It is rare that an arbitral institution and its procedural rules are altered through legislative decree. Interestingly, this scenario arose in the Superior Court's recent decision in InFrontier AF LP v Rahmani, 2025 ONSC 3968 ("InFrontier"), presenting an unusual question of enforcement where the parties' arbitration agreement did not contemplate such a circumstance. Specifically at issue inInFrontierwas whether an award rendered under the rules of a legislatively-substituted institution – the Dubai International Arbitration Centre ("DIAC") – could be enforced in Ontario, despite the arbitration agreement referencing the now-defunct rules of its predecessor, the Dubai International Finance Centre – London Court of International Arbitration (the "DIFC-LCIA").
Although Canadian readers are unlikely to encounter a similar situation in the foreseeable future, InFrontier nevertheless provides certain valuable reminders on (among other things) the importance of drafting arbitration agreements with an eye towards even remote potential obstacles to enforcement, as well as the limits of public policy and procedural fairness arguments as a basis for resisting enforcement. Below, we review the case.
Factual Background
The applicant, InFrontier AF LP ("InFrontier"), was a UK-based private equity firm. In 2020, two private schools located in Afghanistan (the "Schools") and InFrontier entered into a term loan agreement (the "Loan Agreement"). The respondent, Roeen Rahmani ("Rahmani"), an Ontario resident and founder of the two Afghanistan schools, acted as guarantor for the Loan Agreement.
The Loan Agreement contained an arbitration agreement which provides for arbitration of any dispute under the DIFC-LCIA Rules of Arbitration by one or more arbitrators appointed in accordance with said rules.1 Based on the Court's judgment, it appears the arbitration agreement did not specify that the DIFC-LCIA would be the administering institution.
However, following the issuance of Decree No. 34 by the Dubai government, the DIFC-LCIA was abolished and all of its rights and obligations were transferred to the DIAC. The new DIAC Arbitration Rules came into effect on March 21, 2022, providing that arbitration referring to the rules of the DIFC-LCIA commenced on or after March 21, 2022 would be registered by the DIAC.
InFrontier commenced Arbitration on February 10, 2023, after alleging that the Schools defaulted on the Loan Agreement. Mr. Rahmani objected to the jurisdiction of the Arbitrator under the DIAC Arbitration Rules, but the arbitrator denied his objection as well as other procedural objections for reasons given in her final award.
The arbitration proceeded under the DIAC Rules, and culminated in an award in favour of InFrontier, with Rahmani ordered to pay InFrontier roughly $3 million USD in principal, interest, penalties, and costs. Thereafter, InFrontier brought an application in Ontario to recognize and enforce this award.
Mr. Rahmani opposed the application, arguing that the arbitration was improperly constituted, conducted under the wrong rules, and in violation of the parties' original Loan Agreement. Mr. Rahmani further contended that enforcement of the award would violate Ontario public policy and that the arbitration process was procedurally unfair, denying him a reasonable opportunity to present his case.
The Application Judge's Decision
The application judge granted InFrontier's application, rejecting Mr. Rahmani's arguments that (1) the composition of the tribunal and the arbitration procedure was not in accordance with the arbitration agreement, (2) the arbitration was conducted in such a manner that Mr. Rahmani was unable to present his case, and (3) recognition and enforcement of the Award would be contrary to public policy.
The Tribunal Composition and Applicable Procedure
Mr. Rahmani's principal argument was that the Court should refuse enforcement because the arbitration was not conducted in accordance with the arbitration agreement. Mr. Rahmani contended that the parties had agreed to resolve disputes under the DIFC-LCIA Rules, and that the arbitrator was not appointed in accordance with those rules.2
The Court rejected this position, finding that both parties had contractually agreed to submit to any "amended version" of the DIFC-LCIA Rules, as expressly contemplated in the Preamble of the DIFC-LCIA Rules.3 The Court accepted InFrontier's argument that, by operation of Dubai's Decree No. (34) the DIAC Rules constituted an "amended version" of the DIFC-LCIA Rules for the purposes of the arbitration agreement. Importantly, the parties did not opt out of this substitution post-Decree (i.e. in order to revert back to the DIFC-LCIA Rules), despite their entitlement to do so under both the DIFC Arbitration Law and the DIAC Rules.
In the absence of evidence on the law of England and Wales – the governing law under the DIFC-LCIA Rules – the Court applied Canadian principles of interpretation. Following the purposive interpretation of Article (8)c of the Decree, the Court found that the replacement of DIFC-LCIA Rules with those of the DIAC Rules did not breach the Loan Agreement. This was because the institutional change was mandated by the Decree, did not materially affect the parties' procedural rights, and provided both parties the opportunity to mutually agree to apply the original DIFC-LCIA Arbitration Rules under the Loan Agreement instead of the amended version.
