Comparative Guides
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Results: 4 Answers
International Arbitration
8.
The tribunal
8.1
How is the tribunal appointed?
 
Canada
Article 11(2) of the UNCITRAL Model Law provides that the parties are free to agree on a procedure for appointing the arbitrators subject to Articles 11(4) and (5) of the UNCITRAL Model Law. Failing such an agreement, in an arbitration with three arbitrators, each party shall appoint one arbitrator and the two arbitrators shall appoint the third. If a party fails to appoint an arbitrator or the two appointed arbitrators fail to agree on a third within 30 days, the court will make an appointment upon request by one of the parties. For arbitrations with one arbitrator, the court shall appoint the arbitrator upon request of the parties.

Article 11(4) provides that a party may request a court to take the “necessary measure” if:

  • a party fails to act as required under such procedure;
  • the parties, or two arbitrators, are unable to reach an agreement expected of them under such procedure; or
  • a third party, including an institution, fails to perform any function entrusted to it under such procedure, unless the agreement on the appointment procedure provides other means for securing an arbitrator.

Article 11(5) provides that the court or other authority that appoints an arbitrator pursuant to Article 11(4) shall have due regard to any qualifications of the arbitrator required by the agreement of the parties, and to such considerations as are likely to secure the appointment of an independent and impartial arbitrator.

The British Columbia International Commercial Arbitration Act has similar provisions, the only difference being that it requires that the appointment be made by the chief justice rather than the court (International Commercial Arbitration Act, RSBC 1996, c 233, s 27.01).

In Quebec, Chapter II of the Code of Civil Procedure (CCP) provides that the parties appoint an arbitrator to decide their dispute. They do so by mutual agreement, unless they ask a third party to make the appointment. The parties may choose to appoint a panel of arbitrators, in which case each party appoints one arbitrator and the two so appointed appoint the third. If an arbitrator must be replaced, the procedure for the appointment of an arbitrator under Article 624 of the CCP applies.

Arbitration by a panel of three arbitrators should be reserved for dispute resolution where the interest involved and the complexity of the case warrant it. Usually, when arbitration is limited to legal issues, it is not necessary to have recourse to three arbitrators. When arbitration raises highly technical issues, it may be advantageous to choose two subject-matter experts and a lawyer as chair. The chair will be able to ensure the smooth running of the hearing and the respect of the rules of natural justice.

For more information about this answer please contact: Mark Gelowitz from Osler, Hoskin & Harcourt LLP
8.2
Are there any requirements as to the number or qualification of arbitrators in your jurisdiction?
 
Canada
Parties are free to choose the number of arbitrators in international arbitration. In the absence of agreement, arbitrations conducted under the UNCITRAL Model Law are determined by a panel of three arbitrators.

In relation to the domestic context, if an agreement is silent, then the arbitration is usually conducted by one arbitrator. However, the federal statute ¡V the Commercial Arbitration Act ¡V provides that three arbitrators shall be appointed if the parties fail to agree on a number.

Parties are free to agree on the qualifications of the arbitrators. Under the UNCITRAL Model Law, an arbitrator for an international arbitration is required to be impartial and independent. The federal Commercial Arbitration Act has a similar requirement for independence and impartiality. However, none of the provincial arbitration acts imposes this requirement.

In Quebec, neither the Civil Code of Quebec (CCQ) nor the CCP imposes obligations regarding the qualifications of the arbitrators. The arbitrators will be chosen based on their areas of expertise and their expertise in general, but also on case management and the administration of evidence, and certainly their availability ƒ{ not only to start and hear the case within a reasonable period, if not in the short term, but also to deliver the award within a reasonably short term after the debate.

For more information about this answer please contact: Mark Gelowitz from Osler, Hoskin & Harcourt LLP
8.3
Can an arbitrator be challenged in your jurisdiction? If so, on what basis? Are there any restrictions on the challenge of an arbitrator?
 
Canada
The law governing grounds for challenge of an arbitrator is identical under the UNCITRAL Model Law and in the domestic context.

