Wednesday, 28 November 2012

Procedure for Enforcing a Quebec Judgment In Ontario

At first glance, an application seems clearly a better choice than an action for enforcing a foreign judgment, absent any indication of any viable defence to enforcement.  After all, the court will not be considering the merits of the foreign judgment -- those issues are all res judicata – and an application is available where it is unlikely that there will be any material facts in dispute (see Rule 14.05 (3) (h) of the Ontario Rules of Civil Procedure).  Discoveries are not necessary. 

However, the Superior Court of Justice recently dismissed such an application, ruling that a proceeding to enforce a judgment from a non-reciprocating jurisdiction such as Quebec must be brought as an action: see Noelet Associes v. Sincennes [2012] O.J. No. 3742 (P.B. Kane J.).  The case departs from previous decisions that clearly stated that such proceedings may be brought by application:  see for example, Commission de la Construction v. Access Rigging (2010), 104 O.R.(3d) 313 (S.C.J.), Nuvex Ingredients v.Snack Crafters (2005), 74 O.R. (3d) 397 (S.C.).  See also the recent case of Blizzard Entertainment v. Simpson [2012]O.J. No. 3807 (proceeding to enforce a judgment from California, a non-reciprocating jurisdiction, brought by application), and Cross Border Litigation – Interjurisdictional Practice and Procedure, by Kenneth MacDonald, at p. 272. 

            The Court in Noel explained that when one sues to enforce a foreign judgment, in fact one is suing to enforce a debt based on an implied promise to pay the foreign judgment, and that an application is not available to enforce a debt.  As such, Rule 14.02, which states that every proceeding shall be by action, as opposed to an application, unless the rules or a statute provide otherwise, bars the use of an application for enforcement of a foreign judgment. With respect, there is no reason why a proceeding to collect a debt cannot be brought by application, provided it is unlikely that there will be any material facts in dispute.    In Noel, it was abundantly clear that there were no facts in dispute -- no one appeared for the respondent. 

            The Court said its ruling does not apply to judgments from reciprocating jurisdictions because they can be enforced after registration, pursuant to the Reciprocal Enforcement of Judgments Act, R.S.O. 1990, ch. R.5.   However, the Court overlooked the fact that for enforcement of judgments even from reciprocal jurisdictions, a proceeding will be brought if the judgment debtor asserts a defence to enforcement.  Based on the reasoning in Noel, presumably the creditor would have to proceed by action.   That statute, on the other hand, permits a judgment debtor with a defence to enforcement to use an application to set aside registration – see s. 6.

            The take home message from Noel is that even though a proceeding to enforce a foreign judgment may be well suited for an application, a creditor runs the risk of dismissal, and thus an action may be the safer choice.  

Monday, 12 November 2012

India Abolishes Its Power to Set Aside Foreign Arbitral Awards

For many years, India has been considered somewhat of a outlier in international arbitration circles because of its courts’ power to set aside foreign-seated awards, despite the New York Convention.  The Indian Supreme Court ruled a few weeks ago, in Bharat Aluminum v. Kaiser Aluminum, that Part I of the Indian Arbitration Act does not apply to international commercial arbitration awards issued outside India. Practically, this means that Indian courts will no longer have power to set aside such awards.  Until now,  this power was applicable unless the arbitration agreement excluded it.  (This power will continue for awards issued in India).  This power has been used, for example, to set aside awards after the Supreme Court decided in 2003 that awards that conflicted with Indian law are contrary to public policy and thus unenforceable.   With this ruling, the Supreme Court has endorsed the UNCITRAL Model Law principle that the law of the seat of the arbitration governs the conduct of the arbitration, and annulment actions are generally not brought outside the arbitral seat. 

Unfortunately, this ruling also means that other Part I powers such as to issue interim relief and interim injunctions to preserve assets will also no longer apply to foreign-seated arbitrations. 

This ruling affects only arbitrations arising from arbitration agreements signed after the ruling.  Thus the Part I powers will continue to be applicable to foreign seated awards for some time to come.