The International Arbitration Review: Canada

Introduction

Canada is a federal state made up of 10 provinces2 and three territories,3 most of which belong to the common law tradition. Quebec is Canada's only civil law jurisdiction. This federal structure and a bijural legal system have influenced the development of arbitration law and practice in Canada.

Arbitration legislation of common law provinces and territories was initially modelled after the English Arbitration Act of 1889,4 in most cases, until 1986 (though Newfoundland, Prince Edward Island and the territories still have statutes following this model).5 In 1985, after the United Nations Commission on International Trade Law (UNCITRAL) adopted the Model Law on International Commercial Arbitration (Model Law), British Columbia was the first jurisdiction in the world to adopt it.6 Following the 2006 revisions of the Model Law, Ontario and British Columbia modernised their legislation in 2017 and 2018.

Today, the provinces and territories generally (Quebec being the exception) have different statutes for domestic and international commercial arbitration.7 The common law provincial laws on international arbitration are based on the UNCITRAL Model Law, with minor differences, and typically include it as a schedule to the statute.8 The Convention on Recognition and Enforcement of Foreign Arbitral Awards (New York Convention), which has been in force in Canada since 1986,9 is also frequently appended to statutes on international commercial arbitration or is contained in a separate statute.10 Quebec, for its part, has not directly adopted the UNCITRAL Model Law and the New York Convention, but has implemented their main components through the Civil Code of Quebec11 and the Code of Civil Procedure.12 In the spirit of the Model Law and the New York Convention, the only possible recourse against international arbitration awards is by way of applications for set aside or annulment.13 Recourse to local courts is also available in other circumstances; for example, on applications to appoint an arbitrator, to stay or consolidate arbitration proceedings. Local courts in each province and territory that have jurisdiction to hear such matters are the superior courts of first instance.

Provincial legislation regarding domestic arbitration varies on matters such as appeal rights, consolidation of arbitration proceedings, evidentiary issues, and power of courts to stay court proceedings in favour of arbitration, review an arbitrator's account for fees and expenses, decide arbitrator challenges, grant interim measures, etc. The aforementioned differences between provinces command vigilance in performing due diligence before choosing to seat an arbitration in Canada.

At the federal level, the Commercial Arbitration Act (CAA) makes applicable the Commercial Arbitration Code '. . . where at least one of the parties to the arbitration is Her Majesty in right of Canada, a departmental corporation or a Crown corporation or in relation to maritime or admiralty matters'.14 Claims under paragraph 1 of Annex 14-C of the Agreement, as defined in Section 2 of the United States of America, United Mexican States and Canada Agreement (USMCA) or Article 14.D.3 of that Agreement, are also considered as 'commercial arbitration' within the meaning of the CAA.15 It is noteworthy that the country's federal structure is such that investor claims arising out of a provincial measure are to be taken against and defended by Canada.

Several arbitral institutions operate across the country, such as the ADR Chambers, the ADR Institute of Canada, the Vancouver International Commercial Arbitration Centre (VanIAC),16 and the Canadian Commercial Arbitration Center (CCAC).17 Parties may likewise resort to foreign arbitral institutions (the ICDR, for example, has a separate set of arbitration and mediation rules for Canadian disputes).

The year in review

i Developments affecting international arbitration

The past year has seen a number of significant updates occur in relation to some long-negotiated agreements, such as the USMCA, the Comprehensive Trade and Economic Agreement between Canada and the European Union (CETA) and the Canada–United Kingdom Trade Continuity Agreement (TCA).

On 1 July 2020, the USMCA entered into force,18 replacing NAFTA, which regulated trade relations between the three states for more than a quarter of a century. USMCA's entry into force means, among other things, that NAFTA's notorious Chapter 11 and its dispute settlement procedures: (1) are no longer available for new investments; and (2) will cease to apply to legacy investments (i.e., investments in the territory of the other party 'established or acquired between January 1, 1994 and the date of termination of NAFTA, and in existence on the date of entry into force of the' USMCA)19 three years after the termination of NAFTA.20

Aside from claims concerning legacy investments, investor–state dispute settlement (ISDS) under the USMCA will be available only between the United States and Mexico, in investment disputes (Annex 14-D) and investment disputes related to covered government contracts21 (Annex 14-E).22 To present a claim under the USMCA, Annex 14-D, investors must either exhaust local remedies or wait for a period of 30 months after the commencement of local proceedings.23 Moreover, claims must be submitted within a period of four years since knowledge of the breach in question and knowledge that the claimant or the enterprise has incurred loss or damage.24 Claimants must also inform respondents of their intention to submit a claim to arbitration by transmitting a notice of intent at least 90 days in advance, as per Article 14.D.3.25

While US and Canadian investors will no longer be able to bring claims against Canada or the United States, respectively, investors from Canada and Mexico could rely on the ISDS provisions of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), which entered into force in Canada on 30 December 2018.26 While the CPTPP, Chapter 9, imposes a time frame within which a claim shall be submitted to arbitration, it does not require preliminary recourse to domestic courts, as Annex 14-D of the USMCA.27 In fact, in some cases recourse to domestic adjudicatory bodies will prevent investors from accessing ISDS. As such, if an investor of a party submits a claim to a court or administrative tribunal of Chile, Mexico, Peru or Vietnam, that election 'shall be definitive and exclusive, and the investor may not thereafter submit the claim to arbitration under Section B (Investor-State Dispute Settlement)'.28 Considering the many peculiarities of Chapter 9, and the fact that the application of some of its provisions has been suspended for the time being,29 a more detailed analysis would exceed the bounds of this chapter.

