The Unruly Horse Of Public Policy: BC Supreme Court Considers Whether The Public Policy Exception Extends To Post-Arbitral Domestic Enforcement

• Published date: 12 April 2022
• Subject Matter: Litigation, Mediation & Arbitration, Arbitration & Dispute Resolution
• Law Firm: McCarthy Tétrault LLP
• Author: The International Arbitration Blog and Jennifer K. Choi

Overview

In Enrroxs Energy and Mining Group v Saddad, 2022 BCSC 285, Justice Crerar of the British Columbia Supreme Court had to determine whether the potential for double recovery justified refusing to recognize and enforce a foreign arbitral award based on the public policy exception.

Although the Court found that the public policy exception was not necessarily limited to the integrity and fairness of the foreign arbitral process, Justice Crerar also held that the facts did not require him to determine whether the exception could be extended to encompass situations where the effect of local enforcement offends public policy. As such, this important issue remains a question for another day.

Background

The underlying dispute was the unravelling of a business relationship between parties that aspired to carry out oil and gas enterprises in the Middle East. From November 2017 to January 2020, the petitioner and respondent actively litigated and arbitrated various disputes, resulting in an arbitral award dated January 28, 2020, made in Geneva, Switzerland (the "Award"). The Award directed that the respondent pay the petitioner approximately $4.8 million CAD. The respondent did not appeal the Award and the petitioner moved to have the Award enforced in British Columbia.

After the Award was issued, the respondent commenced a claim in the courts of Dubai against the petitioner, seeking a declaration that he owned certain equipment that the petitioner had seized (and along with certain shares in a company that the parties had incorporated as part of their business plan) in 2015, which the respondent valued at approximately $2.56 million CAD (the "Equipment"). The Dubai Court found that the respondent was the owner of the Equipment, but declined to order its return, finding that the petitioner had seized the Equipment to secure payment of the Award. The respondent unsuccessfully appealed the Dubai Court decision up two levels of the Dubai judicial system, with the Dubai Court of Cassation confirming the original decision in January 2022.

Application to Enforce

The petition to enforce the Award in British Columbia was filed in November 2020.¹ The respondent argued that enforcement of the Award, prior to a valuation and accounting of the shares and Equipment, was against public policy, since it would be tantamount to double recovery.

Justice Crerar noted that "decisions rejecting recognition and enforcement of a foreign arbitral awards (or, for that matter, the...