Limitation Periods and Enforcement of International Arbitral Awards

The Globe and Mail’s article yesterday on the Alberta Court of Appeal decision in Yugraneft Corp. v. Rexx Management Corp. left me wondering. In Yugraneft, the Court held that an application to register and enforce a foreign arbitral award under the 1958 Convention on the Recognition and Enforcement of Foreign Arbitral Awards (a.k.a. the New York Convention) is subject to the ordinary limitation period of two years.

The decision has indeed been the source of much concern among Canadian arbitration practitioners; even the decision by the Court of Queen’s Bench in 2007 created quite a stir. My own sense from speaking to colleagues is that most, if not all, of the arbitration bar agrees that the decision is terrible policy.

But saying a decision is terrible policy is not the same as saying that it is bad law. The tone of the article suggests that errant courts have led our law astray, and it is now up to the Supreme Court to set things right, assuming it grants leave. But why should it be the job of the courts to ameliorate perceived defects in the law? The Alberta legislature established a common limitation period in its Limitations Act, without expressly excepting enforcement of foreign arbitral awards or most foreign judgments. While a longer period for enforcing foreign awards is in my view a good idea – and indeed the Alberta Law Reform Institute has recently recommended that the limitation period for enforcing all foreign judgments and awards be extended to ten years – is this not, ultimately, a legislative choice?

Arguably, the Alberta Act was insufficiently clear on this point, and in the absence of legislative guidance, there was room for the court to read the law more flexibly. Yet consider Ontario’s Limitations Act, which also imposes a largely uniform two year limitation period for bringing an action. Not only does Ontario’s Limitations Act lack any express exception for foreign arbitral awards, it specifically provides that enforcement of domestic arbitral awards under the Ontario Arbitration Act is not subject to any limitation period at all. In view of the (apparent) deliberate omission of any exception for foreign awards, what should a court make of the Ontario Act?

If this decision does, as the Globe says, harm Canada’s image as an arbitration-friendly jurisdiction, then I think we should be turning our energies to lobbying for legislative change. The deficiencies in Canada’s implementation of the New York Convention aren’t limited to just one province, and nothing the Supreme Court can say is likely to change that.


  1. The situation is a bit more complicated. While the Limitations Act, 2002 does not impose any limitation period on the enforcement of domestic arbitration awards, the Arbitration Act, 1991 does so – two years.

    There is also a live question about the limitation period that might be applicable to foreign judgments. The Limitations Act, 2002 says that there is no limitation period for the enforcment of judgments of a court. However, in a case late in the lifetime of the old Act, the Court of Appeal held in Lax v Lax that the law was too firmly fixed that an action to enforce a foreign judgment was the equivalent of an action on a contract debt to allow any change for policy reasons. Thus the contract limitation period (then six years) applied.

    So it is not clear whether the new, ‘clearer’ language of the 2002 statute would overcome that weight of judicial precedent – or whether Alex’s recommendation of legislation should spread to foreign judgments too.

    An article by Stephen Pitel canvasses the question of foreign judgments in more detail.

  2. John,

    I usually refrain from commenting on my own posts, but I wanted to clarify the misleading impression I left initially, which you quite rightly pointed out. I did not mean to state that there was no limitation period at all, pursuant to any legislation whatsoever, applicable to enforcement of domestic Ontario awards. (In fact, I do my best to avoid writing anything on this blog that could be construed as giving a legal opinion, for obvious reasons.) Rather I was simply pointing out that on its face the Ontario Limitations Act expressly addresses domestic awards, but remains silent on foreign ones, and that one could plausibly draw an inference from this difference.

    I have noted the apparent inconsistency between s. 52(3) of the 1991 Ontario Arbitration Act, which gives a two year limitation period, and s. 16(d) of the 2002 Limitations Act, which says no limitation period. It may be significant that s. 19 of the Limitations Act provides that the periods in that Act takes precedence over those in any other Act unless the other Act is listed in the schedule, and that the Arbitration Act is not so listed. But again, as I don’t wish to use this blog to give opinions on legal matters, I won’t try to reconcile them.