Another treaty worthy of mention is CETA, which has been provisionally in force since 21 September 2017, though not some parts of the Investment Chapter. On 29 January 2021, in accordance with Article 8.28(7) of CETA, the European Union and Canada adopted rules clarifying the functioning of the CETA Appellate Tribunal. The Appellate Tribunal shall be composed of six members: two will be selected from nominations proposed by Canada, two from nominations proposed by the European Union (EU), and two will be selected from nominations of either party and shall not be nationals of either Canada or any Member State of the EU.30 Though members are appointed for a nine-year non-renewable term, the terms of three of the first six members shall be limited to six years.31 Appeals shall be heard by panels of three members or six, if the pending case raises a serious question affecting the interpretation or application of Chapter Eight (Investment) of CETA.32 While, as a general rule, appeal proceedings should be concluded within 180 days from the date a disputing party formally notifies its decision to appeal, if the Appellate Tribunal considers that it cannot issue a decision within this time frame, it shall inform the disputing parties of the reasons for the delay and provide an estimate of the period within which it will issue its decision or award, bearing in mind that it should strive to conclude the appeal proceedings within 270 days.33 The ICSID Secretariat will act as Secretariat for the Appellate Tribunal.34

On the same date, and in accordance with Article 8.44.2 of CETA, the parties adopted a code of conduct to be applied in disputes arising out of the Investment Chapter.35 Unsurprisingly, this code contains an expansive provision on disclosure obligations, among others. The same code of conduct shall apply to mediators,36 who will conduct mediations in accordance with the newly adopted rules.37 Lastly, CETA's Joint Committee also adopted rules for binding interpretations of the treaty.38

These CETA developments do not affect the UK, whose definitive departure from the European Union created the need for a new framework for Canada–UK relations. The Canada–UK TCA was signed on 9 December 2020 and entered into force on 1 April 2021. While the TCA incorporates CETA by reference, modifying it to reflect the bilateral nature of the new treaty,39 the parties are meant to negotiate a new Canada–UK free trade agreement, ideally concluding such negotiations within three years of the TCA's entry into force.40 Since CETA's ISDS provisions were not applied provisionally (as other sections were), Canada and the UK agreed to suspend their application pending a comprehensive review. This review should commence within 90 days of the TCA's entry into force and should be completed within three years of that date (though this period may be extended).41

Finally, after several years of public consultations and internal reviews, in May of 2021 the Canadian government released an updated Foreign Investment Promotion and Protection Agreement (FIPA) Model. The 2021 Model FIPA builds upon precedent versions, aiming to, inter alia, clarify the limits to certain obligations of the States and introduce notions of inclusive trade (gender equality and diversity, indigenous peoples' rights and participation, transparency in ISDS, responsible business conduct, etc.). Observers will note that key changes affect ISDS, a further sign of Canada's continued commitment towards the mechanism (despite having been dropped from the USMCA). The 2021 Model FIPA also reaffirms the States' right to regulate in the name of legitimate policy objectives, such as the environment and public health (in fact, the Model FIPA explicitly excludes all present or future tobacco control measures from ISDS). While arbitration is still preferred (the FIPA Model even contains provisions on expedited arbitration), 'if an investor-State dispute settlement mechanism, consisting of a first instance investment tribunal or an appellate mechanism, is developed under other institutional arrangements and is open to the Parties for acceptance', the parties to the agreement are required to consider whether, and to what extent, a dispute under Section E of the FIPA Model should be decided pursuant to that ISDS mechanism (as per Article 46). These changes likely anticipate further developments with regard to ISDS with European Union members and as a result of UNCITRAL Working Group III on ISDS Reform.

ii Arbitration developments in local courts

As noted in prior editions of this publication, case law continues to affirm Canada as an arbitration-friendly jurisdiction (even though one judgment of the Supreme Court may have temporarily led some to doubt it). This section addresses decisions concerning arbitration clauses, recognition and enforcement of awards, and stay of proceedings in favour of arbitration.

Since the previous edition of this chapter, the Supreme Court of Canada (SCC) rendered the judgment in Uber Technologies Inc. v. Heller, refusing to stay court proceedings and refer the dispute to arbitration under the International Chamber of Commerce (ICC) Rules on grounds of unconscionability.42 The respondent (Heller), who provided food delivery services using Uber's software applications, concluded a standard form contract with Uber that contained an arbitration clause. When Heller commenced a class proceeding against Uber in Ontario, alleging violations of employment standards legislation, Uber argued that the dispute had to be resolved through arbitration. Because the arbitration clause was included in a non-negotiated contract, and the ICC's upfront administrative and filing fees represented most of Heller's annual income, raising the issue of access to justice, a majority of the SCC deemed it was appropriate to depart from the general rule of arbitral referral. The majority held that 'respect for arbitration is based on its being a cost-effective and efficient method of resolving disputes. When arbitration is realistically unattainable, it amounts to no dispute resolution mechanism at all.'43

