Reconnaissance et exécution d’une sentence arbitrale étrangère : la Cour supérieure de l’Ontario réitère l’importance de bien informer la partie contre laquelle la sentence est invoquée (en anglais)

8 minutes de lecture
02 juin 2023

The Ontario Superior Court recently reinforced applications of Article 36 of the Model Law in respect to recognizing and enforcing foreign arbitral awards. In Tianjin Dinghui Hungjun Equity Investment Partnership v. Du, the Ontario Superior Court refused to enforce an award of the Shenzhen Court of International Arbitration (the SCIA) on the basis that the defendants had not been given proper notice of the arbitral proceeding. This in turn impacted the ability of those defendants to present their case.


The Plaintiff Tianjin Dinghui Hungjun Equity Investment Partnership (Tianjin) made a loan to Tianjin Kapolei Business Information Consultancy Co., Ltd. (TKB), a corporate entity controlled by the Defendants, Mr. and Mrs. Du (the Dus). As part of that transaction, the Dus provided a guarantee and executed a loan agreement. The loan agreement and the guarantee were subject to Chinese law and included a clause requiring disputes to be resolved before the SCIA (the Loan Agreements).

On July 10, 2020, after having delivered to TKB a default pursuant to the Loan Agreements, Tianjin commenced an arbitration proceeding against TKB, the Dus and other related parties before the SCIA (Arbitration and the Arbitration Notice).

At the time Tianjin issued the Arbitration Notice, the Dus were residing in Canada. In addition to being Canadian citizens and maintaining a residence in Toronto, at various times, the Dus have maintained residences in China including in the Wenyu District of Beijing (the Wenyu Residence). The Wenyu Residence was listed as the address for service of the Dus in the Loan Agreements. Notwithstanding this, in March of 2020, early in the COVID-19 pandemic, the Dus advised Tianjin that they would be staying in Canada at their residence in Toronto. Additionally, by July of 2020, the Dus no longer owned the Wenyu Residence. However, they continued to maintain an office in Fengtai, Beijing, which is where TKB carried out its operations (the Fengtai Office). For the purposes of serving the Arbitration Notice, Tianjin delivered a copy to the Wenyu Residence, which was returned undelivered, and also delivered a copy to the Fengtai Office, which was signed for by a TKB employee.

The Guantao Law Firm (Guantao) filed an appearance on behalf of all of the Arbitration Respondents, including the Dus and TKB. Guantao had represented the Dus and TKB at the time the Loan Agreements were signed. Guantao submitted a power of attorney along with copies of the Dus passports to the SCIA, in support of their authority to appear for the Dus at the Arbitration. However, the power of attorney was not signed by the Dus. The Arbitration proceeded without any appearance or evidence from the Dus. Moreover, the Dus claimed that they did not have any knowledge of the Arbitration or that Guantao was allegedly representing them.

Tianjin succeeded in the Arbitration and on August 27, 2021, the SCIA issued its award (the Award). The Award ordered, in part, that the Dus were jointly and severally liable for the debtor repayment totaling approximately $120 million. It is this amount that Tianjin sought to enforce against the Dus in Canada.

Tianjin commenced an application in Ontario seeking to have the Award recognized and enforced pursuant to Section 35 of the Model Law (the Application). The Dus opposed the Application and asked the court to exercise its discretion pursuant to:

  • Article 36(1)(a)(ii) of the Model Law to not recognize and enforce the Award on the basis that they were not given proper notice of the Arbitration, and they did not have an opportunity to present their case.
  • Article 36(1)(b)(ii) of the Model Law to not recognize and enforce the Award on the basis that enforcing the Award would be contrary to public policy.

The decision

Regarding notice:

  • The Court stated that "proper notice" under the Model Law has been held to mean notice that is reasonably calculated to inform the party of the arbitration and to give them an opportunity to respond. However, it does not require actual notice.
  • The Court was not satisfied that the Dus received the Notice of Arbitration by any method that was provided for in the Loan Agreements.
  • The Dus did not formally change their address for notice under the Loan Agreements to their address in Canada. However, Tianjin failed to inform the SCIA that it was aware that the Dus were staying in Canada as of March 2020 when the travel restrictions began, and which remained where the Dus resided at the time of the Arbitration.
  • Collectively, this was sufficient to satisfy the Court that the Dus met their onus of demonstrating that they did not receive proper notice:

    For TDH [Tianjin] to come to this court seeking recognition and enforcement of an arbitration Award in excess of $100 million (CDN) granted during an Arbitration Proceeding conducted in China in the summer of 2020 against two Canadians who TDH's representative knew had decided in March of 2020 to stay in Canada and not return to China at the beginning of the global COVID-19 pandemic, strict compliance with the contractual notice requirements is what would have to be demonstrated for "proper notice" to be grounded in the contractual notice provisions that TDH seeks to rely upon.[1]

Regarding the opportunity to present their case:

  • The Court noted that there is nothing in the Award to indicate there were any defences that were advanced on the Dus behalf.
  • The Court cited Nanoelectro which equated the Model Law with a due process defence, noting that "a party is unable to present its case at arbitration if it lacks the opportunity to be heard at a meaningful time and in a meaningful manner."
  • The court noted that it is reasonable to conclude that the Dus, facing a claim of over $100 million, would be interested in presenting defences separate from the corporate related Co-Defendants, including defences related to the personal guarantee they granted. The Court noted "at this stage the Court is concerned with the process and not the substance or merits of any such defences as they may have been able to present."[2]

Ultimately, the Court concluded that the Dus were not given proper notice and they were unable to present their case.

The Court went on to briefly consider the Dus' argument that enforcement of the Award should be denied on the basis that enforcement would be contrary to public policy pursuant to Article 36(1)(b) of the Model Law. The Court rejected this argument stating that a public policy defence is "truly an exceptional defence" that applies to acts that are "illegal in the forum… or repugnant to the orderly functioning of a social or commercial life." There were no grounds for its application in this case.

What does it mean?

The decision in Tianjin v. Du involves the application of Article 36 of the Model Law in respect of grounds for refusing recognition and enforcement of foreign arbitral awards. This decision confirmed the importance of ensuring proper notice and the opportunity for meaningful participation, as well as the importance to making candid disclosure to the arbitral panel.

This decision is a reminder to litigants that the ability to enforce a foreign award in Ontario and other jurisdictions across Canada will be impacted by grounds set out in Article 36 of the Model Law. While each case will turn on its own facts, prior to any recognition and enforcement, the courts will generally be concerned with reviewing the underlying process to confirm notice and the opportunity to participate.

[1] 2023 ONSC 1808 at para 79

[2] 2023 ONSC 1808 at para 116

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