    On your other point, I have long found the Lax case – which was cited and applied in Rexx – very interesting as an example of the split between common law and civil law attitudes to this subject. In Minkoff v. Society of Lloyd’s (25 June 2004), Montreal 500-09-014284-046 (C.A.), aff’g (5 February 2004), Montreal 500-17-015948-030 (C.S.), the Quebec Court of Appeal affirmed the long-standing civil law position on the limitation period applicable to enforcing foreign judgments: they are treated exactly the same as domestic judgments. As the Quebec Court notes, the common law analogy of foreign judgments to contract debts for limitations purposes was expressly rejected by Quebec jurisprudence as far back as the 19th century. I have not seen any mention of this difference in any of the common law cases I have read on enforcement of foreign judgments, nor in Prof. Pitel’s article. (I suspect this may be, as I have previously lamented, an example of the sad tendency of the Canadian common law to flaunt its unilingualism.)


  3. I found the CA’s decision in Lax very disappointing, a real stick-in-the-19th-century (and not even Quebec’s 19th century!) stare decisis decision, in the face of a very well reasoned decision by Justice Cumming in a separate case that the CA refused to follow. The only ground for going back to the old law was that the old law had been around for so long. The fact that the SCC had dramatically changed the law of enforcement of judgments was not thought relevant.

    Can anyone think of any reason why this should not be dealt with simply by legislation (aside from the occasional difficulty of getting the attention of the Legislature)?

    Probably the ‘right’ policy would be no limitation periods for foreign arbitral awards or foreign (as domestic) judgments. Other views? 10 years for foreign arbitral awards?

  4. John,

    My own view – for what it’s worth – is that as a matter of policy, foreign arbitral awards under the New York Convention should be treated, for limitations purposes, as though they were a domestic judgment.

    First, in my view the traditional policy arguments used to justify limitation periods for causes of action either don’t apply or apply to a far lesser degree in the case of foreign arbitral awards, where the grounds for refusing to recognize them are so narrowly circumscribed.

    Second, and more fundamentally, I think treating an application to register an arbitral award as akin to suing on a cause of action fails to give due respect to the nature of arbitration as an autonomous dispute-settlement mechanism. The court, when asked to recognize or homologate the award, should not see itself (barring exceptional circumstances) as acting in an adjudicative capacity.

    I agree with you that this legislative intervention seems the best approach, though in the current environment I have no optimism that it would rank high on the list of priorities.

    A question worth pondering, related to my earlier comments above: if the interaction of the Ontario Arbitration Act and the Limitations Act, 2002 means that no limitation period applies to arbitrations under the Ontario Arbitration Act, is Canada in breach of its obligations under Article III of the New York Convention, which provides that “[t]here shall not be imposed substantially more onerous conditions […] on the recognition or enforcement of arbitral awards to which this Convention applies than are imposed on the recognition or enforcement of domestic arbitral awards” ?


  5. Alex (et al, if anyone else on Slaw cares …)

    i) re your question – since it is not clear that Ontario law would support a limitation period on foreign arbitral awards (our courts might not follow Alberta’s), and it may not be completely clear that the apparent limitation period for domestic awards in the Arbitration Act, 1991 is ineffective, I do not have to grant your premises! In any event, non-compliance with the Convention does not give the winning party in an arbitration any rights against anybody. OTOH it might provoke a higher priority for a legislative fix, if it’s clear enough that something is broken.

    ii) The Alberta CA in the Yugraneft case did say that the time ran from the discovery that there were assets in Alberta that should be enforced against i.e. not from the date of the award, so the time could be pretty long even with a theoretical two-year period.

    iii) We could harmonize (legislatively) foreign and domestic judgments and foreign and domestic arbitral awards, with no limitation periods on any of them. I would be interested in hearing policy arguments (or any other) against that idea.

  6. John,

    At the risk of scaring away other potential contributors to this conversation (Angela Swan, where are you?), I’ll once again venture a response.

    On point (ii), I agree that the practical effect of Yugraneft is ameliorated somewhat by the court’s holding that the clock ticks from the discoverability of assets in the jurisdiction. The problem with that – with the greatest of respect to the learned judges – is that such an analysis appears, at least in my view, inconsistent with both the way limitations law and arbitration work.

    First, the court held that the “claim” which was discovered (hence starting the limitations clock) was the actual or deemed knowledge of exigible assets in Alberta. Yet the applicability of the limitation period was contingent on the analogy of an arbitral award to a foreign judgment, where the judgment (or award) itself creates a contract debt. Discoverability, as I understand it, applies to knowledge of the cause of action – i.e. the award – not to knowledge of the practical effectiveness of any execution measures which may be taken against the debtor’s assets.