Notwithstanding the issue of unconscionability, which, in our view, is unlikely to arise often in international commercial arbitrations, recent Canadian jurisprudence has largely upheld the well-established pro-arbitration approach.44

As such, in Bakaris v. Southern Sky45 the Ontario Superior Court of Justice stayed its proceedings under the 2017 Ontario International Commercial Arbitration Act in favour of arbitration under the London Court of International Arbitration (LCIA) Rules. The applicant (Bakaris), an entrepreneur working and residing in Zimbabwe, and the respondent (Southern Sky), a British Columbia holding company concluded a memorandum of agreement (MOA) that called for resolution of disputes in LCIA arbitration. Despite the mandatory language of the arbitration clause, when the dispute arose the parties disagreed as to who should rule on it. This is because the MOA, in addition to the arbitration clause, also contained a 'jurisdiction' provision that granted Canadian courts 'nonexclusive jurisdiction to settle any dispute or claim arising out of or in connection with [the MOA] or its subject matter or formation'.46 Neither party asserted that the arbitration provision in the MOA was void, inoperative or incapable of being performed,47 and neither party contested its mandatory character.48 Relying on Article 16(1) of the Model Law and Canadian case law, the court declined to make any final determination as to the scope of the arbitration agreement and held that it was the arbitral tribunal selected by the parties that ought to rule on its own jurisdiction.49

The judiciary's support for arbitration is also evident from two judgments concerning applications for recognition and enforcement. The Quebec Superior Court in Metso Minerals Canada Inc. v. Arcelormittal exploitation minière Canada50 recognised an arbitration award rendered under the Rules of Arbitration of the International Chamber of Commerce (ICC Rules) despite the respondent's (Arcelormittal's) objections that the award had already been executed, making its recognition 'theoretical'.51 Reaffirming that recognition could be refused only on grounds identified at Article 653 of the Code of Civil Procedure, the court held this was not an 'exceptional case' that warranted a departure from set rules.52

In Parrish & Heimbecker Ltd. v. TSM Winny AG Ltd.53 the Saskatchewan Court of Queen's Bench (the province's superior court) held that an application for recognition of an arbitration award should be allowed, despite the defendant's multiple objections, including that there was no 'agreement in writing' because the parties did not sign any document (rather, they communicated about the contract confirmation via text messages).54 In the court's view,

Article II's definition of an “agreement in writing” is inclusive. Aside from signed agreements, the definition also applies to an exchange of letters or telegrams. Given the absence of text and email messages in 1958, when the New York Convention was created, I think it only logical for the Court to modernize these words and find that the reference to “telegrams” should include other similar forms of electronic communication, such as facsimile, text and email messages.55

Though primarily relevant in the context of domestic arbitration, two decisions of the Supreme Court of Canada must be mentioned. In 2019 the SCC rendered the long-awaited judgment in Canada v. Vavilov.56 While the facts of the case could inspire a spy novel, for the purposes of this chapter we focus on the revised framework for selecting the standard of review. In Vavilov, the court held that 'reasonableness' is the presumed standard in all cases. This presumption, however, is rebutted in two types of situations: (1) where the legislature has indicated that it intends a different standard to apply; and (2) where the rule of law requires that the standard of correctness be applied (e.g., in 'constitutional questions, general questions of law of central importance to the legal system as a whole, and questions related to the jurisdictional boundaries between two or more administrative bodies').57 Though Vavilov concerned the standard of review applicable to administrative decisions, courts and scholars have since pondered over the judgment's impact on appeals from arbitral awards.58 The SCC's recent decision in Wastech Services Ltd. v. Greater Vancouver Sewerage and Drainage District59 addressed, inter alia, appellate standards of review. The majority of the court in Wastech left 'for another day consideration of the effect, if any, of Vavilov on the standard of review principles articulated in Sattva and Teal Cedar'.60 In the court's view, irrespective of the standard of review (correctness or reasonableness), the arbitrator's award could not stand.61 The concurring justices, however, held that Vavilov displaced the previously applicable framework and that, in cases where a statute provides for an 'appeal' from an arbitration award, the standard of review should be 'correctness'.62 The issue of standard of review from arbitral awards, therefore, remains unsettled post-Vavilov and post-Wastech,63 and parties engaged in domestic arbitrations in Canada should be mindful of this uncertainty.

iii Investor–state disputes

In the previous edition we discussed the damages award in Clayton/Bilcon v. Government of Canada, according to which the respondent was to pay the investors US$7 million with interest64 as compensation for breaches of NAFTA Articles 1105 (minimum standard of treatment) and 1102 (national treatment).65 Fixing and allocating the costs of arbitration, however, was left to be decided in a separate, final award on costs.66 Since the investors sought to set aside the award, the parties agreed to suspend the procedural calendar, as well as the running of interest on the award of damages pending the conclusion of set-aside proceedings.67 As no judgment on the application for set aside has been issued to date, it may be a while before an award on costs is rendered.

