International and Domestic Arbitration –
Recent Developments, Relationships and Differences
Arbitrage international et domestique – Développements récents, relations, et différences
November 17, 2014
Fasken Martineau (Arbitrator)
McCarthy Tétrault LLP
F. Andrew Scott
British Columbia International Commercial Arbitration Centre (Director, Business rep)
2017 JD Candidate
Mr. Cote began the panel by discussing Canada’s recent ratifications of the ICSID Convention whose purpose is to provide an international arbitral tribunal for disputes between foreign investors and host states. ICSID arbitration is not rooted in national law but in public international law and it allows the parties to decide which law is applicable. Superior courts in Canada all have the power to control an award before accepting to enforce it. Federal and provincial legislation implementing ICSID Convention removes the power from superior courts to control a demand or request for recognition and enforcement of ICSID award. If the powers removed from superior courts were “inherent powers”–powers essential to the administration of justice and maintenance of the rule of law, then we cannot strip them of their powers.
Mr. Cote focused on the question of the potential problems of compatibility with constitutional protection of jurisdiction of Superior Courts in Canada in reference to s. 96 of the Constitution Act of 1867. A test for the compatibility with s. 96 of the Constitution Act of 1867 in the Re Residential Tenancies Act examined the extent to which federal and provincial parliaments can transfer judicial power and prohibit administrative tribunals to act as courts. Mr. Cote also discussed the challenges of NAFTA in Chapter 11 and s. 96 but found that this case must be distinguished from that of ICSID. Mr. Cote argued that there is a fair ground for a constitutional challenge of the ICSID Convention under s. 96 of the Constitution Act if the judicial power to recognize and enforce foreign arbitral awards is to be considered as being part of the inherent jurisdiction of superior courts in Canada.
The next panellist, Ms. Shoranick presented the Supreme Court of Canada decision Sattva Capital v. Creston Moly, a case involving an appeal from an arbitral award. The Supreme Court’s decision established that interpretation of contracts will almost always be a question of law. The Court's decision means that leave to appeal from arbitral awards, which requires identification of a question of law, will rarely be granted under the British Columbia Arbitration Act. The court also held that the standard of review for appeals from arbitral awards is reasonableness and not correctness (based in part on Dunsmuir.) Sattva prevailed because there was no question of law, only an interpretation of contract.
The Sattva case was a breakthrough in arbitration awards in British Columbia and confirmed the central role of factual matrix in contractual interpretation despite earlier Supreme Court authority to the contrary. By stating that contractual interpretation involves mixed facts and law, the Court has significantly limited appellate reviews to all decisions interpreting contracts. In recent developments, new parole evidence rule does not apply to preclude objective evidence of surrounding circumstances.
The third panellist, Mr. Scott introduced the work of the BC International Commercial Arbitration Centre (ICAC), which aims to provide society with an efficient and private dispute resolution system. In British Columbia, the ICAC sets the rules for arbitration unless the parties agree otherwise. Arbitration is distinct from litigation for businesses and has the following features: fair decision, reasonable timeframe, reasonable costs, fair process, privacy, damages limited to compensation (i.e. no punitive damages) and provides greater certainty in the process. Seeking leave to appeal has the disadvantages of destroying privacy and once leave is granted the parties lose virtually all the advantages of arbitration. However, appeals do allow for quality assurance on decisions, opportunities to make new laws and to “win” disputes.
The Sattva decision was significant in that it narrowed the grounds on which an appeal of an arbitration decision might be based and made it harder for leave to appeal to be granted. The ICAC’s solution to the quality assurance problem while maintaining the advantages of arbitration is through creating an appeal panel within the Arbitration Centre and working towards eliminating appeals to the courts.