By Paul Godin
The Supreme Court of Canada will soon decide the leave to appeal application in Yugraneft v. Rexx Management, a case with international consequences for arbitration law. The central issue relates to the enforceability of international arbitration awards in Canada. At issue is the applicability of local (provincial) statutes of limitation on the commencement of proceedings to enforce arbitration awards made internationally.
Canada, along with 143 other countries, is a signatory to the New York Convention (United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards), which has successfully governed many arbitrations internationally for 50 years. The New York Convention has provided reliability and certainty of enforcement of awards across a wide variety of countries. Enforceability, subject to certain exceptions carved out, provides the confidence for commercial parties to contract in foreign jurisdictions in which the laws and courts may be less than reliable.
Other arbitral provisions such as the Model Law on International Commercial Arbitration adopted by the United Nations Commission on International Trade Law (UNCITRAL) may also be affected by this decision. Canada has adopted the model law, wholly or partially, in all provinces and territories, as in Ontario with the International Commercial Arbitration Act.
In August of 2008 the Alberta Court of Appeal in Yugraneft ruled that if proceedings to enforce a foreign arbitral award are not commenced within Alberta’s two year statute of limitations, the proceeding will be statute-barred. This decision, if upheld at the Supreme Court, could have a large impact on enforcement of arbitral awards across Canada and internationally, as it arguably departs from the New York Convention which does not list delayed enforcement proceedings as a barrier to enforcement. If Yugraneft becomes the law in Canada, arbitration will be less attractive to international companies with a tie to Canada.