The dispute in Global Telecom Holding SAE v. Canada, also discussed in more detail in the previous edition, is far from over, even though the proceedings concluded last year with an award in Canada's favour (its first-known successful defence of a BIT case).68 After having a majority of the tribunal dismiss all of the investor's claims, both Canada and the claimant sought to have the award partially annulled. The ad hoc committee consisting of Mónica Pinto of Argentina, Lawrence Boo of Singapore and Dyalá Jiménez of Costa Rica has thus far issued two procedural orders (one covering procedural matters and the other one concerning the admissibility of new evidence). The second procedural order is of particular interest as it concerned Canada's request to introduce into the record new evidence on Canadian domestic law that it had omitted to include in the original arbitration proceeding (the Ontario Business Corporations Act).69 Relying on past cases, the ad hoc committee denied Canada permission to file this new evidence. In the ad hoc Committee's view, 'the admission of new evidence should be restricted to very specific and uncommon circumstances, which should assist the ad hoc Committee in assessing whether the process was legitimate'70 and

the introduction of one or more pieces of legislation by a party which considers it should have been the applicable law in the original arbitration but which did not submit it in that arbitration is not pertinent during the annulment proceeding [because] the annulment proceeding does not provide another instance to litigate the same questions but a completely different one.71

As the hearing on annulment is scheduled to take place in February 2022,72 this case is bound to merit attention for the years to come.

A few NAFTA cases that were commenced fairly recently against Canada are likely to remain on the horizon for the foreseeable future. These include claims brought by Tennant Energy, LLC (a PCA-administered energy dispute);73 Westmoreland Coal Company (a mining dispute conducted under the 1976 UNCITRAL Rules);74 Resolute Forest Products Inc (a manufacturing dispute under the 1976 UNCITRAL Rules);75 and Einarrson (an oil and gas matter).76 Further developments are also expected in the long-running UNCITRAL Lone Pine v. Canada case,77 in which a hearing on jurisdiction and the merits was held in late February 2021.

Tribunals in the above-mentioned NAFTA cases have dealt with some of the same issues, such as confidentiality,78 amicus curiae submissions,79 bifurcation80 and third-party funding.81 In Tennant Energy, LLC v. Canada, for instance, the tribunal had to decide on the admissibility of videos which, while having been obtained legally from the internet, had been previously designated as 'confidential' in a different arbitration. Namely, in its memorial, the claimant relied on information included in unredacted videos of the hearing in Mesa Power. The respondent requested that these videos be suppressed because 'the disputing parties in Mesa Power only authorized the publication of videos which, like the public hearing transcripts, had all the portions of the hearing that concerned confidential information redacted'.82 Though the unredacted videos had been available on the website of the Permanent Court of Arbitration for more than five years, and the respondent published a link to the videos on its own website, it claimed it only became aware of the inadvertent disclosure upon receiving claimant's memorial.83 Apart from arguing that it had not waived confidentiality,84 Canada submitted that claimant's counsel, 'in their capacity as former counsel for Mesa Power LLC, are bound by the Mesa Power confidentiality order and must prevent other clients, including the claimant, from using information designated as confidential in that arbitration'.85 In the claimant's view, it was entitled to rely on said videos because, inter alia: (1) Canada had the opportunity to review the videos as soon as they were published; because of its omission, the videos remained in the public domain for five years;86 (2) the claimant obtained the videos lawfully through the internet;87 (3) the videos were accessed by individuals not bound by the Mesa Power confidentiality order;88 and (4) the videos were '“the best evidence available” for the determination of merits and jurisdictional questions before the tribunal'.89 The tribunal accepted Canada's submissions that it had not waived confidentiality and that it had a 'reasonable expectation that the confidentiality instructions would be followed'.90 Yet, it ultimately dismissed Canada's request to suppress the videos in question. However, as the Mesa Power videos had since been removed from the registry's website and were no longer in the public domain, the tribunal expressed its willingness to 'order that any confidential information contained in the Mesa Power Videos be redacted from the publicly available versions of the Parties' pleadings and any decision or award' should the respondent so request.91

With respect to third-party funding, the tribunal ordered the claimant to disclose (and to inform the tribunal of any changes concerning) the identity of any third-party funder and any terms of the arrangement relating to the payment of adverse costs orders against the claimant.92 The tribunal, however, refused to hold that the existence of a third-party funding arrangement implied the claimant's inability to comply with an adverse costs order.93 Though the tribunal acknowledged it had jurisdiction to make an order of that sort,94 it held that the existence of a funding agreement alone was not sufficient basis for granting security for costs.95 Rather, to succeed in its request, the respondent would have had to demonstrate 'exceptional circumstances', such as:

(i) a claimant's track record of non-payment of costs awards in prior proceedings; (ii) a claimant's improper behaviour in the proceedings at issue, such as conduct that interferes with the efficient and orderly conduct of the proceedings; (iii) evidence of a claimant moving or hiding assets to avoid any potential exposure to a costs award; or (iv) other evidence of a claimant's bad faith or improper behaviour.96

Third-party funding was also at the source of some controversy in Einarrson v. Canada. In this case, investors allege a series of breaches with respect to Canada's handling of claimant-owned proprietary marine seismic data: fair and equitable treatment (FET) or minimum standard of treatment, performance requirements and indirect expropriation. As the claim was brought in 2019, there are still no (or at least not publicly available) pronouncements of the tribunal. However, a recent judgment of the Federal Court on a conflict of interests issue, apart from reaffirming the Canadian judiciary's respect for arbitration, also sheds light on this rather crucial and ever more present problem in modern disputes. The judgment rendered in October of 2020 concerns the investors' application for judicial review of Canada's legal counsel (the Trade Law Bureau of Global Affairs Canada or the Trade Law Bureau)'s refusal to remove members of its team, working on the Einarsson v. Canada matter, for an alleged conflict of interests.97 Namely, the investors, who obtained third-party funding, opposed to Canada being represented by a former employee of said third-party funder, and any other individuals who had worked with that person. What triggered the application to the court was the Trade Law Bureau's letter of 9 October 2019, in which it reiterated its decision to reinstate the individual in question in the NAFTA proceeding because the investors had not provided sufficient information as to the alleged conflict of interests.98

