This country-specific Q&A provides an overview of international arbitration laws and regulations applicable in Canada.
1. What legislation applies to arbitration in your country? Are there any mandatory laws?
Every province and territory of Canada, except Quebec, has two arbitration statutes. One statute applies to domestic arbitrations, while the other applies to international commercial arbitrations. For example, in Alberta, the Arbitration Act, RSA 2000, c A-43 (Alberta Arbitration Act) applies to domestic arbitrations, while the International Commercial Arbitration Act, RSA 2000, c 1-5 (Alberta International Commercial Arbitration Act) applies to international commercial arbitrations.
In Quebec, the Civil Code of Quebec (CCQ) and the Code of Civil Procedure (CCP) apply to both domestic and international commercial arbitrations.
At the federal level, the Commercial Arbitration Act, RSC 1985, c 17 (2nd Supp) (Federal Commercial Arbitration Act) applies to both domestic and international commercial arbitrations when: (a) at least one of the parties is a federal department or Crown corporation; or (b) the arbitration involves an admiralty or maritime matter.
There are mandatory laws regarding arbitration. However, the mandatory laws depend on which statute applies. Common mandatory laws in domestic arbitration statutes provide that:
- the parties shall be treated equally and given an opportunity to present a case;
- the courts must stay court proceedings about matters that are subject to an arbitration agreement;
- if an arbitration agreement does not specify the number of arbitrators who are to form the arbitral tribunal, the arbitral tribunal shall be composed of one arbitrator;
- an arbitrator shall be independent of the parties and act impartially; and
- subject to the arbitration agreement, a party may only appeal on questions of law with leave of the court. See, for example, ss. 7(1), 9, 11(1), 19, 44(2), and 44(2.1) of the Alberta Arbitration Act and ss. 7(1), 9, 11(1), 19, and 45(1) of the Ontario Arbitration Act, 1991, SO 1991, c 17 (Ontario Arbitration Act).
Common mandatory laws in international commercial arbitration statutes, including the Federal Commercial Arbitration Act, provide that:
- arbitration agreements shall be in writing;
- if an arbitration agreement does not specify the number of arbitrators who are to form the arbitral tribunal, the arbitral tribunal shall be composed of three arbitrators; and
- the parties shall be treated equally and given a full opportunity to present a case. See, for example, ss. 7(2), 10, and 18 of Schedule 1 of the Federal Commercial Arbitration Act and ss. 7(2), 10, and 18 of Schedule 2 of the Alberta International Commercial Arbitration Act.
2. Is your country a signatory to the New York Convention? Are there any reservations to the general obligations of the Convention?
Canada is a signatory to the New York Convention. The Convention entered into force in Canada on August 10, 1986.
Canada has issued one reservation to the general obligations of the New York Convention. In every province and territory of Canada, except Quebec, the New York Convention only applies to differences arising out of legal relationships that are considered commercial pursuant to the laws of Canada.
3. What other arbitration-related treaties and conventions is your country a party to?
In addition to the New York Convention, Canada is a party to:
- the Convention on the Settlement of Investment Disputes between States and Nationals of Other States of 1965 (ICSID); and
- numerous bilateral and multilateral investment treaties and free trade agreements.
4. Is the law governing international arbitration in your country based on the UNCITRAL Model Law? Are there significant differences between the two?
The law governing international arbitration in Canada is based on the UNCITRAL Model Law. Every international commercial arbitration statute, except those in British Columbia and Quebec, incorporate the UNCITRAL Model Law as a schedule. In British Columbia and Quebec, the statutes applicable to international commercial arbitrations are generally consistent with the UNCITRAL Model Law.
5. Are there any impending plans to reform the arbitration laws in your country?
British Columbia brought into force a new domestic Arbitration Act, S.B.C 2020, c. 2 on September 1, 2020. We are not aware of any other impending plans to reform any of the other arbitration statutes in Canada.
6. What arbitral institutions (if any) exist in your country? When were their rules last amended? Are any amendments being considered?
