International Commercial Dispute Resolution BCAMI Symposium BC Arbitration & Mediation Institute The Morris J Wosk Centre for Dialogue Simon Fraser University, May 30 & 31, 2016 © Helmut Johannsen, P.Eng., C.Arb., FCIArb Associate Counsel, Singleton Urquhart LLP

Introduction Relevant laws Overview of some differences between domestic and international arbitrations in BC Jurisdiction and appeals Document production Use of experts Acts governing International arbitration in Canada Ad hoc vs Institutional Arbitration Challenges to Arbitrator Appointment/Continuance Enforceability of International Arbitral Award 2

Relevant Laws Law governing the contract Governs the substantive provisions of the contract Law governing the seat of the arbitration The seat usually determines what law will govern the procedure of the arbitration Determines role of courts in the arbitration and impact on issues such as interim relief If no seat specified then some institutional rules (e.g. LCIA and ICC) say tribunal may determine seat Seat is not the same as venue/place of hearing Law of the arbitration agreement Governs the construction of the arbitration agreement itself Where not specified can be law of contract or seat 3

Governing Legislation in Canada UNCITRAL Model Law The Model Law on International Commercial Arbitration Adopted by the United Nations Commission on International Trade Law (UNCITRAL) on June 21, 1985 Designed to assist States in reforming and modernizing their laws on arbitral procedure to take into account the particular features and needs of international commercial arbitration Covers all stages of the arbitral process: arbitration agreement composition and jurisdiction of the tribunal extent of court intervention recognition and enforcement of the arbitral award 4

Governing Legislation in Canada (cont’d) UNCITRAL Model Law (cont’d) Reflects worldwide consensus on key aspects of the international arbitration practice Has been accepted by States of all regions In 1986, Canada, with consent of the provinces, adopted the Model Law and became the first country in the world to do so Today, the Model Law governs Canadian international arbitrations and has been adopted throughout Canada (including NWT and Nunavut) with only minor modifications 5

Governing Legislation in Canada (cont’d) UNCITRAL Model Law (cont’d) Most notable modifications in some provinces include provisions which: Encourage settlement and allow the arbitrators, with agreement of parties, to employ mediation, conciliation or other procedures at any time during the proceedings (and confirms the use of such procedures does not disqualify arbitrators from thereafter resuming their roles as arbitrators) Allow courts, on application of the parties to two or more arbitrations, to consolidate or to stay arbitration proceedings 6

Governing Legislation in Canada (cont’d) Provincial/Territorial International Commercial Arbitration Laws The international arbitration legislation in force in the province/territory in which the arbitration is brought applies to all international commercial arbitrations between parties, except where the federal Commercial Arbitration Act applies 7

Governing Legislation in Canada (cont’d) Provincial/Territorial - International Arbitration Acts: Alberta, International Commercial Arbitration Act, R.S.A. 2000, c. I-5; British Columbia, International Commercial Arbitration Act, R.S.B.C. 1996, c. 233; Manitoba, International Commercial Arbitration Act, C.C.S.M. c. C151; New Brunswick, International Commercial Arbitration Act, S.N.B. 2011, c. 176; Newfoundland and Labrador, International Commercial Arbitration Act, R.S.N.L. 1990, c. I-15; Northwest Territories, International Commercial Arbitration Act, R.S.N.W.T. 1988, c. I-6; Nova Scotia, International Commercial Arbitration Act, R.S.N.S. 1989, c. 234; 8

Governing Legislation in Canada (cont’d) Provincial/Territorial – International Arbitration Acts (cont’d): Nunavut, International Commercial Arbitration Act, R.S.N.W.T. (Nu) 1988, c. I-6; Ontario, International Commercial Arbitration Act, R.S.O. 1990, c. I.9; Prince Edward Island, International Commercial Arbitration Act, R.S.P.E.I. 1988, c. I-5; Quebec, Civil Code of Québec, LRQ, c. C-1991 (Chapter XVIII: Arbitration Agreements); Code of Civil Procedure, R.S.Q., c. C-25 (Chapter II: Arbitration by Advocates, Book VII: Arbitrations) Saskatchewan, International Commercial Arbitration Act, S.S , c. I-10.2; Yukon Territory, International Commercial Arbitration Act, R.S.Y. 2002, c

