Arbitration Law of Canada: Practice and Procedure

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1 Arbitration Law of Canada: Practice and Procedure Third Edition J. Brian Casey JURIS

2 Questions About This Publication For assistance with shipments, billing or other customer service matters, please call our Customer Services Department at: To obtain a copy of this book, call our Sales Department: Fax: Toll Free Order Line: (United States & Canada) See our web page about this book: COPYRIGHT 2017 by JurisNet, LLC All Rights Reserved Printed in the United States of America ISBN JurisNet, LLC 71 New Street Huntington, New York USA

3 Page No. Practice Notes Contents... xix Introduction... xxiii Acknowledgements... xxv About the Author... xxvii Chapter 1, Introduction to Commercial Arbitration Historical Background Modern Hallmarks of Arbitration Special Arbitration Clauses Amiable Compositeur and Decisions Ex Aequo et Bono Final Offer Arbitration Other Common Forms of Dispute Resolution Mediation Conciliation Clauses Used for Mediation and Conciliation Sample Institutional Mediation Clause Sample Ad Hoc Mediation and Conciliation Clauses Mini-trial Sample Mini-trial Clause Neutral Evaluation: Expert Determination and Valuation Expert Determination Clause Sample Expert Determination Clause Dispute Boards Hybrid Forms of Dispute Resolution Practice Note Mediation Agreement in Med-Arb When to Consider Arbitration Chapter 2, Application and Scope of the Legislation Introduction Application and Scope of Federal Legislation v

4 2.3 Provincial Legislation Alberta Ontario British Columbia Saskatchewan New Brunswick Manitoba Newfoundland and Labrador Nova Scotia Prince Edward Island Quebec The Territories Yukon, Northwest and Nunavut Washington Convention Application and Scope of the Provincial International Commercial Acts Definition of International in the International Acts Definition of Commercial in the International Acts Contracting out of the International and Domestic Acts Oral Arbitration Agreements Inter-Provincial Arbitration Practice Notes Characterizing the Agreement Proper Law of the Contract Distinguished from the Law of the Arbitration Practice Note Practical Considerations Judicial Interpretation of the Domestic, International and Federal Acts Party Autonomy Chapter 3, The Arbitration Agreement Arbitration Agreement Defined Autonomy of the Arbitration Agreement The Development of the Autonomous Arbitration Clause Practice Note Allegations of Fraud or Illegality The Law Applicable to the Agreement to Arbitrate Practice Note Determining the Law of the Arbitration Agreement Arbitration Agreement as Contract vi

5 3.4.1 Consensus ad Idem Practice Note Practical Considerations of Consensus ad Idem Implied Agreement to Arbitrate Incorporation by Reference Practice Note Incorporation by Reference Associated Parties and Assignees Operation of Law Additional Parties by Agreement of the Parties The Group of Companies Doctrine By Later Agreement of the Parties Court Enforcement to Arbitrate under the Domestic Acts Incapacity Invalidity Court Enforcement to Arbitrate under the Model Law Null and Void Inoperative Incapable of Being Performed Practice Note Legal Considerations When Drafting an Arbitration Clause Termination Death of a Party Bankruptcy Interpreting the Arbitration Agreement Determining the Scope of the Arbitration Agreement Inconsistent Wording Public Policy Considerations and Statutory Claims Consumer and Class Actions Scott v. Avery Clauses Negotiating and Drafting an Arbitration Agreement General Considerations What Is to Be Arbitrated: The Scope of the Clause Practice Note Example of a Broad Ad Hoc Clause Before Whom Is It to Be Arbitrated? Where Is It to Be Arbitrated? Practice Note Choosing the Place of Arbitration vii

6 How Is It to Be Arbitrated? Commencing Arbitration and Service Third Party and Multi-Party Disputes Optional or Permissive Arbitration Clauses Practice Note Optional or Permissive Arbitration Clauses Agreement to Arbitrate after a Dispute Has Arisen: Submissions Stepped or Progressive Dispute Resolution Clauses Negotiation ADR Enforcement of Progressive or Stepped Clauses Practice Note Enforcement of Conditions Precedent to Arbitration Breach of Arbitration Agreement Chapter 4, Commencing the Arbitral Process and Choosing an Arbitrator Rules regarding Commencement Form of Commencing Document Service of Commencing Document Practice Note Commencing Arbitration Answer to the Notice of Arbitration Time Limits and Limitation Periods Time Limits in the Agreement Relief from Contractual Time Limits Limitation Act Time Limits Practice Note Time Limits Commencement and Empowerment Composition of the Arbitral Tribunal Choosing an Arbitrator What to Look for in an Arbitrator Finding an Arbitrator Interviewing a Potential Arbitrator Party Appointment of a Sole Arbitrator Appointing Authority Appointments Institutional Assistance Court Assistance in Appointment Three Arbitrators Choosing the Chair viii

