SCC: Enforcement of Foreign Arbitral Awards in Canada Subject to Local Limitation Laws

Originally published in the Ontario Bar Association ADR section newsletter, Vol. 18, No. 2, March 2010.

The Supreme Court of Canada has handed down an important decision clarifying what, if any, time limits may apply to the enforcement of a foreign arbitral award in Canada. The Court has held that, for these purposes, the imposition of a time limit is a procedural rule permitted by Article III of the 1958 Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the "New York Convention"). Consequently, the question whether the enforcement of an arbitration award is subject to any time limit depends on the wording of any limitations legislation in the Province where the award is sought to be enforced.

Yugraneft Corporation, a Russian company in the business of developing and operating oilfields in Russia, purchased materials from Rexx Management Corporation, an Alberta company. Following a contractual dispute and an international commercial arbitration before the International Commercial Arbitration Court at the Chamber of Commerce and Industry of the Russian Federation on Sept. 6, 2002 the tribunal awarded just under US$1million to Yugraneft. On Jan. 27, 2006 Yugraneft applied to Alberta's Court of Queen's Bench for recognition and enforcement of the award. The application was dismissed and an appeal to Alberta's Court of Appeal was unsuccessful. Leave to appeal to the Supreme Court was granted which, following oral argument in December 2009, issued its ruling dismissing the appeal on May 20, 2010.

The principal issue was whether the enforcement proceeding was subject to any limitation period and, if so, whether it should be the two-year period applicable to a "remedial order" (s. 3 of Alberta's Limitations Act, R.S.A. 2000, c. L-12) or the ten-year period applicable to a "judgment or order for the payment of money" (s. 11). Yugraneft argued that s. 11 should apply since a foreign arbitral award possesses all the hallmarks of a judgment and because there was ambiguity as to whether s. 3 was intended to apply. Rexx argued that s. 3 should apply since the Alberta legislature intended the two-year limitation period to apply to all causes of action, unless one of the exceptions enumerated in the Act expressly applied.

On the threshold issue as to whether the imposition of a local limitation period for the enforcement of a foreign award was contrary to the New York Convention, the Court held that this was a procedural – and...