    Second, the court’s application of discoverability to the execution measures necessarily conflates the recognition and execution stages of arbitral awards. However, they are wholly discrete steps: indeed, a creditor may register an award in a jurisdiction without having certain knowledge that any assets exist there. (Having the award registered in as many jurisdictions as possible is useful in convincing a recalcitrant debtor to pay as it reduces the potential places the debtor can hide or transfer assets. It also permits garnishment against third parties who may owe money to the debtor.) Moreover, merging these two stages for limitations purposes risks that courts may extend the analytical confusion by treating the presence of exigible assets in the jurisdiction as a necessary precondition to the assertion of personal jurisdiction over the respondent for the award registration proceedings – as a couple of Quebec judgments have suggested, in highly alarming obiter. Were a Canadian court to take that route, I have little doubt that the harm to Canada’s arbitration-friendly reputation would be many times greater than anything a resulting from a two year limitation period for registration of an award.

    On your point (iii), I am personally unconvinced about any move to harmonize limitation periods for enforcing foreign judgments with those for domestic ones. The matter of arbitral awards arises within the context of an international convention, with generally agreed upon rules that tend to produce (usually) awards that conform with Canadian public policy. Foreign judgments (the recent Hague Convention on Choice of Courts Agreements aside) are quite a different matter. Giving a foreign judgment creditor unlimited time to enforce his judgment, in my view, permits him to wield a fairly hefty club against the debtor, even if it remains open to the debtor to defend against recognition in Canada based on breaches of public policy, fraud, and so on. (As the post-Beals caselaw shows, courts have tended to set the bar for denying recognition very high.) Before enlisting Canadian law to assist further, I’d like to be confident that the judgment sought to be enforced, or the justice system from which it originates, meets Canadian standards of fairness – rather than leaving it up to the debtor, any number of years after the fact, to prove the reverse.


  7. A late follow-up, for those who are still interested: The Supreme Court will be releasing its decision on the leave to appeal application in Yugraneft on Thursday, February 26.

  8. Alex,
    On your point to ponder re: Canada in breach of its obligations under the NY Convention, owing to the NY Convention’s federal clause (art XI) and b/c ICA falls under s.92, Canada can not be in breach as it is Ontario that is mucking things up and Canada’s only obligation (a soft one) is to point out to the offending province that its legislation conflicts with the NY Convention. For its part, as a Province can not be a “Party” to the NY Convention, there is equally no breach.

  9. Well, Ontario is not “mucking things up” here. The questionable judicial decision was in Alberta. This thread has debated the effect of Ontario’s limitations and arbitration statutes, inconclusively but immaterially until there’s an actual case.

    However, it seems to me that if a province’s law does not do what the Convention requires, then Canada is in breach of its international obligations. That’s why Canada does not ratify conventions that need provincial implementation until the provinces agree to implement it (and usually until most or all of them have done so.)

    As it happens, the New York Convention is the only private international law convention without a federal state clause to which Canada is a party (except the Hague Service Abroad Convention that was implemented through rules of court, not legislation). It is hard to get provincial unanimity, even on matters as generally uncontroversial, not to say boring, as PIL. Current efforts in this direction involve the ICSID Convention and the Hague Legalization Convention – both s-l-o-w processes despite honest efforts by both levels of government and some good policy reasons for ratifying.

    It is true that provinces are not parties to such conventions (even, I would suggest, when there is a federal state clause and some implement and some do not). Thus the question of reciprocity under the New York Convention must apply only to Canada (i.e. is Canada a party? then Canada is a reciprocating jurisdiction) and not to a province (e.g. is Alberta in compliance though it has a non-standard reading of the limitations rule? even if not, Canada is still a reciprocating jurisdiction.)

    Canada has no power in Canadian law to compel a province to implement a convention within provincial jurisdiction. It may have indirect ways to encourage or even compel compliance – spending power, invocation of foreign sanctions (e.g. NAFTA) – but I know of no precedent for international law to compel a state party to a convention to use such indirect methods to bring an errant subnational government to heel. (I haven’t gone looking, mind you.)

    Back to the law reform question: if one grants Alex’s point that foreign judgments are not comparable to foreign arbitral awards, should the provinces legislate to provide that both domestic and foreign arbitral awards have the same limitation period?

    If so, should this period be longer than the usual domestic period (for civil actions? for judgments?) such as 10 years, or even unlimited, i.e. no limitation period for enforcing arbitral awards of any kind?

    Should province legislate on this point before the SCC decides Yugraneft?