The investors submitted this issue to the Federal Court because, in their view, the arbitral tribunal had no jurisdiction over the issue because it had no inherent jurisdiction.99 The investors also argued, inter alia, that domestic Canadian law was applicable to their application for judicial review, that counsel were subject to Canadian conflict of interests rules, that they would suffer extreme prejudice if the court declined jurisdiction, and that the Trade Law Bureau's decision was 'clearly public in nature'.100 In the investors' view, Canada's actions breached 'the principles of natural justice, a breach which would be reviewable on a standard of correctness'.101 Canada countered, arguing, inter alia, that 'the arbitral tribunal [had] the requisite jurisdiction to hear these arguments' and that 'the decision not to remove counsel [was] not a reviewable decision under subsection 18.1(1) of the Federal Courts Act, as it [was] not of a “federal board, commission or other tribunal” as defined in section 2 of the Federal Courts Act and the power exercised by the Senior Counsel and Deputy Director of the Trade Law Bureau [was] private in nature'.102

After reviewing a non-exhaustive list of jurisprudential factors, the Federal Court determined that the Trade Law Bureau's decision was private.103 According to the court, though the Trade Law Bureau is a public entity, it is acting as counsel and it represents Canada 'substantially in the way that any attorney would represent any other party'.104 As the claimants' dispute essentially revolves around a claim for damages for misappropriation of their property, in the court's view, the dispute does not raise issues of particular importance to the public.105 While there is a public interest in ensuring that 'lawsuits are conflict free', this interest is protected by existing remedies, which are available to the claimants.106 Even if the purported conflict of interests could be an issue of public interest, the Court expressed 'serious doubt' that the individual in question was indeed conflicted.107 Finally, the court held that even if the Trade Law Bureau's decision were amenable to judicial review under the Federal Courts Act, it was inappropriate for the court to intervene in a NAFTA proceeding.108

Since the Federal Court deferred the issue to the arbitral tribunal,109 and the Federal Court of Appeal suspended the investors' appeal until 17 May 2021 (supposedly, to allow the arbitral tribunal to decide the issue), it will be interesting to see whether the latter finds a conflict of interests and, if so, how it would balance the investor's rights against the respondent's right to be represented by its internal counsel.

Lastly, several cases not involving a Canadian party are likewise noteworthy. In a Toronto-seated ICSID arbitration under NAFTA, Nelson v. United Mexican States,110 the tribunal dismissed all of the claimant's claims and ordered it to bear its own, in addition to 80 per cent of the respondent's, arbitration costs. Even the claimant's reliance on the Bilcon v. Canada decision did not assist its arguments regarding the arbitrariness of the respondent's actions, as the tribunal held that 'even if it were to apply the Bilcon tribunal standard, the claim of arbitrariness under NAFTA Article 1105 by Claimant will fail as the [governmental measure in question] neither created a new standard of assessment, much less departed from the standard of evaluation required under Mexican law'.111

The B-Mex v. United Mexican States112 dispute, also seated in Toronto and scheduled to be heard on the merits in November 2021,113 concerns claims by US companies that invested in the gaming industry in Mexico. In July 2019, the tribunal issued a partial award, upholding its jurisdiction (although Professor Vinuesa partially dissented)114 and ordering the respondent to compensate a portion of the claimants' legal costs (US$1,399,362.40 out of the US$8,453,600.11 requested).

Mexico applied to the Ontario Superior Court to set aside this decision under Section 11 of the International Commercial Arbitration Act of Ontario (ICAA) and articles 16 and 34 of the UNCITRAL Model Law.115 After the court dismissed its application, concluding that Mexico had not shown that the tribunal was incorrect in its interpretation of Articles 1119 and 1121 or in its conclusion that it had jurisdiction over all of the respondents,116 Mexico appealed, but was once again unsuccessful in setting aside the Partial Award.117 According to the Ontario Court of Appeal, determining whether the first instance judge's ruling could be appealed depended on the article of the Model Law that Mexico relied on. Whereas Article 34 permitted appeal, an application governed only by Article 16 of the Model Law did not. Article 16(3) of the UNCITRAL Model Law, the gist of which is reflected at Section 11(2) of the ICAA, provides that 'if the arbitral tribunal rules as a preliminary question that it has jurisdiction, any party may request . . . the court . . . to decide the matter, which decision shall be subject to no appeal'. Because (1) the arbitral tribunal understood it was addressing jurisdiction as a preliminary question,118 (2) it did not address the substantive merits of the dispute,119 (3) Mexico did not focus on Article 34 of the Model Law in its application to the Superior Court,120 and (4) there was no substantive argument on how Article 34 applied on the facts of the case, the Court of Appeal quashed Mexico's appeal.