Governing Legislation in Canada (cont’d) Federal – International (and domestic) Commercial Arbitration The federal Commercial Arbitration Act, R.S.C. 1985, c. 17 (2nd Supp.) Governs all commercial arbitrations, whether domestic or international, but only in relation to matters where: At least one of the parties is: Her Majesty in right of Canada, or A department of the Canadian federal government, or A Crown corporation, or Arbitration is in relation to maritime or admiralty matters 10

The BC Landscape – Domestic Arbitration Arbitration Act, RSBC 1996, c. 55 Jurisdiction: If arbitral error committed, Court may (s. 18(1)) remove arbitrator or (s. 30(1)) set aside award or remit award back to arbitrator for reconsideration, with “arbitral error” defined (s. 1) as including: Corrupt or fraudulent conduct Bias Exceeding the arbitrator’s powers Failure to observe rules of natural justice Rules: Unless parties otherwise agree, British Columbia International Commercial Arbitration Centre rules for domestic commercial arbitrations apply (s. 22) 11

The BC Landscape – Domestic (cont’d) Arbitration Act, RSBC 1996, c. 55 Document Production: Advance production of documents expressly provided for in Act and may be ordered by arbitrator on application of a party (s. 5) Experts No provision in Act for tribunal appointed experts Although BCICAC Domestic Rules provide for tribunal appointed expert, this is rarely done in practice Party appointed experts often treated similar to party appointed experts in litigation 12

The BC Landscape – International Arbitration International Commercial Arbitration Act, RSBC 1996, c. 233 Based on UNCITRAL Model Law & only applies where: Place of arbitration is in BC More than one state is involved, i.e.: Parties have places of business in different states Place of arbitration is someplace other than where parties have their place of business Substantial part of obligations of commercial relationship performed outside state in which parties have place of business Parties have agreed that subject matter of arbitration agreement relates to more than one state NOTE: All provinces and territories considered one state (s. 1(5)). Act applies even if the arbitration agreement refers to the Arbitration Act. 13

The BC Landscape – International (cont’d) International Commercial Arbitration Act, RSBC 1996, c. 233 Jurisdiction: Arbitral tribunal may rule on its own jurisdiction (s. 16(1) May rule on existence or validity of arbitration agreement Decision by tribunal that contract is null and void does not render arbitration provisions of agreement null and void as contract provisions regarding arbitration treated as agreement to arbitrate independent of all other terms of contract Award only set aside on limited grounds (s. 34), e.g.: Party was under some incapacity, arbitration agreement not valid under law to which parties have subjected to it, party was not given notice of appointment of arbitrator or proceedings, award deals with dispute not falling within terms of submission to arbitration, or composition of tribunal was not in accordance with agreement of the parties Contrary to public policy 14

The BC Landscape – International (cont’d) International Commercial Arbitration Act, RSBC 1996, c. 233 Rules (s. 19) Parties free to agree on procedure to be followed by arbitral tribunal in conducting the proceedings Failing agreement: NO rules are mandated Arbitral tribunal may (subject to the Act) conduct the arbitration in the manner it considers appropriate, including determining the admissibility, relevance, materiality and weight of any evidence 15

The BC Landscape – International (cont’d) International Commercial Arbitration Act, RSBC 1996, c. 233 Documents (s. 22) Only express provision for document production is s. 22, which states parties may submit with their statements (of claim/response) “all documents they consider to be relevant or may add a reference to the documents or other evidence they will submit” No right to discovery of documents, except as provided in the rules agreed to by parties (e.g. LCIA, ICC, etc.) or as arbitral tribunal at its discretion may order Substantial Cultural differences exist between common law and civil law counsel and arbitrators on extent of document production, particularly if counsel not experienced in international arbitrations involved Can have “documents only” arbitration 16

