Ontario Court of Appeal found that it is an abuse of process to resist enforcement of an award based on grounds previously raised, dismissed, and not appealed.

Facts

A payment dispute arose under a funding agreement between La Française IC2 Fund (the “Fund”), a Luxembourg-regulated investment vehicle, and Mr. Wires. The dispute was referred to arbitration administered by the Arbitration Institute of the Stockholm Chamber of Commerce (the “Institute”) and seated in London, England. The arbitrator made an award that dismissed Mr. Wires’s claims and ordered that he pay the costs of the arbitration.

During the arbitration proceedings, the arbitrator ordered Mr. Wires to provide security for costs. Mr. Wires refused to provide the security and shortly thereafter challenged the arbitrator on the basis of a reasonable apprehension of bias. This challenge was heard and dismissed by the Institute for being time-barred and without merit. Importantly, no appeal or review of the Institute’s decision was pursued at the seat of the arbitration (England).

The Fund sought to enforce the award against Mr. Wires in Ontario, where he lived. Mr. Wires sought to resist enforcement on various grounds, including the repeated allegation that the arbitrator was biased and therefore the arbitration was not conducted in accordance with the parties’ agreement or the law of the seat.

Decision

The Ontario Superior Court dismissed Mr. Wires’s objections and granted the Fund’s application to recognize the award.

On appeal, the Ontario Court of Appeal upheld this decision, rejecting Mr. Wires’s challenge to the arbitrator’s impartiality as being motivated by dissatisfaction with the security for costs order, rather than by genuine concerns about bias. The Court found that Mr. Wires’s failure to appeal the Institute’s decision at the seat of arbitration weighed heavily against allowing these issues to be revisited during enforcement proceedings.

Re-litigating the arbitrator bias claim, which had already been rejected by the Institute, was an abuse of process. In accordance with the parties’ agreement, it was open to Mr. Wires to challenge or appeal the Institute’s decision to the English courts; he chose not to do so. Permitting Mr. Wires to raise the matter again at this stage would result in “the misuse of (the court’s) procedure, in a way that would be manifestly unfair to a party to the litigation”.

Analysis

This decision highlights the Canadian judiciary’s strong stance toward the enforcement of arbitral awards. By applying the doctrine of abuse of process, the Court reinforced the importance of procedural finality in arbitration. The ruling illustrates that courts will not allow parties to circumvent or undermine arbitral awards, particularly where objections have already been considered and dismissed by the arbitral institution.

It is important to note that this case was decided on its own particular facts, including allegations of bias that were not well-founded. It should not be construed as establishing a hard and fast rule that the failure to challenge an award at its seat means a party should be prohibited from resisting recognition and enforcement of that award in other jurisdictions. There are numerous international examples of an award debtor successfully challenging the recognition and enforcement of an award, despite not challenging (or unsuccessfully challenging) the award in the seat. Indeed, abuse of process is an inherently flexible doctrine designed to respond to the facts of a given case.

Rather, the Court’s dismissal of Mr. Wires’s arguments reinforces the expectation that procedural objections must be raised and substantiated at the appropriate stage. In this case, that objection was raised and, apparently, resolved at the institutional level. It was an abuse of process for Mr. Wires to sit on that decision and then attempt to re-open the matter at the enforcement stage, long after any remedial action would have been possible.

Importantly, the decision highlights the potential need for parties to exhaust all remedies at the seat of arbitration before seeking to challenge enforcement in other jurisdictions.

La Française IC2 v. Wires, 2024 ONCA 171