Canada: Can An Arbitration Award Survive Fraud?

Thomas Heintzman specializes in the field of alternative dispute resolution. He has acted as counsel in trials, appeals and arbitrations in Ontario, Newfoundland, Manitoba, British Columbia and New Brunswick and has made numerous appearances before the Supreme Court of Canada.

Mr. Heintzman practised with McCarthy Tétrault LLP for over 40 years with an emphasis in commercial disputes relating to securities law and shareholders' rights, government contracts, broadcasting and telecommunications, construction and environmental law.

Thomas Heintzman is the author of Heintzman & Goldsmith on Canadian Building Contracts, 4th Edition which provides an analysis of the law of contracts as it applies to building contracts in Canada.

Heintzman & Goldsmith on Canadian Building Contracts has been cited in over 183 judicial decisions including the two leading Supreme Court of Canada decisions on the law of tendering.

When material evidence tendered to an arbitral tribunal is fraudulent, we expect the court having jurisdiction to be very inclined to set the award aside. But as the recent decision of the English High Court in Chantiers de l'Atlantique S.A. v. Gaztransport & Technigaz S.A.S.demonstrates, "it ain't necessarily so." In that case the award was upheld despite the findings by the court that the arbitral tribunal heard material evidence which it held to be fraudulent. How did the court arrive at that conclusion?

The arbitration was an ICC arbitration held in Paris between French companies. The arbitration clause stated that the seat of the arbitration was in London, so the English Courts exercised supervisory jurisdiction over the arbitration and the application to set aside the award was made to the English courts.

The applicant to the arbitration, Chantiers de l'Atlantique (CAT), built LNG carriers. It licensed a technology from the respondent to the arbitration, Gaztransport & Technizaz (GTT) for the construction of the containment system in the tankers. During the sea trials of the tankers, it was discovered that nitrogen was passing through the barriers in the containment system, suggesting faults in that system. The faults could be due to GTT's design or poor construction by CAT. Eventually, the ships were constructed with a barrier system that worked. However, CAT commenced an arbitration against GTT alleging that the initial failures in the barrier system were due to mis-design by GTT.

The arbitral tribunal dismissed the arbitral proceeding. It did so as it found that CAT could not establish "gross fault" on the part of GTT and thus could not meet the test imposed by French law for liability by a licensor to a licensee for a design fault or economic fault.

After the arbitral decision, CAT received a tip-off from a whistleblower raising questions about tests of the barrier system conducted by GTT and the alleged non-disclosure of those tests in the evidence that GTT had presented to the arbitral tribunal. CAT accordingly brought an application before the English courts for an order setting aside the arbitral award under section 68(2)(g) of the English Arbitration Act, 1996. That clause, like Section 46(1).9 of the Ontario Arbitration Act, 1991, authorizes the court to set aside the award if it is "obtained by fraud".

After a very long review of the evidence led before the arbitral tribunal, the English Court concluded that fraud had been established for the purpose of section 68(2)(g) of the English Act. The misconduct arose from the non-disclosure of tests conducted by GTT. Yet the court declined to set aside the award. The reasoning of the judge is an important explanation and exploration of the factors which should guide a court in its consideration of the power to set aside an arbitral award for fraud.

First, the court set out the four principles:

  1. An arbitral award will only be set aside for fraud in extreme cases;
  2. Fraud is dishonest, reprehensible or unconscionable conduct. Fraud must be distinctly pleaded and proven to a heightened burden of proof.
  3. The Award must have been caused by the fraud. There must have been fraud "in the arbitration itself" and there must be "a causative link between the deliberate concealment of the document and the decision in the award".
  4. The evidence of fraud must not be "of such as could have been obtained or produced at the arbitration hearing with reasonable diligence" and must be "so material' it "would probably have affected the result of the arbitration." The test does not require that the applicant show that the evidence would have affected the result, as such a test would usurp the function of the arbitral tribunal in the event that the matter is remitted to the tribunal, but the applicant must show that the evidence "would have had an important influence on the result."

Except for the second test, these tests appear to be relevant for use by Canadian courts. But Canadian courts generally hold that there are only two standards of proof: balance of probabilities in civil cases, and beyond a reasonable doubt in criminal cases. So a Canadian Court would more likely apply a balance of probabilities to the second element of these principles.

Second, the judge went out of his way to point out that the arbitration had been conducted under the IBA rules. Under those rules, he said that "there was no duty to disclose relevant documents, akin to CPR Part 31, such as would be the case with London arbitration conducted in accordance with English procedure. In these circumstances, the court must be careful not to import into its assessment of GTT's conduct....English concepts of the duty of disclosure."

