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Arbitration - International Commercial Arbitration Act (Ontario)

. China Yantai Friction Co. Ltd. v. Novalex Inc.

In China Yantai Friction Co. Ltd. v. Novalex Inc. (Div Ct, 2021) the Divisional Court considered a motion for leave to appeal involving the International Commercial Arbitration Act (Ontario). I include it here to give an example of how this infrequently used statute operates.

. Uber Technologies Inc. v. Heller

In Uber Technologies Inc. v. Heller (SCC, 2020) the Supreme Court of Canada considers a conflict between Ontario's International Commercial Arbitration Act and it's Arbitration Act:
[20] The ICAA and AA are exclusive. If the ICAA governs this agreement, the AA does not, and vice versa (AA, s. 2(1)(b)). As the Superior Court correctly identified, whether the ICAA governs depends on whether the arbitration agreement is “international” and “commercial”. That the agreement here is international is not in dispute. Whether the agreement is commercial is contested. To answer this question, one must understand the legislative scheme of the ICAA.

[21] The ICAA implements two international instruments: the Convention on the Recognition and Enforcement of Foreign Arbitral Awards, Can. T.S. 1986 No. 43, adopted by the United Nations Conference on International Commercial Arbitration in New York on June 10, 1958 (“Convention”) and the UNCITRAL Model Law on International Commercial Arbitration, U.N. Doc. A/40/17, Ann. I adopted by the United Nations Commission on International Trade Law on June 21, 1985, as amended by the United Nations Commission on International Trade Law on July 7, 2006 (“Model Law”). Only the Model Law is relevant here.

[22] Section 5(3) of the ICAA states that the Model Law applies to “international commercial arbitration agreements and awards made in international commercial arbitrations”. The meaning of “commercial” in this section of the ICAA must be the same as the meaning of “commercial” under the Model Law, as the latter states that it “applies to international commercial arbitration” (art. 1(1)).

[23] While the Model Law does not define the term “commercial”, a footnote to art. 1(1) provides some guidance:
The term “commercial” should be given a wide interpretation so as to cover matters arising from all relationships of a commercial nature, whether contractual or not. Relationships of a commercial nature include, but are not limited to, the following transactions: any trade transaction for the supply or exchange of goods or services; distribution agreement; commercial representation or agency; factoring; leasing; construction of works; consulting; engineering; licensing; investment; financing; banking; insurance; exploitation agreement or concession; joint venture and other forms of industrial or business cooperation; carriage of goods or passengers by air, sea, rail or road.

(Model Law, art. 1(1), fn. 2)
[24] The Analytical Commentary on Draft Text of a Model Law on International Commercial Arbitration: Report of the Secretary-General further explains that “labour or employment disputes” are not covered by the term “commercial”, “despite their relation to business”:
Although the examples listed include almost all types of contexts known to have given rise to disputes dealt with in international commercial arbitrations, the list is expressly not exhaustive. Therefore, also covered as commercial would be transactions such as supply of electric energy, transport of liquified gas via pipeline and even “non-transactions” such as claims for damages arising in a commercial context. Not covered are, for example, labour or employment disputes and ordinary consumer claims, despite their relation to business.

(United Nations Commission on International Trade Law, Analytical Commentary on Draft Text of a Model Law on International Commercial Arbitration: Report of the Secretary-General, U.N. Doc. A/CN.9/264, March 25, 1985, at p. 10 (emphasis added); see also p. 11.)
[25] Two points emerge from this commentary. First, a court must determine whether the ICAA applies by examining the nature of the parties’ dispute, not by making findings about their relationship. A court can more readily decide whether the ICAA applies (or an arbitrator can more readily decide whether the Model Law applies) by analysing pleadings than by making findings of fact as to the nature of the relationship. Characterising a dispute requires the decision-maker to examine only the pleadings; characterising a relationship requires the decision-maker to consider a variety of circumstances in order to make findings of fact. If an intensive fact-finding inquiry were needed to decide if the ICAA or the Model Law applies, it would slow the wheels of an arbitration, if not grind them to a halt.

[26] The second point to draw is that an employment dispute is not covered by the word “commercial”. The question of whether someone is an employee is the most fundamental of employment disputes. It follows that if an employment dispute is excluded from the application of the Model Law, then a dispute over whether Mr. Heller is an employee is similarly excluded. This is not the type of dispute that the Model Law is intended to govern, and thus it is not the type of dispute that the ICAA is intended to govern.

[27] This result is consistent with what courts have held (Patel v. Kanbay International Inc., 2008 ONCA 867, 93 O.R. (3d) 588, at paras. 11-13; Borowski v. Fiedler (Heinrich) Perforiertechnik GmbH (1994), 1994 CanLII 9026 (AB QB), 158 A.R. 213 (Q.B.); Rhinehart v. Legend 3D Canada Inc., 2019 ONSC 3296, 56 C.C.E.L. (4th) 125, at para. 27; Ross v. Christian & Timbers Inc. (2002), 2002 CanLII 49619 (ON SC), 23 B.L.R. (3d) 297 (Ont. S.C.J.), at para. 11). It is also consistent with the Model Law’s reference to “trade” transactions, which, as Gary B. Born observes, “arguably connot[es] involvement by traders or merchants, as distinguished from consumers or employees” (International Commercial Arbitration, vol. I, International Arbitration Agreements (2nd ed. 2014), at p. 309). Further, one could draw a negative inference from the definition’s omission of “employment” relations (p. 309, fn. 454). It seems unlikely to us that the drafters of the Model Law would have included such a thorough list of included commercial relationships and not considered whether to include “employment”.

[28] Employment disputes, in sum, are not covered by the ICAA. The AA therefore governs.


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