An arbitrator can be challenged only on the basis of bias or if he or she lacks the necessary qualifications agreed to by the parties. The challenging party must have been unaware of the reasons for the challenge if it participated in the selection and appointment process. The prevailing Canadian standard for disqualification of an arbitrator is one of reasonable apprehension of bias.

In Quebec, the CCP provides that an arbitrator may be recused if there is serious reason to question his or her impartiality or if the arbitrator does not have the qualifications agreed to by the parties. Article 626 of the CCP provides that an arbitrator is required to declare to the parties any fact that could cast doubt on the arbitrator’s impartiality and justify a recusal.

For more information about this answer please contact: Mark Gelowitz from Osler, Hoskin & Harcourt LLP
8.4
If a challenge is successful, how is the arbitrator replaced?
 
Canada
When an arbitrator is removed, a replacement is appointed using the same procedure as the appointment of the original arbitrator. This is true under both the UNCITRAL Model Law and the various provincial arbitration acts.

The CCP provides that if an arbitrator must be replaced, the procedure for the appointment of an arbitrator under Article 624 of the CCP applies.

For more information about this answer please contact: Mark Gelowitz from Osler, Hoskin & Harcourt LLP
8.5
What duties are imposed on arbitrators? Are these all imposed by legislation?
 
Canada
The following duties have been imposed on arbitrators by legislation:

  • a duty to treat parties equally (for example, UNCITRAL Model Law, Article 18);
  • a duty to give each party a full opportunity to present its case (for example, UNCITRAL Model Law, Article 18); and
  • a duty requiring arbitrators to disclose circumstances that likely lead to a conflict of interest (UNCITRAL Model Law, Article 12 and Alexander Gay and Alexandre Kaufman, Annotated Ontario Arbitration Legislation 2nd ed (Toronto: Thomson Reuters), p564).

In the domestic context, the various provincial arbitration acts echo the UNCITRAL Model Law’s requirements to treat parties fairly and provide each party with an opportunity to present its case. Arbitrators must:

  • listen fairly to both sides;
  • give both parties a fair opportunity to contradict or correct prejudicial statements;
  • not receive evidence from one party behind the back of the other; and
  • ensure that a responding party knows the case it has to meet.

Arbitrators must respect the principles of natural justice. A breach of these rules allows a court to pronounce the annulment of the arbitration award. Thus, it is important for the arbitrators to ensure that the parties whose rights may be affected by the award are heard, in order to respect the principle of justice codified in Article 17 of the CCP, which provides that a claim may not be made by a party unless it has been heard or duly summoned.

The audi alteram partem rule also has a specific application to conventional arbitration, since Paragraph 4 of Article 646 of the CCP specifically provides that a violation of this principle may be raised to prevent the homologation of the arbitral award by the court.

For more information about this answer please contact: Mark Gelowitz from Osler, Hoskin & Harcourt LLP
8.6
What powers does an arbitrator have in relation to: (a) procedure, including evidence; (b) interim relief; (c) parties which do not comply with its orders; (d) issuing partial final awards; (e) the remedies it can grant in a final award and (f) interest?
 
Canada
(a) Procedure, including evidence?

Parties are free to determine the applicable procedural rules. In the absence of the parties’ agreement, the tribunal can generally conduct an arbitration in the manner it considers appropriate (UNCITRAL Model Law, Article 19).

The UNCITRAL Model Law provides general procedural rules concerning:

  • the exchange of statements;
  • the holding of oral hearings; and
  • the production of documents.

Domestic arbitrations follow similar guidelines. Most provincial statutes regulating arbitration set some default rules, but generally allow parties to select their own procedure.

As further guidance, the Supreme Court of Canada has held that the procedure to be followed in an arbitration is established by the tribunal, exercising its discretion, provided that the parties are given an equal opportunity to make their case and meet the case made against them (Moreau-Bérubé v New Brunswick (Judicial Council), [2002] SCJ No 9, [2002] 1 SCR 249 (SCC)).

The CCP provides that the arbitrator may require each party to send the arbitrator, within a specified time, a statement of its contentions and any exhibits mentioned, and to send such statement to the other party, if not already done. Any expert reports and other documents on which the arbitrator may base the arbitration award must also be sent to the parties. The arbitrator, or a party with leave of the arbitrator, may request the assistance of the court to obtain evidence, including to compel a witness who refuses, without valid reason, to attend, answer or produce real evidence in their possession.

