Ontario Superior Court confirmed common law principles are generally unavailable to set aside an award where Article 34 of the Model Law does not apply.

Facts

Medivolve (based in Ontario) entered into a contract with Chukotka (based in Russia) for the supply of COVID-19 testing kits. A dispute arose regarding alleged defects with the goods supplied. This resulted in Chukotka commencing an arbitration against Medivolve before the International Commercial Arbitration Court (“ICAC”), a Moscow-based arbitration institution.

After Chukotka commenced arbitration, ICAC attempted to deliver a copy of Chukotka’s claim by registered mail to Medivolve’s registered address and its head office. Medivolve did not receive the claim through the mail because the courier could not find Medivolve at either address; without advising Chukotka or ICAC, Medivolve had moved to a new office in the preceding weeks and failed to update its address in the federal corporate registry in a timely manner. However, Chukotka successfully notified Medivolve of its statement of claim and notice of arbitration through email.

The arbitration proceeded to a hearing, but notice of the hearing could not be delivered and no representative appeared on Medivolve’s behalf. During the arbitration, Chukotka applied for reimbursement of its arbitration expenses, and ICAC sent Medivolve notice of the application by mail (which was not delivered) and email (which was). Medivolve still did not respond to Chukotka’s application, but it did retain counsel. That counsel made a request to review Chukotka’s materials, which was denied because of certain formal deficiencies.

The tribunal decided the dispute in Chukotka’s favour without Medivolve’s participation. It found that Medivolve had been properly given notice under the ICAC rules and Russian law. Chukotka delivered notice of the award to Medivolve’s new registered address, which had by now been updated.

Medivolve unsuccessfully applied to set the award aside before the Russian courts. Chukotka then sought an order recognising and enforcing the award in Ontario. Medivolve resisted the application and brought an application to set aside the award under Article 34 of the Model Law (which is incorporated into Ontario law via the International Commercial Arbitration Act, 2017) and certain common law principles.

Decision

The Superior Court dismissed Medivolve’s set-aside application for a lack of jurisdiction. Article 34 only applies if “the place of arbitration is in the territory of [Ontario].” As the seat of arbitration was in Russia, Article 34 had no application.

The Court also rejected Medivolve’s attempt to invoke common law principles as an alternative basis to set aside the award. First, the Court found Ontario’s Arbitration Act, 1991, and International Commercial Arbitration Act, 2017, “indicate an intention to occupy the field”. Accordingly, “any application to set aside an arbitration award must proceed under one or other of these statutes[,] absent perhaps special circumstances that are not present in this case.”

Second, Medivolve had not suggested that the common law principles it sought to invoke differed from the principles reflected in Article 36 of the Model Law—the provision under which an award debtor may resist recognition and enforcement of an award. Therefore, Medivolve’s arguments regarding lack of notice were properly addressed in Chukotka’s recognition/enforcement application.

The Court granted Chukotka’s application despite Medivolve’s arguments that the Court should refuse to recognise or enforce the award because Medivolve:

  1. Had not received proper notice of the arbitration.
  2. Was unable to present its case in the arbitration.
  3. Had been treated unequally by the tribunal.

In doing so, the Court emphasised what other decisions have recognized as conferring a high degree of deference afforded to international arbitral tribunals.

Analysis

Medivolve emphasizes the importance of promptly retaining counsel to respond to and investigate notices of arbitration and threatened proceedings.

Having failed to diligently address the notices and documents that it received by email, Medivolve could not later complain that that notice was inadequate or that it was denied an opportunity to participate in the arbitration. The Court found that, in the circumstances, notice by email was “proper notice” for the purposes of Article 36 of the Model Law.

Medivolve also largely forecloses any prospect for parties to invoke alternative common law principles as a basis to set aside a foreign arbitral award, confining the grounds for resisting applications for recognition and enforcement to those set out in statute. However, the small window that the Court left open for a common law power to set aside a foreign award in “special circumstances” may afford some alternative relief in exceptional cases.