues that have not been specified in the arbitration agreement or cannot otherwise be agreed on between the parties. Diligence is therefore required when choosing the seat, and choosing the wrong place can result in undesirable procedural and practical consequences.
Seat Selection Does Not Impact Choice of Law and Hearing Venue
It is important to underscore that choosing a particular seat of arbitration does not mean that the parties are restricted to stipulating the same jurisdiction as the governing law of their contract, nor does it mean that any in-person hearing for the determination of the dispute has to proceed in the same jurisdiction as the seat of arbitration. Rather, parties are free to choose the same or a different jurisdiction as the governing law for the contract, as the seat of arbitration, and as the venue for arbitration hearings.
Case for Choosing a Canadian Seat
Some important factors that must be considered in making this significant decision include the neutrality of the jurisdiction; the applicable arbitration law and legislation; the extent to which courts in that jurisdiction would interfere or assist with the arbitration process; whether the jurisdiction is a party to the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the "Convention"); whether there are any peculiarities in the local laws of the jurisdiction (for example, restrictions on who may act as arbitrators and counsel in the arbitration); whether the jurisdiction offers any sector-specific advantages or disadvantages; and practical considerations (such as proximity of witnesses, counsel or arbitrators; travel requirements or limitations; availability and cost of arbitration facilities and support services; climate; and time zones).
Canada offers several advantages from this perspective, making it a top choice for arbitrating cross-border or international disputes. Leading Canadian seats include Toronto, Vancouver, Calgary, and Montréal. Some of the reasons that business executives, in-house counsel, and external advisors should consider choosing a Canadian seat for a party’s next arbitration include the following:
- Canada is a bilingual country with a rich legal tradition in both common law and civil law.
- It is an arbitration-friendly jurisdiction and has adopted a modern statutory framework for arbitration as well as international best practices.
- Canada has an excellent reputation for fairness and neutrality.
- Canada continues to be a safe and stable country to travel to, and it cherishes diversity.
- Canada offers recognized expertise in a broad range of industries, including mining, technology, energy, natural resources, manufacturing, banking, and financial services.
- Canada was the first country to adopt modern arbitral legislation based on the United Nations Commission on International Trade Law (UNCITRAL) Model Law on International Commercial Arbitration.
- Canada is a party to the Convention.
- Leading international arbitral institutes support arbitrations being conducted in Canada.
- Procedural rules of any major international arbitral institute (for example, the International Chamber of Commerce (ICC), the International Centre for Dispute Resolution (ICDR), and the London Court of International Arbitration (LCIA)) can be used in an arbitration seated in Canada.
- Canadian courts are supportive of arbitration, respectful of party autonomy, and readily recognize and enforce arbitration agreements and foreign arbitral awards.
- Canadian judiciary has expertise in dealing with complex commercial disputes and has made a notable contribution to the development of international arbitration law.
- Canadian arbitration practitioners include highly skilled and experienced lawyers who are well-versed in the arbitration process and also offer industry-specific expertise.
- Canadian arbitrators have been recognized globally.
- Canadian seats offer world-class infrastructure, modern arbitration facilities with state-of-the-art technology, and convenient and reliable access to ancillary services.
- Arbitrations held in Canada are typically more cost-effective compared to the more traditional arbitration centres.
- Canadian cities mentioned above are relatively easy to access from different parts of the world.
Conclusion
In the current uncertain economic environment, we expect to see a rise in disputes between commercial parties based in different jurisdictions. Parties should turn their minds to the effective and efficient resolution of their disputes before they arise, including by crafting appropriate arbitration agreements that are tailored to their particular needs and circumstances.
As they do so, parties would be wise to consider Canadian jurisdictions like Toronto, Vancouver, Calgary, and Montréal as the legal seat. A Canadian seat offers parties and their counsel modern arbitration legislation that restricts court intervention, sophisticated legal talent and arbitration experts (including the judiciary, arbitrators, counsel, and experts), cost-saving benefits, and a cosmopolitan, safe, stable, and neutral jurisdiction with world-class facilities. The case for arbitrating in Canada is stronger than ever.
