More US firms choose to seat their arbitrations in Canada

Our judges are more hands-off. Our system is less litigious. Our country is more welcoming to international witnesses. And seating a case here is just as convenient.
Canada, and Toronto in particular, has emerged as a hub for international arbitration for many reasons — and US attorneys and in-house counsel would do well to heed them.

“From the perspective of a US party involved in an international dispute, the reality is that the other side will rarely want the arbitration seated in the US,” says Anne-Marie Whitesell, an international arbitrator who is Faculty Director of the Program on International Arbitration and Dispute Resolution at Georgetown University Law Center in Washington, DC, and also a member arbitrator at Arbitration Place in Toronto. “But Canada is viewed as a neutral, open and welcoming jurisdiction that is convenient, comfortable, has an international flavor because it has both civil and common law jurisdictions, has the UNCITRAL Model Law as the basis of its arbitration legislation, and boasts commercially savvy courts.”

In the Trump era, Canada’s relative openness is particularly appealing.

“ These days, it can be hard to get witnesses into the US,” says Tina Cicchetti, an independent resident neutral at Vancouver Arbitration Chambers and a member arbitrator at Arbitration Place.

As it turns out, Canadian courts are about as arbitration-friendly as they come. And that matters, because the seat of arbitration governs an arbitral proceeding’s oversight.

“So even if parties haven’t chosen Canadian federal or provincial law as the governing law for their dispute, an award made at an arbitration held in Toronto or elsewhere in Canada means that a Canadian court will deal with issues such as challenges to the awards, the removal of arbitrators or in fact any issue that calls for the courts’ involvement,” says John Keefe of John Keefe Chambers, a resident arbitrator at Arbitration Place. “Both the Supreme Court of Canada and the provincial superior courts have been very arbitration friendly and taken a decidedly hands-off approach to meddling in arbitration matters.”

A recent example is the September 2018 decision of the Ontario Court of Appeal in Popack v. Lipszyc, in which the court reinforced the binding nature of arbitral awards from the moment the award is released as well as the rules that Ontario courts use to recognize and enforce foreign arbitral awards. 

Other Ontario decisions indicative of the deference shown to arbitration awards generally are Consolidated Contractors Group v. Ambatovy and Trade Finance Solution v. Equinox Global Limited (Take Two). And in 2017, the Supreme Court of Canada chimed in with its decision in Sattva Capital Corp. v. Creston Moly Corp., holding that leave to appeal an arbitral award will be granted only on questions of law and not on questions of mixed fact and law. 

As Keefe points out, it’s not that US courts aren’t arbitration-friendly.

“But the US system, including all the judges and lawyers, have a far more litigation-oriented culture than we have in Canada, and that can adversely affect the conduct of arbitrations,” Keefe says. “When choosing between Canada and the US, Canada is a more sensible and more neutral venue that has less risk associated with its legal system.”

By way of example, Keefe cites a recent arbitration involving a Colombian mining property that had no US parties but was seated in New York as a matter of convenience.

“We found ourselves caught up in proceedings where someone was asking a New York judge to impose a freezing order on assets outside of the US,” Keefe recalls. “That just wouldn’t happen in Canada, where the risk of that kind of judicial intervention is much lower.”
Canadian courts’ disinclination to interfere with arbitration proceedings and awards are mirrored in recent legislative measures, particularly in Ontario, which  recently updated its International Commercial Arbitration Act. The new regime came into force in March 2017, replacing a statute that had not been amended since 1990.

At its core, the legislation, which incorporates the New York Convention and the 2006 Model Law, sets basic principles for the conduct of international arbitration and delimits the extent to which courts can review awards.

The upshot is that Ontario gave up its dubious status as the only Canadian jurisdiction that had not explicitly incorporated the New York Convention in its legislation. And by appending the 2006 Model Law, the legislation modernizes the definition of an arbitration agreement so that it is deemed to exist as long as it has been “recorded” in some way. The old regime explicitly required a written agreement before an agreement was enforceable.