Numerous arbitral institutions exist in Canada, including the ADR Institute of Canada Inc. (ADRIC), Vancouver International Arbitration Centre (VanIAC, formerly the BCICAC), Canadian International Internet Dispute Resolution Centre (CIIDRC, a division of VanIAC), Canadian Arbitration Association (CAA), and International Centre for Dispute Resolution of Canada (ICDR – Canada).
The ADRIC, VanIAC (international arbitration rules), and CAA rules were last amended in 2016, while the ICDR rules were last amended in 2015. VanIAC amended its domestic arbitration rules in 2020. VanIAC also plans to amend its international arbitration rules in 2021.
7. Is there a specialist arbitration court in your country?
There is no "specialist arbitration court" in Canada. However, Canadian courts are very familiar with international arbitration law and practice, recognize and respect party autonomy, and recognize and enforce foreign arbitral awards.
8. What are the validity requirements for an arbitration agreement under the laws of your country?
The validity requirements for an arbitration agreement depend on which statute applies. Some domestic arbitration statutes require that arbitration agreements be in writing, while other domestic arbitration statutes, such as those in Alberta and Ontario, do not expressly. Every international commercial arbitration statute, including the Federal Commercial Arbitration Act, require that arbitration agreements be in writing.
9. Are arbitration clauses considered separable from the main contract?
Arbitration clauses are considered separable from the main contract. Some domestic arbitration statutes expressly provide that arbitration clauses are separable from the main contract. In the provinces and territories with domestic arbitration statutes that do not provide that arbitration clauses are separable from the main contract, the courts apply the common law doctrine of separability. Every international commercial arbitration statute, including the Federal Commercial Arbitration Act, incorporates Article 16 of the UNCITRAL Model Law, which provides that arbitration clauses are separable from the main contract.
10. Do the courts of your country apply a validation principle under which an arbitration agreement should be considered valid and enforceable if it would be so considered under at least one of the national laws potentially applicable to it?
The "validation principle" has not been widely applied by Canadian courts. Canadian courts instead generally take the position that the validity of any given arbitration clause is within the jurisdiction of the arbitrator and should be deferred to the arbitrator. (See Morran v. Carbone,  O.J. No. 409 (Sup. Ct. J. [Commercial List])
Canadian courts apply the competence – competence principle pursuant to which arbitrators have the jurisdiction to determine their jurisdiction, leaving the question as to which law is applicable to the arbitration agreement to be determined by arbitrator. This includes situations in which a party to an arbitration agreement argues that an arbitration clause is void, inoperative, or incapable of being performed; even in such situations Canadian courts have determined that their jurisdiction to make such a finding is limited, and that arbitrators should be the first to consider challenges to their jurisdiction. (See Seidel v. Telus Communications Inc., 2011 SCC 15; Ciano Trading & Services C.T. & S.R.L. v. Skylink Aviation Inc., 2015 ONCA 89)
Canadian courts respect parties' express or implied choice of law, unless there is a strong cause to override that agreement. In determining that choice of law, the court will look to see if the intention of the parties as to the law governing the agreement is expressly stated, in which case, generally that law governs. If the intention of the parties as to the governing law is not expressly stated, but may properly be inferred from the terms and nature of the contract and the surrounding circumstances, then the intention so inferred, in general, governs. If the intention of the parties as to the applicable law cannot be ascertained from the express terms of the contract, or cannot be inferred from the terms of the contract in the light of surrounding circumstances, the intention of the parties may be inferred by referring to the system of law with which the contract has its closest and most real
connection. (See O'Brien v. Canadian Pacific Railway (1972) 25 D.L.R. (3d) 230 (Sask C.A)) Where the arbitration agreement is silent on the law that governs it, and there is an absence of any other indication as to what law should govern arbitration agreement, the court will generally apply law of the commercial contract to the arbitration agreement.
Originally published by Legal 500 Comparative Guide to International Arbitration 2020.
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