Outlook and conclusions

If past practice is any indication of future trends, commercial arbitration is likely to continue to flourish in Canada, given the judiciary's pro-arbitration stance. Furthermore, in the age of a pandemic that has upset courts across the globe, users' preference for arbitration may increase, as arbitration is generally better suited to adapt swiftly to new normalities than traditional court litigation.

In the area of investor–state disputes, change is imminent. Not only will investors need to adjust to the phasing out of NAFTA's dispute resolution mechanism in the very near future, they will also have to embrace a somewhat different way of settling their differences through an investment court (e.g., such as the one envisaged in the CETA). Furthermore, parties will need to account for the public's increased interest in their disputes (as is evident from the multiple documents published online, such as email exchanges with tribunals and procedural orders, which were previously typically kept under wraps) and be mindful of conflicts of interest issues that could derail entire proceedings.

Footnotes

1 James A Woods and Eric Bédard are partners, and Dina Prokic is an associate at Woods LLP. The authors wish to thank Charbel G Abi-Saad, associate at Woods LLP, for his contribution to the previous edition of this chapter.

2 Alberta, British Columbia, Manitoba, New Brunswick, Newfoundland and Labrador, Nova Scotia, Ontario, Prince Edward Island, Quebec and Saskatchewan.

3 The Northwest Territories, Nunavut and Yukon.

4 J Kenneth McEwan and Ludmila B Herbst, Commercial Arbitration in Canada – A Guide to Domestic and International Arbitration, Canada Law Book, Thomson Reuters, 2018, Toronto, pages 1–9.

5 ibid.

6 id., pages 1–11.

7 With the latest amendments to the British Columbia Arbitration Act, SBC 2020, c. 2, the differences between the two areas are now relatively minor in that province. In Ontario, the recently released Arbitration Act Reform Committee final report advocates for a single statute to govern domestic and commercial arbitration, based on the Model Law. The final report is available at: Arbitration Act Reform Committee - Toronto Commercial Arbitration Society: https://torontocommercialarbitrationsociety.com/arbitration-act-reform-committee/.

8 Lawrence E Thacker, 'Arbitration procedures and practice in Canada: overview', Practical Law, Thomson Reuters, 2013, https://ca.practicallaw.thomsonreuters.com/0-502-1672?transitionType=Default&contextData=(sc.Default)&firstpage=true&bhcp=1.

9 As stated on the UNCITRAL website, 'Canada declared that it would apply the New York Convention only to differences arising out of legal relationships, whether contractual or not, that were considered commercial under the laws of Canada, except in the case of the Province of Quebec, where the law did not provide for such limitation'. See https://uncitral.un.org/en/texts/arbitration/conventions/foreign_arbitral_awards/status2.

10 See, e.g., Saskatchewan's Enforcement of Foreign Arbitral Awards Act, 1996, SS 1996, c E-9.12, available at: www.canlii.org/en/sk/laws/stat/ss-1996-c-e-9.12/latest/ss-1996-c-e-9.12.html.

11 Civil Code of Quebec, SQ 1991, c 64, Articles 2638–2643, 3121, 3133, 3148 and 3168. Desputeaux v. Éditions Chouette (1987) inc, 2003 SCC 17, para. 40: 'The Civil Code [of Quebec] excludes from arbitration only [d]isputes over the status and capacity of persons, family members or other matters of public order” (art. 2639 C.C.Q.)'.

12 Code of Civil Procedure, CQLR, c C-25.01 at Articles 649–651. In international context, the UNCITRAL Model Law is nevertheless given considerable interpretative weight (see Dell Computer Corp v. Union des consommateurs, 2007 SCC 34 and Article 649(1) of the Code of Civil Procedure). In pure domestic cases, the UNCITRAL Model Law can also be looked at to interpret the Code of Civil Procedure (Coderre v. Coderre, 2008 QCCA 888).

13 McEwan and Herbst (see footnote 4), pages 10–17.

14 Commercial Arbitration Act, RSC 1985, c 17 (2nd Supp), Section 5(2). See also Desputeaux v. Éditions Chouette (1987) inc, 2003 SCC 17, para. 40: '. . . the Commercial Arbitration Code, . . . is based on the model law adopted by the United Nations Commission on International Trade Law on June 21, 1985'.

15 Commercial Arbitration Act, RSC 1985, c 17 (2nd Supp), Section 5(4)(a.1).

16 Previously known as the British Columbia International Commercial Arbitration Centre (BCICAC).

17 Perhaps as a sign of things to come, it is noteworthy that the Singapore International Arbitration Centre (SIAC) recently signed a memorandum of understanding with arbitration services provider Arbitration Place: www.siac.org.sg/69-siac-news/705-siac-signs-memorandum-of-understanding-with-arbitration-place.

19 Annex 14-C, Section 6(a) of the USMCA.

20 Annex 14-C, Section 3.

21 'Covered government contract' means a written agreement between a national authority of an Annex Party and a covered investment or investor of the other Annex Party, on which the covered investment or investor relies in establishing or acquiring a covered investment other than the written agreement itself, that grants rights to the covered investment or investor in a covered sector. 'Covered sectors' include oil and natural gas, supply of power generation services, telecommunications services, transportation services, as well as ownership or management of roads, railways, bridges or canals that are not for the exclusive or predominant use and benefit of the government of a party. See Annex 14-E, Section 6(a) and (b).