The BC Landscape – International (cont’d) International Commercial Arbitration Act, RSBC 1996, c. 233 Experts Party appointed experts Few provisions in Model Law dealing with party appointed experts Tribunal appointed experts (s. 26) Unless otherwise agreed, tribunal may appoint one or more experts Civil law arbitrators and counsel typically more comfortable with this than common law arbitrators/counsel 17

Institutional Arbitration vs. Ad hoc Key Features of Institutional Arbitration: Provides model arbitration clause(s) Institution administers proceedings Appoints arbitrators (if parties cannot agree) Reduces pre-arbitration litigation and delays over appointments and challenges to arbitrators Institution’s rules can be adopted Can be more predictable Provides supervision and administration but at a price Awards may be more readily recognized and enforced BUT: check rules of the institution to see if they are satisfactory (e.g. Do they provide for injunctions or interim measures? Do they set out time limits? etc.) 18

Institutional Arbitration vs. Ad hoc Key Features of Institutional Arbitration (cont’d) : Model Arbitration Clause Arbitral institutions often recommend model clauses for future disputes In each case consider the appropriate dispute resolution method and the particular needs of a contract or client If an institution is selected to administer the arbitration it is wise to incorporate institution’s model clause without modification In addition to institutional model clauses, consider setting out the place and language of the arbitration, the number of arbitrators (one or three) and the law governing the agreement Always check most recent version of the clause before you use it 19

Institutional Arbitration vs. Ad hoc (cont’d) Key Features of Ad hoc Arbitration: Not administered or supervised by an arbitral institution (such as ICC, LCIA, etc.) In Canada, ad hoc is popular for domestic commercial arbitration but can be somewhat problematic for international commercial arbitration Some provinces/territories provide for rules if contract is absent and parties fail to agree on rules May or may not adopt the rules of a particular institution Depends on and requires greater party co-operation Degree of success and satisfaction often dependent on experience of arbitrators in international arbitration 20

Institutional Arbitration vs. Ad hoc (cont’d) Key Features of Ad hoc Arbitration (cont’d): Procedures can be more flexible and tailored to needs of the parties Heavy reliance on arbitrators to keep process moving UNCITRAL Arbitration Rules can be more readily adapted than institutional rules Save institutional fees Dealing with financial arrangements for security deposits and payment of arbitrators involves arbitrators directly Can lead to extra delay and cost if a party needs to resort to court to appoint an arbitrator or compel arbitration 21

Arbitral Institutions ICC - International Chamber of Commerce ICC Court based in Paris Secretariat provides guidance on the conduct of the arbitration Terms of Reference Costs based on value Scrutiny/review of awards prior to issue LCIA - London Court of International Arbitration LCIA Court based in London No scrutiny of awards by LCIA Court Cost based on hourly rate ICSID - International Centre for Settlement of Investment Disputes World Bank Investment Law, BITs, MITs No appeal of point of law. Limited “procedural” appeal No challenge outside of ICSID Convention 22

Arbitral Institutions (cont’d) Arbitral Institutions (alphabetically) ADR Chambers ADR Institute of Canada American Arbitration Association (AAA) Australian Centre for International Commercial Arbitration (ACICA) British Columbia International Commercial Arbitration Centre (BCICAC) Canadian Commercial Arbitration Centre (CCAC) CPR Institute for Dispute Resolution (New York) Chamber of Commerce and Industry of Geneva Hong Kong International Arbitration Centre (HKIAC) 23

Arbitral Institutions (cont’d) Arbitral Institutions (alphabetically, cont’d) Inter-American Commercial Arbitration Commission (IACAC) International Centre for Dispute Resolution (ICDR) International Centre for Settlement of Investment Disputes (ICSID) (for investor-State arbitration) London Court of International Arbitration (LCIA) The Netherlands Arbitration Institute (NAI) Singapore International Arbitration Centre (SIAC) Stockholm Chamber of Commerce (SCC) United Nations Commission on International Trade Law (UNCITRAL) Note that UNCITRAL provides Rules but does not administer disputes 24