Ontario’s ICAA also clarifies an arbitrator’s power to award interim relief, including injunction and securities for costs. It also makes such orders enforceable by the courts.

The old law allowed the granting of interim relief, but did not define its scope. The new version is much more specific, allowing such relief, for example, if there are allegations that assets in dispute will be dissipated or evidence destroyed.

As well, the new act sets a 10-year limitation for enforcing an arbitral award, supplanting the previous two-year limit. This means that Ontario has essentially done an end-run around the Supreme Court of Canada’s 2010 ruling in Yugraneft v. Rexx Management, which decided that domestic limitations applied to the enforcement of international arbitral awards unless the legislation contained an express provision to the contrary.

Turning to the practicalities, it’s clear that while Toronto is obviously more convenient for disputes involving Europeans, Vancouver seems the natural choice when Asian parties are in play. 

“Cases between US and Asian parties come here because it’s convenient and culturally close to the Asian market given the massive number of Asian immigrants here and others who feel at home because they own property or send their kids to school here,” says Cicchetti. “As well, the costs are lower compared to other venues like New York or London, and we have excellent facilities.”

As it turns out, excellent facilities are also among Toronto’s strongest draws. There’s little doubt that the opening of Arbitration Place and the Toronto Resolution Centre of JAMS in 2012 have been catalysts for the city’s great leap forward to international recognition as an arbitration center.

Arbitration Place, which has partnered with the London Court of International Arbitration and ICC Canada, is a 17,000-square-foot state-of-the art facility located in Toronto’s Bay Adelaide Centre that hosts international and domestic arbitrations.

The facility boasts LEED gold-certified, centrally located facilities in Toronto and Ottawa. The all-encompassing approach to hosting arbitrations includes reconfigurable rooms, concierge-level administrative services and an in-house court reporting company, A.S.A.P. Reporting Services, that offers real-time transcription, simultaneous interpretation and videoconferencing. 

“Toronto is emerging primarily because arbitrators are enamored with the fact that Arbitration Place has great facilities and a really high level of service at a fraction of the price in New York,” Cicchetti says.

And it’s not just the arbitrators who sing the praises of Arbitration Place.

“Many of the people that have been at an arbitration here - arbitrators, parties and witnesses - tell me they have never been exposed to better facilities, better support or better technology,” Keefe says.

The roster at Arbitration Place includes Beverley McLachlin, who served as Chief Justice of Canada from 2000 to 2017; Ian Binnie and Marshall Rothstein, both  former Supreme Court justices; Warren Winkler, former Chief Justice of Ontario; and Yves Fortier, the former Canadian ambassador to the United Nations who has become one of the world’s leading arbitrators in the 26 years since 1992, when he gave up the post.

“Arbitration Place has put together a roster that has international experience, names with which US and other international parties are comfortable,” Whitesell says. “And the cooperation agreements Arbitration Place has developed with international institutions like the International Chamber of Commerce and the London Court of International Arbitration create a further level of comfort for non-Canadian parties.”

Toronto boasts other advantages as well, not the least of which is the presence of the Ontario Superior Court of Justice’s Commercial List, recognized worldwide for its expert and expeditious handling of complicated commercial cases.
“The judges who make up that list now have arbitration issues as part of their mandate,” Keefe says.

For its part, JAMS, the world’s largest provider of mediation and arbitration services worldwide, works out of a 7,000-square-foot facility known as the JAMS Toronto Resolution Centre in the heart of the city, where it focuses on all methods of domestic and international alternative dispute resolution. The facility features a virtual conference room, a break out room, a business center, a sound buffering system and a café.

Instrumental in helping to promote Toronto evolve as a pre-eminent location for international commercial arbitration is the Toronto Commercial Arbitration Society, formed in 2010 as a non-profit association whose objectives include encouraging continuing education among the group’s members and providing a forum for the exchange of ideas on all aspects of international and domestic arbitration. 

“There is a lot of backing for arbitration education, which makes Canada more visible and attractive to stakeholders in the arbitration process,” Whitesell says.