Enforcing International Arbitration Awards In Québec: Supreme Court Of Canada Dismisses The Appeal In Instrubel

• Published date: 25 May 2020
• Author: The International Arbitration Blog, Trudy Goldenberg, Sandra (Aigbinode) Lange, Dominique Paiement, Chris Puskas and Timothy St.J. Ellam
• Law Firm: McCarthy Tétrault LLP
• Subject Matter: Litigation, Mediation & Arbitration, Arbitration & Dispute Resolution, Trials & Appeals & Compensation

By dismissing the appeal in International Air Transport Association v. Instrubel, N.V., 2019 SCC 61, the Supreme Court of Canada has helped to ensure that Canada remains an arbitration-friendly jurisdiction, including with respect to the enforcement of international arbitral awards. The Court did not address the arbitration issues in the case directly, but it upheld the judgment of the Court of Appeal of Québec, which will allow a Dutch company to take steps to enforce two arbitral awards, obtained in 1996 and 2003, against Iraqi entities that have so far refused to pay them.

The Supreme Court of Canada dismissed the appeal from the bench after a hearing on December 11, 2019. At the time, the Chief Justice announced that Justice C'té had dissented from the Court's otherwise-unanimous opinion, and that her dissenting reasons would follow. Those reasons were released on May 1, 2020.

Instrubel ultimately turned on a question of civil law: Do the Québec courts have jurisdiction to order garnishment in respect of funds held by a Québec-domiciled entity in a Swiss bank account. The majority of the Supreme Court of Canada held that the answer is 'yes'. It upheld the Court of Appeal of Québec's determination that the Montréal-based International Air Transport Association ("IATA") owed a debt to the Iraqi entities against which Instrubel had obtained an arbitral award, and that the arbitral award could be enforced against this debt in the Québec courts, even though the funds earmarked for the Iraqi entities were in an IATA bank account outside the province.

The Chartered Institute of Arbitrators (Canada) Inc. ("CIArb Canada") intervened to address the arbitral context in which the case arose. It submitted that arbitral awards and foreign judgments are not equivalent, that different principles should apply to the enforcement of the former than to the latter, and that the voluntary nature of arbitration agreements - in light of the broader Canadian arbitration jurisprudence - justifies a liberal approach to enforcing arbitral awards in this country. Though neither the majority nor the dissenting judge in the Supreme Court of Canada commented on the arbitral context specifically, the majority's disposition of the case was consistent with the approach that CIArb Canada had asked it to endorse.

McCarthy Tétrault represented CIArb Canada in the Supreme Court of Canada, with a team led by Simon V. Potter that included Adam Goldenberg, Sandra Lange, Dominique Paiement...