International Commercial Arbitration Award Enforced Despite Lack Of Reasons

The requirement to give reasons is generally considered an inherent and fundamental component of the arbitrator's role. However, the Ontario Superior Court of Justice recently enforced an international commercial arbitral award despite the fact that the award did not include written reasons. In doing so, the decision upholds the freedom of parties to tailor arbitral proceedings, including the form of award, to suit their circumstances.

In Activ Financial Systems, Inc. v Orbixa Management Services, Inc., 2011 ONSC 7286, the two companies were parties to a software licence agreement. Activ claimed payment for licence fees during a period in which Orbixa alleged the agreement had been terminated. The software licence agreement provided for disputes to be settled pursuant to the commercial arbitration rules of the American Arbitration Association. These rules do not require a written award unless requested by the parties or determined by the arbitrator to be appropriate. In this case, the parties had expressly agreed that, as a...