The Lawyers Weekly - June 18, 2010

THE LAWYERS WEEKLY
June 18, 2010 | 9

Keeping courts’
Provincial
limitation periods

hands off arbitration
bar enforcement

of foreign
arbitral awards

CRISTIN SCHMITZ OTTAWA

JEREMY BRUNEEL FOR THE LAWYERS WEEKLY

Bahrain offers an international arbitration ‘free zone’

BARRY LEON

&ANDREW MCDOUGALL

When a Canadian business is asked to
agree to a seat (or place) for an international
arbitration, it should be concerned about the
possibility of interference by a local court in
that jurisdiction. This is particularly so when
the seat is an unfamiliar jurisdiction.
No matter how modern the jurisdiction’s
arbitration rules; how competent the arbitral
institution; how attractive the hearing and
other facilities; or how safe, convenient or
welcoming the place (international connec-
tions; visa availability; lack of impediments
for visiting counsel, arbitrators, parties and
witnesses), the risk of local court interference
can undermine it all.
The seat of an arbitration is its legal loca-
tion, not necessarily where hearings will be
held. Its courts have the ability to lend sup-
port to the arbitration or to interfere with it.
The prospect of a local court interfering
with the arbitration by entertaining — often
slowly — and even worse, granting relief such
as an anti-arbitration injunction or an order
narrowing the scope or subject matter of the
arbitration, or setting aside the arbitration
award on some basis that does not accord
with international standards, justifiably
makes foreign parties and their counsel nerv-
ous about that place.
See Bahrain Page 13

Commercial creditors seeking to enforce their foreign arbitral awards in Canada are subject to the limitation periods of the province where they are seeking enforcement, the Supreme Court has affirmed 9–0.

Justice Marshall Rothstein’s eagerly anticipated May 20 judgment in Yugraneft Corp. v. Rexx Management Corp., [2010] S.C. J. No. 19, marks the first time that the high court has pronounced on whether, and how, the disparate limitation periods in various provinces apply to the recognition and enforcement in Canada of international commercial arbitration awards made under the Convention on the Recognition and Enforcement of Foreign Arbitral Awards.

Last month’s judgment dismisses the appeal of Yugraneft against rulings of the Alberta courts that the Russian oil field operator is time-barred, under the two-year limitation period in s. 3 of Alberta’s Limitations Act, from enforcing a $952,614 damages award it obtained in 2002 against its former equipment supplier, Rexx Management of Alberta.

The primary issues in the appeal were whether provincial limitations laws apply to foreign arbitration awards under the Convention and, if so, whether a two-year or a 10-year limitation period under Alberta’s Limitations Act applied to Yugraneft’s award from the International Commercial Arbitration Court sitting in the Chamber of Commerce and Industry of the Russian Federation.