Ontario Superior Court enforces arbitral award despite improper notice claim

The dispute stemmed from an agreement concerning the supply of COVID-19 testing equipment

Ontario Superior Court enforces arbitral award despite improper notice claim
arbitral award, notice

The Ontario Superior Court of Justice has ruled to enforce an arbitral award despite allegations made by one of the parties that it did not receive proper notice as required by arbitration law.

The dispute in Medivolve Inc. v. JSC Chukotka Mining and Geological Company, 2024 ONSC 2200 stemmed from a supply agreement, in which Medivolve Inc. agreed to provide Chukotka Mining and Geological Company with COVID-19  PCR testing machine and kits for approximately US$ 2.07 million. After delivery, Chukotka raised concerns about the equipment's functionality, claiming defects.

Despite attempts at negotiation, Chukotka issued a formal notice of rejection and demanded a refund, which Medivolve did not respond to. Accordingly, Chukotka initiated arbitration proceedings with the International Commercial Arbitration Court at the Chamber of Commerce and Industry of the Russian Federation (ICAC). Medivolve failed to receive several communications from the ICAC due to a change of address that it did not properly update in relevant records.

Despite this, Medivolve did receive email notifications about the arbitration status from Chukotka on July 15, 2021, and from the ICAC on October 18, 2021. However, Medivolve did not take timely action to participate in the arbitration process.

The ICAC issued an arbitral award in favour of Chukotka, ordering Medivolve to pay over US$ 2.4 million. Medivolve sought to set aside the award, arguing it had not received proper notice of the arbitration proceedings and could not present its case. Medivolve's application to the Arbitration Court of the City of Moscow and a subsequent appeal were denied.

In its application to the Ontario Superior Court, Medivolve argued that the ICAC failed to provide proper notice as required under Article 36 of the UNCITRAL Model Law on International Commercial Arbitration. The court, however, determined that Medivolve had received adequate notice through emails sent by Chukotka and the ICAC, deeming it sufficient to inform Medivolve of the arbitration proceedings.

The court also found that Medivolve did not present evidence that it could not participate in the arbitration meaningfully. Despite being aware of the arbitration, Medivolve delayed engaging legal counsel and did not take steps to ensure receipt of important documents.

Ultimately, the Ontario Superior Court recognized and enforced the arbitral award, emphasizing the high degree of deference accorded to international arbitral tribunal decisions. The court rejected Medivolve's claims of improper notice and inability to present its case and did not find any unequal treatment by the ICAC.

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