  10. I have always read article XI of the Convention to be a federal state clause – am I mistaken?
    “Article XI
    In the case of a federal or non-unitary State, the following provisions shall apply:
    (a) With respect to those articles of this Convention that come within the legislative jurisdiction of the federal authority, the obligations of the federal Government shall to this extent be the same as those of Contracting States which are not federal States;
    (b) With respect to those articles of this Convention that come within the legislative jurisdiction of constituent states or provinces which are not, under the constitutional system of the federation, bound to take legislative action, the federal Government shall bring such articles with a favourable recommendation to the notice of the appropriate authorities of constituent states or provinces at the earliest possible moment;
    (c) A federal State Party to this Convention shall, at the request of any other Contracting State transmitted through the Secretary-General of the United Nations, supply a statement of the law and practice of the federation and its constituent units in regard to any particular provision of this Convention, showing the extent to which effect has been given to that provision by legislative or other action.”
    On the reciprocity point – and I may be misunderstanding your post – reciprocity under the Convention is different from the usual reciprocity at international law. Under the Convention, reciprocity is dealt with directly by allowing States to make a reservation to this effect (Canada has not I believe).
    Returning to the meat of the post, I do believe the provinces should legislate (Quebec did re: Dell) but it should be uniform throughout Canada if Canada wishes to remain “arbitration friendly”.

  11. Neither the federal government nor the provinces have ever interpreted Article XI of the New York Convention as one that allowed the Convention to extend to the provinces that chose to implement it. Perhaps it has been thought just too confusing to have a whole range of shadings of application under this language.

    Compare, for example, art 93(1) of the Convention on the International Sale of Goods:

    93(1) If a Contracting State has two or more territorial units in which, according to its constitution,
    different systems of law are applicable in relation to the matters dealt with in this Convention, it may, at
    the time of signature, ratification, acceptance, approval or accession, declare that this Convention is to
    extend to all its territorial units or only to one or more of them, and may amend its declaration by
    submitting another declaration at any time.

    This is the ‘modern’ (1972+) version of the federal state or ‘territorial unit’ clause that has allowed Canada to ratify several private international law conventions in the past 25 years or so. Almost all such conventions are now in force across the country, but spread gradually rather than having everyone in at the beginning.

    Some people argue that article 70 of the ICSID convention on the arbitration of international investment disputes would also allow a partial or staged Canadian participation:

    70. This Convention shall apply to all territories for whose international relations a Contracting State is responsible, except those which are excluded by such State by written notice to the depositary of this Convention either at the time of ratification, acceptance or approval or subsequently.

    Again, the Canadian governments do not take this view. (This provision is much like article X of the NY Convention.)

    I do not think we disagree about reciprocity. The reciprocity clause in the New York Convention allows a contracting state to refuse to enforce foreign arbitral awards unless they were made in the territory of another contracting state to the Convention. Canada did not make such a declaration.

    There was some misguided concern in the early 1990s that because Ontario did not have legislation expressly implementing the Convention, somehow Ontario was not a party and thus countries that had made the reciprocity declaration would not enforce awards made in Ontario.

    This was misguided for several reasons:

    i) Nothing in Canadian law requires a province (or, I would submit, Canada) to refer to a convention expressly in the legal instrument that implements it. So long as Canada’s laws create the results required by the convention, then Canada has met its international obligation undertaken by ratification. (It may be an advantage to refer expressly to the convention, for purposes of communication or interpretation, but it is not legally necessary in domestic or international law.)

    Ontario’s International Commercial Arbitration Act does everything the NY Convention requires – there is an added provision (s. 10) that extends it to non-international yet foreign award (e.g. an award from an arbitration between two parties in the same foreign country). Thus Ontario could safely repeal its Foreign Arbitral Awards Act, rather than having two closely overlapping but not quite identical statutes on international commercial arbitration, as several provinces have.

    ii) Ontario is not a party to the NY Convention; Canada is a party. Anyone asked whether an award made in Ontario came from a contracting state would have to answer Yes, so another state that enforced only award from contracting states would have to enforce a Canadian award, wherever in Canada it was made.

    iii) This latter statement is true, in my view, even if a province did not fully implement the Convention. Its deficiency would be Canada’a deficiency in international law, but that deficiency would not affect Canada’s status as a state party entitled to reciprocal treatment, so long as Canada did not denounce (withdraw from) the convention. (There is no way that I see for anyone to force another country out for non-compliance.)

    In other words, failure to live up to the convention does not affect one’s status as a party for the purposes of the reciprocity question.

    The same argument work for the limitations issue that we started with. As a matter of principle and of good international practice, we should comply with our obligations – though there is as we have seen debate about whether the Yugraneft decision puts us out of compliance. But if we are not in compliance, Canadian awards should still be enforceable in all member states.