Public Policy
Mr. Rahmani further argued that recognition and enforcement of the Award should be denied because the Award was contrary to the public policy of Ontario.4 Mr. Rahmani based his argument on the claim that the award resulted from the Arbitrator applying procedural rules that had not been agreed upon by the parties. Mr. Rahmani contested that recognizing and enforcing an award rendered under substituted rules imposed by foreign legislation – without express party consent – would offend the public policy of Ontario.
The Court disagreed, emphasizing the high threshold for invoking the public policy exception. The Decree did not alter the parties' arbitration agreement without the consent of the parties. Instead, as in this case, a revised version of the arbitration rules became effective in a manner consistent with what the parties had contemplated – namely, that amended rules could apply if adopted prior to the commencement of arbitration. Consequently, there was insufficient evidence that the Decree functioned in a manner that is contrary to the public policy of Ontario.
Procedural Fairness
Finally, the Court rejected the argument that the arbitrator failed to provide Mr. Rahmani with a fair hearing, leaving him unable to properly present his case.5 In that regard, Mr. Rahmani relied upon the short period between InFrontier's Statement of Claim on January 18, 2024, and the hearing on April 26, 2024, as well as the challenges posed by the Taliban's takeover in Afghanistan, in arguing that these circumstances prevented him from securing legal counsel, ultimately forcing him to self-represent and act on behalf of the Schools.
However, the Court rejected Mr. Rahmani's submission that he was denied procedural fairness. The arbitrator had issued procedural orders after seeking input from both parties, granted opportunities for submissions, and gave reasoned decisions. Although Mr. Rahmani represented himself and the Schools, the arbitrator had addressed issues of representation and disclosure in a considered manner. Claims regarding insufficient disclosure – specifically documents relating to InFrontier's funders – were rejected by the arbitrator as irrelevant and immaterial to the case's outcome.
Ultimately, the application judge concluded that the hearing was fair, and consequently, that there was no basis to refuse enforcement on grounds of procedural fairness.
Commentary
As noted, InFrontier presents a highly unusual scenario that would seem to be of limited applicability to Canadian readers. That being said, it nevertheless offers an important reminder with respect to institutional changes affecting applicable procedural rules (including, for example, where an institution updates its own rules). Arbitration rules will typically include provisions dictating what occurs in case of an update to the rules, including whether parties who have selected those rules are bound by the old version or the new one. Best practice – though it is perhaps self-evident to say – remains for parties drafting an arbitration agreement to consider and address the possibility of their chosen arbitration rules being updated or amended after the arbitration agreement is executed.
The Court's treatment of Decree No. 34 also presents interesting food for thought. This issue ultimately turned on whether the DIAC Rules were an "amended version" of the DIFC-LCIA Rules, with the Court finding in the affirmative after considering the matter within the statutory context of the Decree. From a pure contractual interpretation perspective, there would seem to be a credible argument in favour of Mr. Rahmani's position – the preamble to the DIFC-LCIA referred to "such amended version of those rules as the DIFC-LCIA Arbitration Centre may have adopted" (emphasis added), indicating that it needed to be the DIFC-LCIA that amended the applicable rules rather than the DIAC or the Decree.
On the other hand, from a statutory interpretation perspective, the Decree transferred all of the DIFC-LCIA's rights and obligations to the DIAC, the implication being that the right to amend the arbitration rules was also transferred to the DIAC (which it then did). As a result, it appears the Court's conclusion was the result of statutory interpretation taking precedence over contractual interpretation, which appears reasonable insofar as the Decree was a legislative instrument binding on the parties (given their selection of the DIFC as the seat of the arbitration) and incapable of being excluded by agreement.
In addition, InFrontier raises one further issue for consideration. While InFrontier involved an institutional transition from DFIC-LCIA to DIAC, the Court expressly declined to consider whether the DIFC-LCIA Rules and the DIAC Rules were materially different, instead finding that the arbitrator had correctly applied the DIAC Rules. Future cases may arise, that test the limits of party consent (presumed or otherwise) where revised arbitral rules materially depart from those originally contemplated. In a similar scenario where two competing sets of arbitral rules are materially different, it will be interesting to see whether this might present a more robust test to the enforceability of an award (for example, on public policy grounds).
Footnotes
1. InFrontier A F LP v Rahmani, 2025 ONSC 3968, at para 7.
2. InFrontier A F LP v Rahmani, 2025 ONSC 3968, at para 18.
3. InFrontier A F LP v Rahmani, 2025 ONSC 3968, at para 30.
4. InFrontier A F LP v Rahmani, 2025 ONSC 3968, at para 54.
5. InFrontier A F LP v Rahmani, 2025 ONSC 3968, at para 61.
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