On May 5, 2020, 23 of the Member States of the European Union signed the Agreement for the Termination of Bilateral Investment Treaties between the Member States of the European Union. This move invalidates all Bilateral Investment Treaties between these EU Member States and disallows any future claims from being made thereunder.

On May 1, 2020, the Secretariats of the ICSID and UNCITRAL released their long-awaited draft Code of Conduct for Adjudicators in Investor-State Dispute Settlement (“Draft Code of Conduct”).

This Draft Code of Conduct is the result of the ICSID and UNCITRAL coming together to address an ethical issue which is often the source of criticism in Investor-State Dispute Settlement (“ISDS”), namely “the lack or apparent lack of independence and impartiality of ISDS tribunal members.” In doing so, the Draft Code of Conduct serves to reinforce the legitimacy of the ISDS process. 

The Draft Code of Conduct sets the table for the adoption of a Code of Conduct for Adjudicators which will “contain concrete rules rather than guidelines.” In other words, Member States have yet to come to an agreement on the common standards they share before this Draft Code of Conduct gives place to a binding (or non-binding) corpus of rules.

In what circumstances will arbitration awards obtained in other Canadian jurisdictions be enforced in British Columbia? That was the question before the British Columbia Supreme Court in Zonruiter v. Matthews, 2020 BCSC 568.

In this case, the Court dismissed the claimant’s application to enforce the Alberta arbitrator’s costs awards in British Columbia. Instead, the claimant needed to follow the usual two-step process of first obtaining a judgment in Alberta and then enforcing it in British Columbia pursuant to the Court Order Enforcement Act, R.S.B.C. 1996, c. 78

In what circumstances will arbitration awards obtained in other Canadian jurisdictions be enforced in British Columbia? That was the question before the British Columbia Supreme Court in Zonruiter v. Matthews, 2020 BCSC 568.

In this case, the Court dismissed the claimant’s application to enforce the Alberta arbitrator’s costs awards in British Columbia. Instead, the claimant needed to follow the usual two-step process of first obtaining a judgment in Alberta and then enforcing it in British Columbia pursuant to the Court Order Enforcement Act, R.S.B.C. 1996, c. 78.

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The flexibility afforded by institutional rules, such as the ICC and LCIA, makes international arbitrations well suited for the use of technology in a myriad of ways in arbitral proceedings. Parties can be faced with responding to dozens and sometimes hundreds of Redfern requests (i.e. documentary production requests), the need to call witnesses and experts based in various parts of the world and an arbitral panel that can be made up of arbitrators who are also based in different jurisdictions. Confronted with these challenges, the use of technology is crucial to international arbitration living up to some of its central pillars – being that it is faster and less expensive than court proceedings, can be tailored to the nature of the dispute and, of course, gives parties the benefit of confidentiality. 

At the outset of proceedings, parties to an international arbitration ought to consider how technology can assist them throughout the course of the proceeding. Importantly, how such technology will be employed by the parties should be recorded in the first procedural order or the terms of reference for the arbitration to help avoid any future disputes. 

By dismissing the appeal in International Air Transport Association v. Instrubel, N.V., 2019 SCC 61, the Supreme Court of Canada has helped to ensure that Canada remains an arbitration-friendly jurisdiction, including with respect to the enforcement of international arbitral awards. The Court did not address the arbitration issues in the case directly, but it upheld the judgment of the Court of Appeal of Québec, which will allow a Dutch company to take steps to enforce two arbitral awards, obtained in 1996 and 2003, against Iraqi entities that have so far refused to pay them.

The Supreme Court of Canada dismissed the appeal from the bench after a hearing on December 11, 2019. At the time, the Chief Justice announced that Justice Côté had dissented from the Court’s otherwise-unanimous opinion, and that her dissenting reasons would follow. Those reasons were released on May 1, 2020.

Instrubel ultimately turned on a question of civil law: Do the Québec courts have jurisdiction to order garnishment in respect of funds held by a Québec-domiciled entity in a Swiss bank account. The majority of the Supreme Court of Canada held that the answer is ‘yes’. It upheld the Court of Appeal of Québec’s determination that the Montréal-based International Air Transport Association (“IATA”) owed a debt to the Iraqi entities against which Instrubel had obtained an arbitral award, and that the arbitral award could be enforced against this debt in the Québec courts, even though the funds earmarked for the Iraqi entities were in an IATA bank account outside the province.

