The Québec Court of Appeal has recently added a new,
if uncertain, twist to public order as applied in the context
of arbitration. According to Article 949 of the Québec
Code of Civil Procedure (C.C.P.), a Québec
court may refuse to recognize and execute a foreign arbitration
award if doing so would be "contrary to public
order." The concept of public order, particularly as
applied to enforcing arbitration awards, is a matter of the
fundamental values and principles of a legal system, rather
than of its mandatory substantive rules (see
Desputeaux v. Éditions Chouette (1987)
Inc.  1 S.C.R. 178). For the purposes of enforcing
arbitration awards, the outcome of the award is measured
against this concept of public order.
In Smart Systems Technology v.
Domotique Secant Inc., Smart Systems sought
recognition and enforcement of an arbitral award rendered in
New Mexico. The award annulled the purchase of goods by Smart
Systems, rejected a demand for the price by the seller,
Domotique, and condemned the latter to damages and punitive
damages as well as costs.
The Québec Court of Appeal confirmed the first
instance judgment and refused to recognize the foreign
arbitration award on the basis that recognition would be
against public order as understood, primarily with respect to
international relations. Its rationale was that the award was
rendered without any reasons contrary to the parties'
arbitration agreement. The court recognized that the parties
can expressly waive a reasoned award. The absence of reasons
may not always be a cause for annulling an arbitration award,
even in some cases where the arbitration agreement requires
reasoning. The court provided an example of a "black and
white" decision that had been based on the credibility of
witnesses. The substance of the arbitration award in that case
was not contrary to public order.
Nonetheless, the court appeared to indicate that the parties
should be able to review its reasons given the seriousness of
the results. In addition to the public order issue, the court
refused to recognize the award on the basis of Art. 950(4) and
(5) C.C.P. (i) because the arbitrators
exceeded their jurisdiction when they annulled the contract and
awarded punitive damages, neither of which were part of their
mandate, and (ii) due to procedural irregularities including a
private communication between an arbitrator and one party
during the deliberations. The court stated that the fact the
award was homologated by a court in New Mexico does not prevent
a Québec court from refusing to recognize the award.
McCarthy Tétrault Notes:
The decision clearly raises the issue of public order in
relation to strict adherence to arbitration procedure. While
the Court of Appeal appears to elevate the requirement of a
reasoned arbitration award to the status of public order,
uncertainty remains over when exactly this requirement will be
considered a fundamental value under Québec law. The
tenor of the decision also blurs the distinction between
procedure and substance in arbitration as they apply to the
process for recognition of foreign awards. While the case does
not yet appear to have been appealed to the Supreme Court of
Canada, it is safe to assume that we have not heard the last of
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In Irwin v. Alberta Veterinary Medical Association, 2015 ABCA 396, the Alberta Court of Appeal found that the "ABVMA" failed to afford procedural fairness to a veterinarian undergoing an incapacity assessment.
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