In the result, the judge found that, while some of GTT's answers were misleading and inaccurate, there had been no fraud arising from the Requests that had been made during the arbitration. One is left to wonder whether the result would have been the same under common law duties of disclosure.

Third, the judge found that, while there had been fraud in the arbitration arising from the non-disclosure of testing results, the disclosure of the true position would not have affected the result of the arbitration. He gave seven reasons for arriving at that result. The most material and interesting are as follows:

  1. The other tests and evidence submitted by GTT to the arbitral tribunal demonstrated that the design of the barrier system was satisfactory. In light of all the evidence, the judge concluded that the impugned tests would not have affected the arbitral decision.
  2. Ultimately, the barrier system did work. In this context, a defect in design was not a likely explanation.
  3. If the impugned tests had been revealed, they would not have had a devastating impact on the conduct of the arbitration.
  4. The non-concealment of some tests was not the "tip of the iceberg." It did not demonstrate that non-concealment was a wider issue.
  5. The arbitral tribunal had held that, even if design fault was proven, the standard of misconduct required by French law had not been established. The tribunal decided that, under French law, the design had to be "technically unusable or extremely difficult to use" to give rise to liability. Since the barrier technology had ultimately been implemented, that test could not be met.

These conclusions are noteworthy on a number of accounts:

First, the judge went into the technical evidence, and the evidence before the arbitral tribunal, to an extraordinary extent. His conclusions, and particularly as to whether the impugned evidence would probably have impacted the arbitral tribunal, came very close to a re-trial of the merits of the substantive issue between the parties, something which the judge warned himself that he should not undertake.

Second, the judge was largely unmoved by the impact on credibility that the disclosure of the impugned tests would have had on the arbitration process and tribunal. This reaction of the judge is somewhat surprising, having regard to the unpredictable impact which non-disclosure can have upon the credibility of parties and witnesses during any contested proceeding. Here, the issue might be what exactly is the question:

Is it: Would the disclosure of the true position probably have affected the result of the arbitration? (as stated by the judge). Or is it, or does it include: Did the non-disclosure of the true position probably affect the result of the arbitration? Those two questions do not necessarily lead to the same answer.

Third, the principles applied by English courts are based upon a strong disinclination to interfere with arbitration proceedings, even in the presence of fraud. Is this the right judicial attitude? Is the test used by the court too high a test? Is using this test the best way to ensure that both the stature and credibility, and the independence, of arbitral proceedings are protected? These questions will be further debated in the courts as arbitration proceedings, and in particular international commercial arbitrations, become even more common.

Fourth, the court's decision seems to have been overwhelmingly driven by the very high test for liability under French law which the arbitrators applied, and the fact that the barrier system ultimately did work. The judge seems to have felt that, since the system did work, the applicant's complaint was something of a tempest in a teapot, no matter how serious were his findings of misconduct.

These latter two factors may well not be present in another case. In North America, the test for negligence does not appear to be nearly as high as the test under French law used by the arbitrators. And if, in another case, the design or manufacture of the article is ultimately shown to be faulty, then the second factor will not exist.

In any event, this decision will be a useful precedent for future considerations of arbitral awards attacked on the ground of fraud.

See Heintzman and Goldsmith, Canadian Building Contracts(4th ed.), Chapter 10, Part 3

International Arbitration - Setting Aside Arbitration Award - Fraud or Misconduct

Chantiers de l'Atlantique S.A. v. Gaztransport & Technigaz S.A.S., 2011 EWHC 3383 (Comm)

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:
  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.
  • Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.
    If you do not want us to provide your name and email address you may opt out by clicking here
    If you do not wish to receive any future announcements of products and services offered by Mondaq you may opt out by clicking here

    Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

    Use of

    You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


    Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

    The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


    Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

    • To allow you to personalize the Mondaq websites you are visiting.
    • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
    • To produce demographic feedback for our information providers who provide information free for your use.

    Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

    Information Collection and Use

    We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

    We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

    Mondaq News Alerts

    In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


    A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

    Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

    Log Files

    We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


    This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

    Surveys & Contests

    From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


    If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


    From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

    *** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .


    This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

    Correcting/Updating Personal Information

    If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

    Notification of Changes

    If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

    How to contact Mondaq

    You can contact us with comments or queries at

    If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.

    By clicking Register you state you have read and agree to our Terms and Conditions