The Chartered Institute of Arbitrators (Canada) Inc. (“CIArb Canada”) intervened to address the arbitral context in which the case arose. It submitted that arbitral awards and foreign judgments are not equivalent, that different principles should apply to the enforcement of the former than to the latter, and that the voluntary nature of arbitration agreements – in light of the broader Canadian arbitration jurisprudence – justifies a liberal approach to enforcing arbitral awards in this country. Though neither the majority nor the dissenting judge in the Supreme Court of Canada commented on the arbitral context specifically, the majority’s disposition of the case was consistent with the approach that CIArb Canada had asked it to endorse.

McCarthy Tétrault represented CIArb Canada in the Supreme Court of Canada, with a team led by Simon V. Potter that included Adam Goldenberg, Sandra Lange, Dominique Paiement, and Chris Puskas.

The world has undergone incredible social and societal changes with the onset of the global pandemic COVID-19. Many are wondering how the world will look post pandemic[1] once social distancing mandates are lifted, and what the long term impact will be on the way industries conduct business.

The use of videoconferencing allowed parties in commercial arbitrations to proceed entirely virtually despite the imposition of social distancing measures. Notwithstanding this, it is doubtful that entirely virtual arbitrations will remain commonplace post-pandemic (though it has proven itself a viable option when appropriate). A potential residual effect of the widespread use of virtual hearings may be more frequent use of video conference for the taking of evidence from certain witnesses.

Where videoconference will be used to take witness evidence, crafting a protocol that sets out the terms governing the videoconference will be important. It is also a best practice to have the protocol enshrined in a procedural order.

The Korean Commercial Arbitration Board recently adopted the Seoul Protocol on Videoconference in International Arbitration. It provides a starting point for parties looking to craft a protocol for the use of videoconference in taking evidence in international arbitration.

[1]https://time.com/5818578/post-pandemic-world-look-like/; https://www.forbes.com/sites/enriquedans/2020/04/01/after-thepandemic/#249b556c65ba

In BNA v BNB and Another, [2019] SGCA 84, the Singapore Court of Appeal reversed the ruling of the Singapore High Court and confirmed that the phrase “arbitration in Shanghai” meant that Shanghai was the seat of arbitration, not simply the venue of arbitration. This decision meant that the laws of the People’s Republic of China (“PRC”), not Singapore, governed the arbitration agreement. Further, it created a risk that the arbitration agreement would be found invalid under PRC law.

The dispute arose out of an agreement (the “Takeout Agreement”) after the appellant buyer failed to make certain payments to the respondent sellers for the products they purchased and delivered under the Takeout Agreement. The Takeout Agreement contained an arbitration agreement in Article 14:

ARTICLE 14: DISPUTES

14.1 This Agreement shall be governed by the laws of the People’s Republic of China.

14.2 With respect to any and all disputes arising out of or relating to this Agreement, the [p]arties shall initially attempt in good faith to resolve all disputes amicably between themselves. If such negotiations fail, it is agreed by both parties that such disputes shall be finally submitted to the Singapore International Arbitration Centre (SIAC) for arbitration in Shanghai, which will be conducted in accordance with its Arbitration Rules. The arbitration award shall be final and binding on both [p]arties.

Notably, the arbitration agreement did not include an express choice of law.

The respondents initiated arbitral proceedings administered by the Singapore International Arbitration Centre (“SIAC”), which appointed a three-person arbitral tribunal. The appellant challenged the jurisdiction of the arbitral tribunal on the grounds that the proper law of the arbitration agreement was the law of the PRC, which rendered the agreement invalid, as PRC law did not permit a foreign arbitral tribunal, such as the SIAC, to administer a PRC-seated arbitration or domestic dispute. The majority of the tribunal ruled that the tribunal did have jurisdiction.

Why this case matters

The recent decision in Paulpillai v Yusuf, 2020 ONSC 851 serves as a warning to parties, who have an arbitration agreement or clause, of the importance of moving quickly when seeking a stay of proceedings in favour of arbitration.

In this case, the Superior Court of Justice refused to stay the litigation because the Respondents failed to seek a stay of proceedings in favour of arbitration in a timely manner.

Brief overview of the facts

Mr. Yusuf and Mr. Paulpillai were business partners. They signed a partnership agreement which contained an agreement to arbitrate if a dispute arose. Mr. Paulpillai passed away, and his widow became the executor and trustee of Mr. Paulpillai’s estate.

A dispute arose between Mr. Yusuf and several corporate entities (the “Respondents”) and Mr. Paulpillai’s estate and other family members (the “Applicants”). The parties attempted to split the partnership enterprise, but encountered numerous issues over a two-year period, leading Mr. Paulpillai’s estate to commence a court application.

Over a period of 7 months, the parties made two appearances before the court on interlocutory motions and exchanged multiple rounds of affidavit evidence. 

At the hearing of the application itself, the Respondents sought to stay the proceeding, pointing to the existence of the arbitration agreement between the parties.