How is the substantive law in an international arbitration proceeding established before an arbitral panel during an arbitration? By substantive law, we are of course referring to the body of laws that apply to the interpretation of the contract and the underlying activities (for instance, environmental or consumer protection laws).

In Toronto Standard Condominium Corporation No. 1628 v. Toronto Standard Condominium Corporation No. 1636, Soho Grand Condominiums Inc. and Soinco Limited, 2020 ONCA 612 (“TSCC No. 1628”), the Court of Appeal for Ontario confirmed that s. 7(6) of the Arbitration Act, 1991 does not bar an appeal where a judge refuses to grant a stay of a court proceeding under s. 7(5) where there is an arbitration agreement between the parties.

Which system of national law governs the validity and scope of an arbitration clause when the law applicable to the contract containing it differs from the law of the seat of the arbitration? The UK Supreme Court provided a common sense answer to this narrow yet important issue in Enka Insaat Ve Sanayi AS v OOO Insurance Company Chubb, [2020] UKSC 38.[1] Briefly, the main principles of law established in Chubb are:

International arbitration continues to grow in popularity as an alternative form of dispute resolution. Parties routinely cite cost-savings, efficiency, autonomy, and expertise as the advantages of arbitration over civil proceedings in foreign jurisdictions. It is not enough to settle on arbitration as the method of dispute resolution, however. Parties must also determine the arbitral “seat”.

The LCIA Arbitration Rules are changing with effect from October 1, 2020 (the “LCIA 2020 Rules”). The over-arching intention of the amendments is to ensure that international arbitrations remain flexible, procedurally efficient and current. 

In announcing the update to the LCIA 2020 Rules, the LCIA was clear that the changes “were being finalised as the Covid-19 pandemic took hold”, but that Covid-19 “allowed the LCIA to address explicitly some changes in recent good practice, notably the increased use of virtual hearings and the primacy of electronic communications across the board.”

Why This Case Matters

The Supreme Court of Canada recently released its much anticipated decision in Uber Technologies Inc. v. Heller, in which a majority of the Court ruled that the arbitration clause in Uber’s standard form services agreement is unconscionable and therefore unenforceable.

In so doing, the Court cleared the way for a class action to be commenced in Ontario court, rather than for the dispute to be subject to mediation and arbitration in the Netherlands per the arbitration clause within the contract.

The majority’s decision raises serious questions about the enforceability of arbitration provisions in contracts of adhesion (i.e., standard form contracts), which are used frequently in the consumer context and by businesses in the gig economy, as noted in Justice Côté’s dissenting reasons. But perhaps more importantly, rather than increasing certainty for contracting commercial parties, the majority decision may have the effect of diluting recent jurisprudence protecting the right of private parties to agree to alternative methods of dispute resolution.