7 Practice Note Checklist for Arbitrator Terms of Appointment Independence and Impartiality Independence Impartiality and Bias Disclosure Guidelines Nationality The Partisan Arbitrator Challenge Reasonable Apprehension of Bias Qualifications of Arbitrators Method of Challenge Practice Note Challenge Waiver Counsel to the Tribunal Administrative Secretary to the Tribunal Practice Note The Use of a Secretary to the Tribunal Termination of Arbitrator s Mandate Termination under the Domestic Acts Termination under the Model Law Replacement Arbitrator Arbitrator s Immunity from Suit Arbitrator s Fees Practice Note Arbitrator s Fees Chapter 5, The Arbitral Tribunal s Jurisdiction Sources of Jurisdiction Jurisdiction by Agreement Party Autonomy Jurisdiction by Implication Jurisdiction: Categories The Jurisdiction to Decide Jurisdiction Jurisdiction under the Domestic Acts Jurisdiction under the Model Law Jurisdiction over the Parties and Their Representatives Parties to the Arbitration Agreement Jurisdiction over the Parties Representatives Subject Matter Jurisdiction Jurisdiction to Determine the Applicable Rules of Law Jurisdiction to Determine the Applicable Law ix

8 5.5.2 Jurisdiction to Raise Issues of Law Not Raised by the Parties Practice Note Jurisdiction to Determine Applicable Rules of Law Jurisdiction to Determine Procedure Objecting to Jurisdiction Objecting to Jurisdiction over a Claim or a Party Exceeding Jurisdiction during an Arbitration Waiver Court Review of a Decision on Jurisdiction Practice Note Arbitrator Exceeding Jurisdiction Jurisdiction to Make Interim Preservation Awards Appointment of Emergency Arbitrators to Deal with Interim Measures The Test for an Interim Measure of Protection Practice Note Interim Measures, Court or Tribunal? Jurisdiction to Award Interest Interest under the Domestic Acts Interest under the Model Law Jurisdiction to Award Costs Costs under the Domestic Acts Costs under the Model Law The Test for Awarding Costs Practice Notes Costs Jurisdiction to Award Security for Costs Security for the Tribunal s Fees and Costs Jurisdiction to Award Security for the Costs of a Party Jurisdiction upon Settlement Practice Note Settlement Chapter 6, Conduct of Arbitral Proceedings Rules of Procedure Judicial Fairness and Economic Efficiency Structure and Flexibility Practice Note Arbitrators Approaches to Procedure Conduct of Counsel Ethical Issues x

9 6.3 Preliminary Meetings and Preliminary Hearings Setting out an Agenda Communications and Correspondence with the Arbitrator Practice Note The Preliminary Meeting Statements Domestic Acts Model Law Practice Note Statements Supplementary Statements or Amending Statements: Domestic Acts and the Model Law Failure to Submit Statements: Domestic Acts and the Model Law Submissions to Arbitration and Terms of Reference Production of Documents and Pre-hearing Discovery Document Disclosure and Exchange Objections to Production Electronic Production Failure to Produce Documents Translation of Documents Pre-hearing Oral Discoveries and Witness Statements Oral Discovery of Non-parties Practice Note Discovery The Requirement for a Hearing Basic Requirements for a Hearing Waiver Time and Place of Arbitration Hearing Distinguishing the Place of Arbitration from the Place of Hearing Adjournments Privacy and Confidentiality Privacy of the Arbitration Hearing Confidentiality of the Arbitration Exceptions to Confidentiality The Deemed Undertaking Rule Practice Note Confidentiality Amicus Curiae xi

10 6.12 Delay of Proceedings Delay by the Respondent Delay by Claimant Delay by Tribunal Rules of Evidence Domestic Acts Model Law Rulings on Evidence Evidence at the Hearing Witness Statements as Evidence Oral Evidence under Oath Compelling Answers from Witnesses Compelling Non-parties to Appear Obtaining Testimony and Documents from a Witness out of the Jurisdiction Restrictions on Evidence Expert Evidence Expert Appointed by Tribunal Practice Note Experts Retained by the Tribunal Expert Retained by a Party Other Methods of Presenting Expert Evidence Qualifying and Disqualifying Experts Practice Note Experts and Experts Reports Order of Presentation Exclusion Orders Hearsay versus Natural Justice Cross-examination Cross-examination and Natural Justice Practice Note Time Limits on Examinations Inspection of Property or Documents Representation by Counsel Keeping a Record Practice Note Conduct of the Arbitral Hearing Chapter 7, Court Involvement in the Arbitral Process Introduction Constitutionality of Agreement to Oust Court s Jurisdiction Breach of Agreement to Arbitrate xii