22 Article 14.2(4) of the USMCA.

23 Article 14.D.5-1(a) and (b).

24 Article 14.D.5-1(c).

25 Article 14.D.3-2.

27 See Article 9.21 of the CPTPP.

28 Annex 9-J of the CPTPP.

29 Article 2 of the CPTPP, which refers to the provisions outlined in the Annex. The text of the CPTPP is available at: www.international.gc.ca/trade-commerce/trade-agreements-accords-commerciaux/agr-acc/cptpp-ptpgp/text-texte/cptpp-ptpgp.aspx?lang=eng. Readers may also find helpful the explanations of suspensions that are available at: www.dfat.gov.au/sites/default/files/cptpp-suspensions-explained.pdf.

30 Decision No. 001/2021 of the CETA Joint Committee of 29 January 2021 setting out the administrative and organisational matters regarding the functioning of the Appellate Tribunal, Article 2(1), available at: https://trade.ec.europa.eu/doclib/docs/2021/january/tradoc_159401.pdf.

31 id., Article 2(3).

32 id., Article 2(5) and (7).

33 id., Article 3(5).

34 id., Article 2(14).

35 Decision No. 001/2021 of the Committee on Services and Investment of 29 January 2021 adopting a code of conduct for Members of the Tribunal, Members of the Appellate Tribunal and mediators, available at: https://trade.ec.europa.eu/doclib/docs/2021/january/tradoc_159403.pdf

36 id., Article 9.

37 Decision No. 002/2021 of the Committee on Services and Investment of 29 January 2021 adopting rules for mediation for use by disputing parties in investment disputes, available at: https://trade.ec.europa.eu/doclib/docs/2021/january/tradoc_159404.pdf.

38 Decision No. 002/2021 of the CETA Joint Committee of 29 January 2021 adopting a procedure for the adoption of interpretations in accordance with Articles 8.31.3 and 8.44.3(a) of CETA as an Annex to its Rules of Procedure, available at: https://trade.ec.europa.eu/doclib/docs/2021/january/tradoc_159402.pdf.

39 Article I of the Canada–UK TCA.

40 Article IV(4) of the Canada–UK TCA.

41 Article V(2) and (3) of the Canada–UK TCA.

42 Uber Technologies Inc. v. Heller, 2020 SCC 16.

43 id., para. 97.

44 What is more, in the spring of 2021, the Quebec Superior Court held that the Supreme Court's ruling in Uber Technologies Inc. v. Heller had no bearing with regard to Quebec, as the doctrine of unconscionability does not exist under Quebec Law. See 9259-5057-Québec inc. c. Edible Arrangements International, 2021 QCCS 1870, paras 28–30.

45 Bakaris v. Southern Sky, 2020 ONSC 7306.

46 id., para. 16.

47 id., para. 23.

48 id., para. 27.

49 id., para. 33.

50 Metso Minerals Canada Inc. v. Arcelormittal exploitation minière Canada, 2020 QCCS 1103.

51 id., paras 7, 15, 22.

52 id., para. 25.

53 Parrish & Heimbecker Ltd. v. TSM Winny AG Lt., 2020 SKQB 348.

54 id., paras 3, 4, 25. Though the court held that the application should be allowed, it adjourned the application to allow the applicant to file certified copies of the award and the document that constitutes the agreement for arbitration.

55 id., para. 41.

56 Canada (Minister of Citizenship and Immigtation) v. Vavilov, 2019 SCC 65 (Vavilov).

57 id., para. 17.

58 For example, the Manitoba Court of Queen's Bench applied the standard of correctness when reviewing an arbitral award on an extricable question of law in Buffalo Point First Nation v. Cottage Owners Association, 2020 MBQB 20. Conversely, the Alberta Court of Queen's Bench found Vavilov to be inapplicable in the context of commercial arbitration and, relying on Sattva and Teal Cedar, applied the standard of reasonableness in Cove Contracting Ltd. v. Condominium Corporation, 2020 ABQB 106. Whether the framework laid down in Vavilov is applicable to review of arbitral awards was also considered in several Ontario cases: Allstate Insurance Company v. Her Majesty the Queen, 2020 ONSC 830; Ontario First Nations (2008) Limited Partnership v. Ontario Lottery and Gaming Corporation, 2020 ONSC 1516; Freedman v. Freedman Holdings Inc., 2020 ONSC 2692. See also, e.g., Sujit Choudhry, 'Protecting Judicial Deference to Commercial Arbitration in Canada after Vavilov: Following the English Approach to Appeals in Questions of Law?', Kluwer Arbitration Blog (10 June 2020); Paul Daly, 'Unresolved Issues after Vavilov,' 2020 CanLIIDocs 3615.

59 Wastech Services Ltd. v. Greater Vancouver Sewerage and Drainage District, 2021 SCC 7 (Wastech).

60 id., para. 46.

61 ibid.

62 id., para. 121.

63 Lululemon athletica Canada inc. v. Industrial Color Productions Inc., 2021 BCCA 108, para. 33.

64 Clayton/Bilcon v. The Government of Canada, PCA case No. 2009-04, Award on Damages (10 January 2019), para. 400.

65 id., para. 93.

