Popack v. Lipszyc appears to be the first Ontario Court of Appeal case on the recognition and enforcement of arbitration awards under the 2017 International Commercial Arbitration Act (“ICAA”). The ICCA includes the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (“New York Convention”) and the 2006 amended version of UNCITRAL Model Law on International Commercial Arbitration (“Model Law”).
The appellants used articles 35 and 36 of Model Law to apply for the recognition and enforcement of the international commercial arbitration award they received in August 2013 against the respondents. While the application judge dismissed the application, the Court of Appeal allowed the appeal.
The Court of Appeal stated that “in Ontario, a strong “pro-enforcement” legal regime” exists for the recognition and enforcement of international commercial arbitration awards, as grounds for refusal are “to be construed narrowly”. Importantly, the Court, and not the tribunal, is the proper avenue to determine if an arbitral award is binding or whether to provide a stay. Under article 34 of Model Law, it is stated that the only recourse against an arbitral award is an application to set it aside. Such an application must be made within 3 months of receiving the award (or, if a request was made, within 3 months of when the request was disposed of by the tribunal).
One of the few conditions for the refusal of recognition or enforcement of an international arbitral award is if the award has not yet become binding (see Model Law article 36(1)(a)(v)). Popack v. Lipszyc provides an important look at the application of the Supreme Court of Canada case Yugraneft Corp. v. Rexx Management Corp., by clarifying when an international commercial arbitration becomes “binding” for the purposes of judicial recognition and enforcement in Ontario.
Yugraneft Corp. v. Rexx Management Corp. states that an arbitral award is “not binding” if “it is open to being set aside under art. 34 of the Model Law, either because the three-month period in which to bring a motion to set aside has not expired or the set aside proceedings have not yet come to an end”. The Court of Appeal commented that “the potential jurisdiction of the Beth Din [the rabbinical court in New York] to entertain a new issue about post-Award events does not affect the binding nature of the Award”, which helps provide insight into the wide scope the Court of Appeal takes in terms of characterizing an award as final. In other words, this illustrates that the Court of Appeal favours finality.
The clarifications that flow from Popack v. Lipszyc are useful, as it is necessary one knows what procedures to engage when an award is unsatisfactory and when recognition and enforcement are involved.
Please see Gilbertson Davis LLP’s related practice areas webpages on International Commercial Arbitration, Cross-Border Litigation, and on the Recognition and Enforcement of Foreign Arbitration Awards. Please also see the Law Times article on this case quoting one of the lawyers at Gilbertson Davis LLP.
If you require legal advice regarding these practice areas, please contact Gilbertson Davis LLP for an initial consultation.
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