11 7.4 Stay of Court Proceedings The Standard of Review Grounds to Refuse a Stay under the Domestic Acts Grounds to Refuse a Stay under the Model Law Arbitration Agreement Covering Only Part of Court Claim Third Parties Multiplicity of Proceedings Invalid or Inoperative Practice Note Dealing with Additional Claims and Parties Residual Discretion to Refuse a Stay Can the Plaintiff Seek a Stay? Lack of Remedy Effect of Refusing a Stay Removing a Stay Practice Note Starting and Staying Court Proceedings Appeal of Decision regarding Stay of Court Proceedings Enjoining Arbitration and Anti-suit Injunctions Enjoining Arbitration Anti-suit Injunctions Court Appointment of Arbitrator Domestic Acts Model Law Appointment of Substitute Arbitrator Practice Note Court Appointment of Arbitrators Interim Preservation Orders Questions of Law Court Enforcement of Arbitral Orders and Directions Domestic Acts Model Law Appeals from Interim Preservation Orders Court Assistance in Compelling Discovery from a Party In the Jurisdiction of the Place of Arbitration Practice Note Court Assistance in Discovery of a Non-party Court-Aided Discovery in the United States xiii

12 7.13 Court Assistance in Taking Evidence Domestic Acts Model Law Practice Note Court Assistance in Compelling Witness Attendance Court-Ordered Extension of Time Limits Time Limits in the Agreement Time Limits under the Applicable Law of the Contract Time Limits under Arbitration Legislation Court-Ordered Consolidation Court Involvement following Delay or Default of a Party Declaration of Invalidity of Arbitration Bankruptcy Petitioning a Party into Bankruptcy The Effect of Bankruptcy on the Agreement to Arbitrate Removal of Arbitrator Domestic Acts Removal of Arbitrator under the Model Law Failure to Treat Parties Fairly and with Equality Reasonable Apprehension of Bias Practice Note Removal of Arbitrator Court Review of Jurisdiction Domestic Acts Court Review of Jurisdiction under Model Law Standard of Review Practice Note Court Review of Jurisdiction Court-Ordered Explanation of Award and Deliberative Secrecy Appeals and Setting Aside of Awards General or Residual Powers of Involvement under the Domestic Acts Chapter 8, The Award Definition Final, Partial and Interim Awards Decision of the Tribunal Application of Law and Equity Must the Award Be in Accordance with Law? xiv

13 Practice Note The Distinction between Procedural Rules and Substantive Law In Accordance with the Terms of the Contract and Usage of the Trade Ex Aequo et Bono Remedies Adaption Rectification Punitive Damages Interest Domestic Acts Model Law Practice Note Pre- and Post-Award Interest Costs and Attorney s Fees Costs under the Domestic Acts Costs under the Model Law Practice Note Costs Cost Consequences of Offers to Settle Costs of the Arbitrators Form and Content of the Award Dissenting Opinions Practice Note Writing an Award Denomination of Award Settlement Place of Award Binding Nature of Award Binding as between the Parties Recognized by the Court: Res Judicata and Issue Estoppel Effect on Third Parties Explanation and Correction of Errors and Deliberative Secrecy Explanations Correction of Errors and Additional Awards Practice Notes Reviewing an Award Confidentiality of the Award Time Limits for Rendering Award xv

14 Chapter 9, Remedies against Awards Review of Procedural and Interlocutory Orders Appeal of Awards Interim Awards The Model Law No Right of Appeal Only Setting Aside Practice Note International Appeals Domestic Appeals Language Limiting the Right of Appeal Practice Note Appeals in the Domestic Context Time Limits for Appeals under the Domestic Acts Application for Leave to Appeal Additional Requirements for Leave to Appeal Importance to the parties Significantly affect the rights of the parties/miscarriage of justice Residual Discretion to Refuse Leave Summary of the Test for Leave to Appeal Practice Notes Leave to Appeal Appeal of the Decision Refusing Leave to Appeal Appeals without Leave Appeal on Questions of Fact or Mixed Fact and Law Appeal of Costs Powers of the Court on Appeal The Standard of Review on Appeal Enforcement of Award Pending Appeal Appeal to the Court of Appeal Setting Aside an Award Grounds for Setting Aside an Award Lack of Jurisdiction Excess of Jurisdiction Failure to Follow Proper Procedure Opportunity to Present Its Case Failure to Give Proper Notice and Natural Justice xvi

