International Arbitration 2022: Law & Practice

• Published date: 18 August 2022
• Subject Matter: Litigation, Mediation & Arbitration, Arbitration & Dispute Resolution, Civil Law
• Law Firm: Lawson Lundell LLP
• Author: Mr Craig Ferris, QC, Meg Gaily, Scott Lucyk and Michael J Donaldson

1. GENERAL

1.1 Prevalence of Arbitration

Arbitration is widely used in Canada as an alternative to court litigation.

Historically, Canadian governments and courts have adopted a pro-arbitration stance in line with modern international practices. In 1986, Canada became the first jurisdiction to adopt the UNCITRAL Model Law on International Commercial Arbitration. Canadian courts have since issued over 200 written decisions under arbitration legislation based on the Model Law.

Every province and territory, with the exception of Québec, has a separate statute for domestic and international arbitration. In Québec, arbitration legislation is set out in the Civil Code of Québec and the Code of Civil Procedure, which are generally consistent with the Model Law.

There are also many arbitral institutions and facilities in Canada which support both domestic and international proceedings.

Unless stated otherwise, the sections below address international arbitration matters.

1.2 Impact of COVID-19

Similar to other jurisdictions, COVID-19 has significantly impacted the conduct of international arbitral proceedings, particularly the increased use of video conference hearings.

Due to COVID-19, limitation periods for civil actions were suspended by the Canadian federal government, British Columbia, Alberta, Ontario, Québec, New Brunswick, Newfoundland and the Yukon. These changes may impact the limitation periods applicable to claims agreed to be resolved by arbitration.

Arbitral institutes and courts across Canada adapted their procedures to meet public health protocols. With certain exceptions, arbitrations and related court proceedings continued to be heard during the pandemic.

1.3 Key Industries

In Canada, international arbitration is commonly used in the following industries: mining, oil and gas, construction, information technology, forestry, and shareholder disputes.

All industries are experiencing an increased demand for arbitration, which was accelerated by the pandemic. Arbitration proceedings proceeded without interruption during the pandemic, while the courts in Canada had various limits or closures that made them less accessible to litigants.

1.4 Arbitral Institutions

There are many arbitral institutions in Canada, including the ADR Institute of Canada Inc. (ADRIC), the Vancouver International Arbitration Centre (VanIAC, formerly BCICAC), the Canadian International Internet Dispute Resolution Centre (CIIDRC, a division of VanIAC), the Canadian Arbitration Association (CAA) and the International Centre for Dispute Resolution of Canada (ICDR - Canada).

Effective 1 July 2022, VanIAC has introduced new International Commercial Arbitration Rules of Procedure (VanIAC Rules), which include International Expedited Procedures in Appendix A. In 2020, VanIAC amended its domestic arbitration rules (in conjunction with the province of British Columbia's new domestic Arbitration Act, SBC 2020, c. 2).

1.5 National Courts

There are no specialised courts in Canada designated to hear arbitration-related disputes. These matters are typically heard by the provincial superior courts, in accordance with their rules of civil procedure.

Canadian courts are accustomed to dealing with domestic and international arbitration matters, and have issued over 200 written decisions under the Model Law.

2. GOVERNING LEGISLATION

2.1 Governing Law

Each of the provinces and territories, except Québec, has enacted an International Commercial Arbitration Act based on the Model Law.

Alberta, Saskatchewan, Manitoba, New Brunswick, Nova Scotia, Prince Edward Island, Newfoundland, Yukon, Nunavut and Northwest Territories (pursuant to Nunavut's legislation) have adopted the 1985 version of the Model Law, while British Columbia and Ontario adopted the Model Law with amendments as adopted in 2006.

British Columbia has enacted a reworked version of the Model Law, while the other provinces and territories attach it as a schedule with small variations to their International Commercial Arbitration Act.

In Québec, the Model Law has not been incorporated. Arbitration in the province is governed by the Civil Code of Québec and the Code of Civil Procedure, which are generally consistent with the Model Law.

The Commercial Arbitration Act, RSC 1985, c. 17 (2nd Supp.) is a federal statute based on the 1985 version of the Model Law. This statute applies only (i) where at least one of the parties to the arbitration is the Crown, a federal departmental corporation or a Crown corporation, or (ii) in relation to a maritime or admiralty matter.

2.2 Changes to National Law

There have been no significant changes to the international arbitration statutes in Canada in the past year.

On 1 September 2020, a new domestic Arbitration Act, SBC 2020, c. 2, came into force in British Columbia.

3. THE ARBITRATION AGREEMENT

3.1 Enforceability

Arbitration agreements are governed by statute. With the exceptions of Ontario, British Columbia and Québec, the requirements for an international arbitration agreement are those contained in the 1985 version of the Model Law. Ontario and British Columbia have adopted the requirements set out in the 2006 version of the Model Law.

All of the international arbitration statutes in Canada require that an arbitration agreement is in writing.

3.2 Arbitrability

With some limited exceptions (discussed below), all commercial disputes can be resolved by arbitration, provided that the parties agreed to do so.

Legislatures and courts have decided that certain matters are not arbitrable in Canada. These include:

• certain types of disputes under British Columbia's Business Practices and Consumer Protection Act (Seidel v Telus Communications Inc., 2011 SCC 15), Ontario's Consumer Protection Act, 2002, SO 2002, c. 30, Sch. A, s. 7(2), and Québec's Consumer Protection Act, CQLR, c. P-401., s 11; and

• disputes over the status and capacity of persons, family matters or other matters of public policy (Québec Civil Code, CQLR c. CCQ-1991, s. 2639).

3.3 National Courts' Approach

Generally speaking, Canadian courts take a pro-enforcement stance with respect to arbitration agreements.

Consistent with the Model Law, Canadian courts will typically enforce an arbitration agreement unless it is void, inoperative, or incapable of being enforced (Uber Technologies v Heller, 2020 SCC 16).

3.4 Validity

In accordance with Section 16(2) of the Model Law, Canadian courts enforce the rule of separability and treat an arbitration clause as an agreement independent of the other terms of the contract.

4. THE ARBITRAL TRIBUNAL

4.1 Limits on Selection

There are no statutory limitations on the selection of arbitrators in Canada. Arbitrators are not required to be legally qualified.

The parties have broad autonomy with respect to the selection of arbitrators, including the procedure to be followed, the number of arbitrators and any specific qualifications required.

4.2 Default Procedures

Under the international arbitration laws in each province and territory, the default procedures for selecting an arbitrator are consistent with Article 11 of the Model Law.

However, these provisions only apply if the parties did not agree to a procedure in the contract or in a set of arbitral rules.

4.3 Court Intervention

Canadian courts will only intervene in the selection of an arbitrator if a party makes a request to the court in accordance with Article 11 of the Model Law.

4.4 Challenge and Removal of Arbitrators

The challenge or removal of an arbitrator is governed by the Model Law, or the procedure agreed to by the parties or contained in...