(b) Interim relief?

Both international and domestic tribunals may exercise their discretion to grant interim measures when justified. However, under the UNCITRAL Model Law, parties can agree that arbitrators are barred from awarding interim relief. Where interim measures are granted, the arbitral tribunal may require any party to provide appropriate security in connection with such measures (Quintette Coal Ltd v Nippon Steel Corp, [1988] BCJ No 1354, 29 BCLR (2d) 233 (BCSC)).

Various provincial arbitration acts provide that the arbitral tribunal may grant interim measures at the request of a party. Interim awards may be enforced in the same manner as final awards. Further, the acts provide that interim awards may be challenged in the same manner as final awards (for example, Avenue Canadian Ventures, Corp v No 151 Cathedral Ventures Ltd, [2009] BCJ No 246, 2009 BCSC 171 (BCSC)). In provinces where arbitrators have not been given express legislative authority to grant interim measures, courts have still granted them such powers based on overall legislative intention (Farah v Sauvageau Holdings Inc, [2011] OJ No 1242, 11 CPC (7th) 363 (Ont SCJ)).

However, these powers do not extend a Canadian tribunal’s jurisdiction to parties which are not bound by the arbitration agreement. To the extent that an interim order purports to bind any non-party, the order will be set aside by a court. Accordingly, there has been conflicting law in Canada as to whether interim relief can include injunctive relief, as these orders often enjoin or direct the conduct of strangers to the arbitration agreement which are not bound by the jurisdiction of the arbitral tribunal (Farah v Sauvageau Holdings Inc, [2011] OJ No 1242, 11 CPC (7th) 363 (Ont SCJ)).

In Quebec, the CCP provides that the arbitrator may, on a party’s request, take any provisional measure or any measure to safeguard the parties’ rights, subject to the conditions that the arbitrator determines and, if necessary, the requirement that a suretyship be provided to cover costs and the reparation of any prejudice that may result from such a measure. Such a decision is binding on the parties; but one of the parties may, if necessary, ask the court to homologate the decision to give it the same force and effect as a judgment of the court.

(c) Parties which do not comply with its orders?

Arbitral tribunals are not granted any express powers in relation to parties that do not comply with their orders. If a party chooses not to comply with a given award, the party seeking to enforce the award must seek recourse through the courts.

Canadian courts enforce arbitral awards just as they do their own judgments. In British Columbia, Northwest Territories, Nova Scotia, Prince Edward Island and Yukon, the arbitration acts provide that judgment is simply entered in the terms of the award. However, each of the other provinces requires either leave of the court (Newfoundland and Labrador) or an application process (Alberta, Manitoba, New Brunswick, Ontario and Saskatchewan) to enforce the award.

(d) Issuing partial final awards?

Arbitral tribunals may render partial awards on key issues when doing so could result in a more efficient arbitration process.

In domestic arbitrations, various provincial acts provide that partial awards may be enforced in the same manner as final awards. Further, partial awards may be challenged in the same manner as final awards (For example, Avenue Canadian Ventures, Corp v No 151 Cathedral Ventures Ltd, [2009] BCJ No 246, 2009 BCSC 171 (BCSC)).

In Quebec, neither the CCP nor the CCQ contains provisions regarding the possibility of issuing partial final awards. However, the question is considered at length, and the authors are of the opinion that if the circumstances justify it  such as where there is a serious question as to the jurisdiction of the court  the court may decide to hold a separate hearing on this issue and then order a partial award.

(e) The remedies it can grant in a final award?

A remedy granted by an arbitral tribunal will vary depending on the arbitration agreement and the circumstances of each arbitration. Generally speaking, international arbitral tribunals seated in Canada can order any relief that is available under the applicable law. The arbitration acts of Alberta, Manitoba, New Brunswick, Ontario and Saskatchewan expressly entitle arbitral tribunals to decide a dispute in accordance with law, including equity, and to order specific performance, injunctions and other equitable remedies.