Pathological Arbitration Clauses Pathological clauses are ones drafted in way that: Leads to disputes over interpretation of the arbitral agreement Results in failure of arbitration clause Results in unenforceability of award Generally problems include: Equivocation as to whether arbitration is intended Lack of clarity over what dispute should be arbitrated Naming an arbitrator who refuses to or cannot act Naming an institution that does not exist Providing for conflicting or unclear procedures Failure to have an effective appointing procedure A hybrid or multi-tier clause which fails to operate properly 25

Challenges to Arbitrator Appointment/Continuance Challenges to appointment of arbitrator(s) and to bias/conflicts/etc. during course of hearing Issues of conflict and perceived conflicts in particular is a growing issue, especially in some jurisdictions Requires full disclosure But disclosure of what? For how far back? Business conflicts only? Professional affiliations? Topic warrants entire session on its own 26

Enforcement of a Foreign Award – The 1958 New York Convention 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards Often referred to simply as the “New York Convention” It is the mechanism that provides for enforcement of award in jurisdictions where unsuccessful party has assets Provides for greater enforceability of arbitral awards than judgments in many jurisdictions Article V of the NY Convention provides for limited, defined grounds upon which recognition and enforcement of an arbitral award may be refused 27

Enforcement of a Foreign Award – The 1958 New York Convention (cont’d) New York Convention (cont’d) Currently has 142 parties In most cases it is desirable for the seat of the arbitration to be in a country that has signed the Convention Canada acceded to and ratified the New York Convention enactment at the federal level of the United Nations Foreign Arbitral Awards Convention Act, R.S.C. 1985, c. 16 (2nd Supp.) Provinces & territories implemented New York Convention either: Within same statute as implementation of Model Law (e.g. Alta., Man., NB, Nfld., NWT, NS, Nunavut, PEI and Ont.), or By separate statute (e.g. BC, Foreign Arbitral Awards Act, R.S.B.C. 1996, c. 154; Sask., Enforcement of Foreign Arbitral Awards Act, S.S. 1996, C. E-9.12 ; Yukon, Foreign Arbitral Awards Act, R.S.Y. 2002, c. 93. ) 28

Enforcement of a Foreign Award – The 1958 New York Convention (cont’d) Grounds for refusal to recognize or enforce award under Article V: Parties to arbitration agreement did not have capacity (under law applicable to them) Arbitration agreement is invalid under the law to which the parties have subjected it Party against whom award is invoked was not given proper notice of appointment of arbitrator or of arbitration proceedings or was otherwise unable to present his or her case Award deals with subject matter beyond the scope of the submission to arbitration 29

Enforcement of a Foreign Award – The 1958 New York Convention (cont’d) Grounds for refusal to recognize or enforce award under Article V (cont’d): Composition of arbitral tribunal or the arbitral procedure not in accordance with agreement of parties (or law of seat of arbitration) Award not yet become binding on parties, or has been set aside or suspended by competent authority in country in which award was made Court in jurisdiction where recognition and enforcement are sought finds: Subject matter of dispute is not capable of settlement by arbitration under law of that country Recognition or enforcement of award contrary to public policy of that country 30

Enforcement of a Foreign Award – The 1958 New York Convention (cont’d) Grounds for refusal to recognize or enforce award under Article V (cont’d): Article V of New York Convention must be carefully considered when drafting arbitration agreement, in particular when choosing seat of arbitration to ensure procedure contemplated by parties will lead to enforceable award 31

Enforcement of a Foreign Award – The 1958 New York Convention (cont’d) Approach of Canadian courts towards enforcement of international arbitral awards Enforcement of international arbitral award requires application to court in the enforcing jurisdiction: Requires notice to person against whom enforcement is sought Supported by original or certified copy of arbitration award Court will enforce international arbitration awards where none of the limited circumstances in Article V of the New York Convention apply Once Judgment granted recognizing award, court has power to enforce award by any means normally available for any final order or judgment of that court 32

Thank You 33