15 Failure to Treat a Party Equally and Fairly Self-represented Parties Reasonable Apprehension of Bias Failure to Follow the Arbitration Agreement The Standard of Review for Setting Aside Lack of Jurisdiction Excess of Jurisdiction Lack of Proper Conduct or Procedure Waiver and Setting Aside Awards Waiver by Express Agreement Waiver by Conduct Setting Aside Due to a Conflict with Public Policy The Model Law Omissions Time Limit for Challenge Extension of Limitation Periods Stay Pending Application to Set Aside Award Chapter 10, Recognition and Enforcement of Awards Recognition Enforcement under the Domestic Acts Enforcement of International Awards Enforcement under the New York Convention Enforcement under the Model Law Grounds for Refusing Recognition or Enforcement of International Awards Error of Law on the Face of the Record Failure to Give Reasons Not Yet Binding Refusing Enforcement of International Awards Public Policy Practice Note Public Policy Estoppel by Waiver Issue Estoppel Stay of Enforcement and Orders for Security Practice Note Seeking a Stay of Enforcement and an Order for Security of an International Award xvii

16 Court Enforcement of International Awards notwithstanding Court Annulment Practice Note What Is the Test for Enforcing an Award that Has Been Set Aside? Limitation Periods and Applications for Enforcement Domestic Act Limitation Periods Limitation Periods regarding the Enforcement of International Awards Practice Notes Enforcement of Awards Practice Note Enforcement of Domestic Awards under Domestic Acts Practice Note Enforcement of International Awards Enforcement of Partial and Interim Awards Appendices Appendix 1 Redfern Schedule for Document Requests... APP-3 Appendix 2 Reciprocity and the Federal Reservation under the New York Convention... APP-5 Appendix 3 Province of Alberta Arbitration Act... APP-11 Appendix 4 Province of Alberta International Commercial Arbitration Act... APP-41 Appendix 5 British Columbia Arbitration Act... APP-73 Appendix 6 British Columbia International Commercial Arbitration Act... APP-91 Appendix 7 Ontario British Columbia Foreign Arbitral Awards Act... APP-113 Appendix 8 Ontario Arbitration Act, APP-121 Appendix 9 Ontario International Commercial Arbitration Act, and Bill 27, Schedule 5... APP-157 Appendix 10 Quebec Code of Civil Procedure (excerpts)... APP-185 Glossary... GLO-1 Table of Cases... TOC-1 Index... IND-1 xviii

17 PRACTICE NOTES CONTENTS Chapter 1 Introduction to Commercial Arbitration Mediation Agreement in Med-Arb Chapter 2 Application and Scope of the Legislation 2.9 Characterizing the Agreement Practical Considerations Chapter 3 The Arbitration Agreement Allegations of Fraud or Illegality Determining the Law of the Arbitration Agreement Practical Considerations of Consensus ad Idem Incorporation by Reference Legal Considerations When Drafting an Arbitration Clause Example of a Broad Ad Hoc Clause Choosing the Place of Arbitration Optional or Permissive Arbitration Clauses Enforcement of Conditions Precedent to Arbitration Chapter 4 Commencing the Arbitral Process and Choosing an Arbitrator Commencing Arbitration Time Limits Checklist for Arbitrator Terms of Appointment Challenge The Use of a Secretary to the Tribunal Arbitrator s Fees xix

18 PRACTICE NOTES CONTENTS Chapter 5 The Arbitral Tribunal s Jurisdiction Jurisdiction to Determine Applicable Rules of Law Arbitrator Exceeding Jurisdiction Interim Measures, Court or Tribunal? Costs Settlement Chapter 6 Conduct of Arbitral Proceedings Arbitrators Approaches to Procedure The Preliminary Meeting Statements Discovery Confidentiality Experts Retained by the Tribunal Experts and Experts Reports Time Limits on Examinations Conduct of the Arbitral Hearing Chapter 7 Court Involvement in the Arbitral Process Dealing with Additional Claims and Parties Starting and Staying Court Proceedings Court Appointment of Arbitrators Court Assistance in Discovery of a Non-party Court Assistance in Compelling Witness Attendance Removal of Arbitrator Court Review of Jurisdiction xx

19 PRACTICE NOTES CONTENTS Chapter 8 The Award The Distinction between Procedural Rules and Substantive Law Pre- and Post-Award Interest Costs Writing an Award Reviewing an Award Chapter 9 Remedies against Awards International Appeals Appeals in the Domestic Context Leave to Appeal Chapter 10 Recognition and Enforcement of Awards Public Policy Seeking a Stay of Enforcement and an Order for Security of an International Award What Is the Test for Enforcing an Award that Has Been Set Aside? Enforcement Awards of Awards Enforcement of Domestic Awards under Domestic Acts Enforcement of International Awards xxi

PLEASE NOTE. For more information concerning the history of this Act, please see the Table of Public Acts.

PLEASE NOTE. For more information concerning the history of this Act, please see the Table of Public Acts. PLEASE NOTE This document, prepared by the Legislative Counsel Office, is an office consolidation of this Act, current to January 1, 2009. It is intended for information and reference purposes only. This