Divided No Longer: Admissibility Of New Evidence On Appeals From UNCITRAL Arbitrations Determined According To Domestic Law

Justice Penny's ruling in The Russia Federation v Luxtona Limited, 2019 ONSC 7558 provides guidance on two elements of international arbitration practice.

First, parties challenging an arbitral tribunal's award on jurisdiction under Articles 16 and 34 of the UNCITRAL Model Law on International Commercial Arbitration (the "Model Law") cannot, as of right, file new evidence for the review. Rather, parties require leave to do so by providing a reasonable explanation for why new evidence is necessary, including why that evidence was not, or could not have been, put before the tribunal in the first place (the "R v Palmer Test").1

Second, when drafting arbitration clauses, parties should consider whether they would prefer that the seat of any future arbitration be subject to the Model Law or another regime, such as the United Kingdom's Arbitration Act.

Facts & Background

Please see our previous post for a detailed account of the events leading up to Justice Penny's decision.

Briefly, the Federation of Russia ("Russia") filed an application with the Superior Court of Ontario ("ONSC") challenging an arbitral tribunal ("Tribunal") finding that it had jurisdiction to hear a dispute between Russia and Luxtona Limited ("Luxtona"). Russia's view was that, at the hearing of the application, it could as of right file new evidence that was not before the Tribunal. Luxtona disagreed and submitted that Russia could only file new evidence if it satisfied the R v Palmer Test.

Applicable Law

The Model Law Provisions

Article 16 of the Model Law has two important features. First, it contains the competence-competence principle, which grants the Tribunal the power to rule on its jurisdiction, including any objections with respect to the existence or validity of the arbitration agreement.2 Second, where the Tribunal so rules, any party may request the court of the "seat" to decide the matter and the decision of the court is not subject to appeal.3

Article 34 of the Model Law simply provides that recourse to the court must be brought by way of application to set aside the award and provides the grounds on which the award may be challenged.4

Judicial Precedent

On challenges to jurisdiction brought under Article 34 of the Model Law, Ontario courts apply a correctness standard of review: the Tribunal must be correct in its determination that it had the ability to make the decision it made.5 The pertinent considerations for this approach are as follows:

in hearing an application to set aside an arbitral...