66 id., para. 399.

67 id., para. 7.

68 Cosmo Sanderson, 'Canada defeats first BIT claim', Global Arbitration Review (1 April 2020): https://globalarbitrationreview.com/Article/1224929/canada-defeats-first-bit-claim.

69 Global Telecom Holding S.A.E. v. Canada, ICISD Case No. ARB/16/16, Annulment Proceeding, Procedural Order No. 2 (4 February 2021), para. 2.

70 id., paras 18.

71 id., para. 25.

72 Global Telecom Holding S.A.E. v. Canada, ICISD Case No. ARB/16/16, Annulment Proceeding, Procedural Order No. 1 (23 November 2020), p. 16 (Annex B – Procedural Calendar).

73 Tennant Energy, LLC v. Government of Canada, PCA Case No. 2018-54.

74 Westmoreland Coal Company v. Government of Canada, ICSID Case No. UNCT/20/3.

75 Resolute Forest Products Inc v. Government of Canada, PCA case No. 2016-13.

76 Theodore David Einarsson, Harold Paul Einarsson and Russell John Einarsson v. Government of Canada.

77 Lone Pine Resources Inc v. Government of Canada, ICSID Case No. UNCT/15/2.

78 Tennant Energy, LLC v. Government of Canada, PCA Case No. 2018-54, Procedural Order No. 5 (27 March 2020) and Procedural Order No. 7 (21 September 2020); Westmoreland Coal Company v. Government of Canada, ICSID Case No. UNCT/20/3, Confidentiality Order (22 April 2020); Resolute Forest Products Inc v. Government of Canada, PCA Case No. 2016-13, Confidentiality Order (14 October 2016) and Procedural Order No. 13 (17 February 2020).

79 Tennant Energy, LLC v. Government of Canada, PCA Case No. 2018-54, Tribunal Communication to the Parties regarding Non-Disputing Party Submissions (11 November 2019); Resolute Forest Products Inc v. Government of Canada, PCA Case No. 2016-13, Procedural Order No. 6 (29 June 2017).

80 Tennant Energy, LLC v. Government of Canada, PCA Case No. 2018-54, Procedural Order No. 4 (27 February 2020) and Procedural Order No. 8 (12 November 2020); Westmoreland Coal Company v. Government of Canada, ICSID Case No. UNCT/20/3, Procedural Order No. 3 (20 October 2020); Resolute Forest Products Inc v. Government of Canada, PCA Case No. 2016-13, Procedural Order No. 4 – Decision on Bifurcation (18 November 2016).

81 Tennant Energy, LLC v. Government of Canada, PCA Case No. 2018-54, Procedural Order No. 4 (27 February 2020), paras 104–111; Westmoreland Coal Company v. Government of Canada, ICSID Case No. UNCT/20/3, Procedural Order No. 1 (22 April 2020), para. 22.

82 Tennant Energy, LLC v. Government of Canada, PCA Case No. 2018-54, Procedural Order No. 7 (21 September 2020), para. 7.

83 ibid.

84 id., para. 11 and following.

85 id., para. 17.

86 id., para. 20.

87 id., para. 23.

88 id., para. 25.

89 id., para. 29.

90 id., para. 38.

91 id., para. 50.

92 Tennant Energy, LLC v. Government of Canada, PCA Case No. 2018-54, Procedural Order No. 4 (27 February 2020), paras 106–107.

93 id., para. 117.

94 id., para. 171.

95 id., para. 179.

96 id., para. 174.

97 Geophysical Service Incorporated v. Canada (Attorney General), 2020 FC 984. Investors filed a notice of appeal on 12 November 2020, as appears from the Federal Court of Appeal - Proceeding Queries - Recorded Entries Queries (https://apps.fca-caf.gc.ca/pq/DocketQueries/dq_queries_e.php), court number T-1735-19 (appeal court file number A-277-20). On 26 February 2021, this appeal has been stayed until 17 May 2021.

98 id., paras 18, 36. It is worth mentioning that Canada has not reintegrated the individual in question since it temporarily removed her on 2 August 2019, and this situation remained unchanged pending the outcome of the application for judicial review. See para. 21.

99 id., para. 30.

100 id., paras 31–32.

101 id., para. 34.

102 id., para. 37.

103 id., paras 46–47.

104 id., para. 48.

105 id., para. 51.

106 id., para. 52.

107 id., para. 53.

108 id., para. 55.

109 id., para. 4.

110 Nelson v. United Mexican States, ICSID Case No. UNCT/17/1, Final Award (5 June 2020).

111 id., para. 327.

112 B-Mex, LLC v. United Mexican States, ICSID Case No. ARB(AF)/16/3, Partial Award (19 July 2019).

113 B-Mex, LLC v. United Mexican States, ICSID Case No. ARB(AF)/16/3, Procedural Order No. 8 (2 October 2019).

114 B-Mex, LLC v. United Mexican States, ICSID Case No. ARB(AF)/16/3, Partial Dissenting Opinion of Arbitrator Raul E Vinuesa (6 July 2019), para. 151.

115 The United Mexican States v. Burr, 2020 ONSC 2376.

116 id., para. 220.

117 The United Mexican States v. Burr, 2021 ONCA 64.

118 id., para. 13.

119 id., para. 14.

120 id., para. 15.

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