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New laws may spur more arbitration in Ontario

|Written By Alex Robinson

While lawyers say new legislation will likely promote Ontario as a hub for international commercial arbitration, there are still practical barriers when it comes to attracting the international business community to arbitrate in the province.

Lauren Tomasich says that, under former laws in Ontario, practitioners could not advise with certainty whether a particular arbitral award was enforceable under the New York Convention.

The International Commercial Arbitration Act 2017 came into effect in late March, eradicating uncertainty that existed under its legislative predecessor, and ironing out some ambiguity of when arbitration awards are enforceable in the province, lawyers say.

“In a whole host of ways, the new International Commercial Arbitration Act clarifies the law, increases certainty and increases the willingness of Ontario courts to enforce international arbitral awards,” says Paul-Erik Veel, a partner with Lenczner Slaght Royce Smith Griffin LLP.

This in turn will likely mean more international arbitration will be centred in Ontario, but lawyers say the province still has some hurdles to get over.

Historically, the major centres for international commercial arbitration have been cities such as London, New York, Paris, Singapore and Hong Kong.

Lawyers say such recognized arbitration centres have a big advantage in attracting international arbitrations because of their strong reputations that have built up over the years.

“Toronto is moving in that direction, but making Toronto a leading location for international arbitrations won’t happen overnight,” says Veel.

The new legislation formerly adopts the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards — an agreement that requires its signatories to enforce awards made in jurisdictions that have adopted the convention.

While Canada was a signatory, there was some doubt as to whether the convention applied in Ontario.

Lauren Tomasich, a partner at Osler Hoskin & Harcourt LLP, says that, under the old framework, practitioners could not advise with certainty whether a particular arbitral award in Ontario was enforceable under the New York Convention.

“If you don’t know if Ontario is actually a signatory, then you don’t know if another jurisdiction will actually enforce the award,” she says.

Veel says the uncertainty that existed with the previous legal framework likely dissuaded parties from choosing Ontario to arbitrate. “As a result, even relatively small amounts of legal uncertainty could be a reason for parties to choose a jurisdiction other than Ontario in which to arbitrate,” he says.

The changes to the legislation also bump up the limitations period that arbitral awards are enforceable to 10 years from two.

The new act also makes it clear that the province’s arbitral tribunals have jurisdiction to award interim relief.

Lawyers say the legislation will mean that there will also be fewer procedural fights than when the act was more ambiguous and that the disputes that do spill over into litigation will be streamlined.

Andrew Ottaway, a lawyer with Gilbertson Davis LLP, says one of the advantages other jurisdictions still have over Ontario is that some of them have specialized courts for international commercial disputes.

Ottaway says that such a specialty court is not necessary for hosting international commercial arbitration, but extending the jurisdiction of Toronto’s commercial list to specifically include such matters would attract international commercial litigators to the province.

“Where there are international commercial litigators, international commercial arbitrations may follow,” he says.

Ottaway argues that the province’s legal profession has not fully embraced international commercial law and that doing so will help entice more international arbitrations to Ontario.

Ontario also has less commercial activity than other jurisdictions that may have more developed commercial arbitration communities. “Brexit may also be an opportunity for Ontario to attract international commercial arbitration at the expense of London,” Ottaway says.

Geography can also play a big role in where parties decide to arbitrate, says Junior Sirivar, a partner with McCarthy Tétrault LLP. As the seat of arbitration is determined at the contract drafting stage, whoever drafts the arbitration clause will determine where a party may seek arbitration, he says.

“Geography remains in large measure one of the motivating factors for the international business community’s selection of the seat of arbitration,” he says.

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