Canada: Will Supreme Court Of Canada Hear High-Profile International Arbitration Case?

Last Updated: December 17 2008
Article by James Redmond and Barry Leon

The pending Supreme Court of Canada leave to appeal application in Yugraneft v. Rexx Management is, in our view, not only of national importance but of international importance. It goes to the heart of the benefits of international commercial arbitration: the ability to enforce an international arbitration award relatively easily in most countries around the world.

Canadians should be aware of just how significant this case is to international business and should hope that our Supreme Court takes on the case and that it articulates that limitation periods cannot be imposed on applications to recognize and enforce international arbitral awards – not in Canada nor elsewhere.

More than 140 countries, including Canada, are signatories to the United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards, more commonly known as the "New York Convention." This year marks its 50th anniversary.

The New York Convention is widely regarded as one of the most successful international conventions ever. Not only has it been accepted by so many countries, but it has had a huge positive effect on international trade and commerce as well as on international development projects. With international arbitration, businesses everywhere have a reliable method of dispute resolution when they contract with businesses in other countries (sometimes where the court systems lack the honesty, independence, reliability and competence that exist in courts in Canada). A Canadian business can invest in or sell goods or services to a company in a country with the least honest, most corrupt and least competent court system in the world and know that its disputes with the other party can be determined by international arbitrators in a reliable country of their choosing.

More than anything, what makes international arbitration effective is that the New York Convention requires that each signatory country recognize and enforce an international arbitration award made elsewhere, except in very narrow circumstances that are set out in the Convention.

This requirement is repeated in most modern international arbitration statutes through the mechanism of the Model Law on International Commercial Arbitration, which was adopted by the United Nations Commission on International Trade Law (UNCITRAL) in 1985. Canada was the first country to adopt the Model Law, and it is now in force (with minor modifications) in all provinces and territories. In Ontario, for example, the Model Law is appended to and forms the bulk of the International Commercial Arbitration Act. The Model Law requires that the courts of the jurisdiction recognize and enforce international arbitral awards irrespective of the country in which they were made, except in the very narrow circumstances set out (which parallel the New York Convention exceptions).

Yet, on August 5, 2008, the Alberta Court of Appeal carved a huge hole in Canada's commitment by ruling in Yugraneft v. Rexx Management that Alberta will not recognize or enforce a foreign arbitral award unless proceedings for recognition and enforcement are commenced in Alberta within two years.

The Court applied Alberta's basic two-year limitation period (the same as in Ontario; in other provinces, the limitation period is either two years or some other fixed number of years).

If the Alberta decision stands, it will not only severely restrict enforcement of foreign awards in Alberta but likely affect decisions across Canada unless other appellate courts rule differently when the issue comes before them.

Limitation periods exist to ensure that prospective defendants find out about claims against them on a timely basis. As a result, witnesses are more likely to remember relevant details and defendants can preserve evidence and avoid having unhappy surprises come out of the woodwork many years after the event. These policy rationales generally are inapplicable when the defendant has been the subject of a proceeding elsewhere in which the defendant was made aware of the proceeding and had an opportunity to defend it.

A party seeking to enforce an international arbitral award may not learn where in the world the debtor has assets – perhaps hidden assets – until some years after the award. Unsuccessful attempts may have been made to enforce the award elsewhere first. But whether, as a policy matter, a party who is the beneficiary of an arbitral award should be able to have the award enforced in another country after some period of time is not the heart of the issue.

The New York Convention requires its signatories to recognize and enforce, and delay is not one of the specified exceptions to enforcing an international arbitral award.

Some may argue that time restrictions are permitted by the New York Convention. Yes, Article III says that enforcement will be in accordance with local rules of procedure and that the country in which enforcement is sought will not impose "substantially more onerous conditions or higher fees or charges" on the recognition or enforcement of international arbitral awards than it imposes on recognition or enforcement of domestic awards.

But in Canadian law, limitation periods are not procedural; they are substantive law. So imposing a limitation period seems to run contrary to Canada's commitment in the Convention, which is part of the law of Canada.

Further, the Model Law, which has been adopted in international commercial arbitration statutes in Canada, including Alberta, provides no room for a "local rules of procedure" argument. The Model Law, and hence arbitration statutes in Canada, require recognition and enforcement, except in the very narrow circumstances specified.

The Alberta courts searched for a limitation period, failing to recognize that the drafters of the New York Convention, the Model Law and Alberta's International Commercial Arbitration Act chose not to impose a time limitation on applications for recognition and enforcement of international arbitral awards.

There are also reasonable grounds to question the Court of Appeal's reasoning. First, it is questionable whether section 3 of Alberta's Limitations Act, which specifies a two-year limitation for seeking a "remedial order," should be taken to apply to proceedings for recognition and enforcement of an international commercial arbitration award. Second, it is difficult to understand why the Court applied the rules relating to the enforcement of judgments of foreign courts to the recognition and enforcement of international arbitration awards when Alberta has its own specific legislation, the International Commercial Arbitration Act, incorporating as schedules to the Act both the Model Law and the New York Convention.

Even though the Model Law and the New York Convention contain no time limitation for applications to recognize and enforce international arbitration awards, the lower court judge concluded that in the absence of such a provision, he should look outside this legislation for an appropriate limitation period. He selected the two-year limitation for the enforcement of judgments of foreign courts.

The Court of Appeal followed the same course, but failed to explain why those rules should apply when the primary objective of international commercial arbitration legislation is to avoid having international disputes decided by national courts and to provide a uniform means of enforcing international arbitration awards worldwide.

As to the application of the two-year limitation in the Limitations Act for seeking "remedial orders," it seems questionable that the drafters of the Act had international commercial arbitration awards in mind when they defined this term. When the successful party in an international arbitration requests recognition and enforcement of the award, it is not asking the court to determine whether it is entitled to a remedy. That has already been decided by an arbitral tribunal in accordance with the rules governing the arbitration. The party is asking for enforcement of that remedy under the provisions of specific legislation enacted as part of a worldwide regime for international arbitration – a regime that provides that recognition and enforcement can only be refused on very narrow grounds (which grounds do not include any time limit).

Interestingly, at the same time as it was enacting international arbitration legislation, the Alberta legislature enacted domestic arbitration legislation that did include a limitation period, as did other similar provincial statutes. So it cannot be that these legislatures simply forgot about limitation periods for their international arbitration Acts.

A decision by the Supreme Court of Canada will be important in bringing certainty and uniformity across Canada to the permissibility of time constraints on the right to seek recognition and enforcement of international arbitral awards.

A decision by the Supreme Court of Canada may also have global significance.

Canada is not the only country in which limitation periods are being applied to recognition and enforcement applications. At least 50 countries purport to apply some form of limitation period. Two years is the shortest period; but the length, while of practical importance, is not the issue here. The issue is whether any limitation period is allowed under provincial international arbitration statutes (or any other Canadian statutes) or under the New York Convention.

For the Supreme Court of Canada to consider this important issue would be in keeping with its leadership role on international legal issues.

A major opportunity would be lost both for Canada and for global business activity if the Supreme Court declines to grant leave in Yugraneft v. Rexx Management.

This article is based on an article previously published as a web exclusive for Canadian Lawyer.

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
Check to state you have read and
agree to our Terms and Conditions

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.

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 by clicking here .

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.


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.