However, it is unclear whether arbitrators conducting domestic proceedings in some provinces have jurisdiction to order equitable relief, such as injunctions and specific performance. For example, several trial court decisions in British Columbia have found that arbitral tribunals only have jurisdiction to order equitable relief where the parties had expressly provided for that remedy after the start of the arbitration, as part of an agreement waiving appeal rights. However, the British Columbia Court of Appeal ultimately ruled that arbitrators can grant equitable relief.

Finally, because arbitral tribunals lack inherent jurisdiction, it has also been held that an arbitrator has no power to award punitive damages unless such a power is expressly provided for in the arbitration agreement or in legislation. However, punitive damages have been found to fall within an arbitrator’s jurisdiction in other cases. The parties’ agreement about what is being submitted to arbitration must be considered.

(f) Interest?

The Supreme Court of Canada has held that provincial arbitration acts generally empower arbitrators to award interest (British Columbia (Forests) v Teal Cedar Products Ltd, [2013] SCJ No 51, 2013 SCC 51 (SCC)). However, this power is limited to simple interest, unless legislation specifically provides the power to award compound interest (Tepei v Insurance Corp of British Columbia, [2009] BCJ No 1018, 2009 BCSC 684 (BCSC).

There are no provisions in the UNCITRAL Model Law that speak to an arbitrator’s ability to award interest.

For more information about this answer please contact: Mark Gelowitz from Osler, Hoskin & Harcourt LLP
8.7
How may a tribunal seated in your jurisdiction proceed if a party does not participate in the arbitration?
 
Canada
The powers of the tribunal depend on what the parties have agreed to. If there is a valid arbitration clause in the agreement and the parties do not agree to different terms, the UNCITRAL Model Law applies:

  • If, without showing sufficient cause, the claimant fails to communicate its statement of claim, the arbitral tribunal must terminate the proceedings;
  • If the respondent fails to communicate its statement of defence, the proceedings continue without treating such failure in itself as an admission of the claimant’s allegations; and
  • If any party fails to appear at a hearing or to produce documentary evidence, the arbitral tribunal may continue the proceedings and make the award on the evidence before it (UNCITRAL Model Law, Article 25).

In Quebec, neither the CCP nor the CCQ contains provisions regarding this issue.

For more information about this answer please contact: Mark Gelowitz from Osler, Hoskin & Harcourt LLP
8.8
Are arbitrators immune from liability?
 
Canada
In the absence of bad faith, an arbitrator is immune from all types of civil liability as a matter of public law because of the similarity of arbitration to the judicial function (Flock v Beattie, [2010] 11 WWR 177 (Alta QB)).

An arbitrator is not liable to be sued for want of skill (Pappa v Rose (1872), LR 7 CP 525) or for negligence (Chambers v Goldthorpe (1901), [1901] 1 KB 624 (Eng CA); Campbell Flour Mills Co v Bowes (1914), 32 OLR 270 (Ont CA)) in the conduct of the arbitration, but an arbitrator who is a party to the submission may incur legal liability through refusing to act (Pappa v Rose (1872), LR 7 CP 525). Therefore, if an arbitrator delays in making an arbitration award – and even if such delay contravenes the provisions of the arbitration agreement – the arbitrator is immune from an action for breach of contract in the absence of bad faith or fraud (Flock v Beattie (2010), [2010] 11 WWR 177 (Alta QB)).

Many institutional arbitration rules also provide that neither the institution nor the tribunal will be liable to any party for any act or omission in connection with any arbitration conducted under the institution’s rules, and that the tribunal and the institution have the same protection and immunity as a judge of the superior court in the province or territory in which the arbitration takes place. This is also a common provision in ad hoc arbitration agreements. Article 12 of the UNCITRAL Model Law further provides that liability on the part of the arbitrators and appointing authorities is excluded to the extent possible under the applicable law (UNCITRAL Model Law, Article 12).

Article 621 of the CCP provides that arbitrators cannot be prosecuted for an act performed in the course of their arbitration mission, unless they acted in bad faith or committed an intentional or gross fault.

For more information about this answer please contact: Mark Gelowitz from Osler, Hoskin & Harcourt LLP