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Canada Takes the Stage in International Arbitration

source : Bev Cline

Canada is shaping up to be a world-class destination for international commercial arbitration .

International commercial arbitration in Toronto, and the rest of Canada, may historically have been flying under the international radar, but that’s rapidly changing. The irony is that, for decades, the talents of Canadian lawyers and arbitrators were evident on the international stage.

While international destinations, commercial arbitrators and counsel have a legacy of trumpeting their suitability – think New York, London, Paris, Geneva – and garnered the lion’s share of the limelight, now Canada, and Toronto, are moving into the spotlight.

Gerry Ghikas, a partner with Borden Ladner Gervais LLP in Vancouver, finds it somewhat mystifying that US lawyers haven’t automatically thought first of Canada before investigating resources further abroad, and Toronto, the financial center of Canada.

He thinks it’s a case of Canadians’ reluctance to blow their horns, tout their advantages. "In the past, we haven’t been active enough in promoting the advantages to US counsel and companies for holding international arbitrations involving Canadian and/or other foreign entities here," he says.

That’s not the case anymore. Now, those in the know say, Canadian lawyers, law firms and arbitrators are taking a much more assertive stance in marketing Canada, and Toronto, as the hub for international commercial arbitrations.

"Toronto has been on the map for a while, but we haven’t been making it known sufficiently to the rest of the world," says Earl Cherniak, a partner at Lerners LLP in Toronto.

Cherniak, a lawyer and commercial arbitrator, chairs the Toronto Commercial Arbitration Society (TCAS), formed in 2010 to promote Toronto internationally to the arbitration world. TCAS now numbers approximately 150 members, including "virtually every senior arbitrator and senior and aspiring counsel in the city, as well as many members from other parts of Canada and some international members," he says.

Just ask Cherniak why US law firms and in-house counsel should look northward and he can confidently list a whole host of reasons.

"There’s a very large cadre of experienced and high-quality arbitrators and arbitration counsel in Toronto," says Cherniak. These are supported by excellent services, including ASAP Reporting Services, Neeson & Associates Court Reporting and Captioning Inc. and Victory Verbatim Reporting Services, Inc.

The development and interest in commercial arbitration is evidenced by the growing number of chambers in Toronto, which currently is home to ADR Chambers; Neeson Arbitration Chambers, which opened in 2009; and in 2012, the opening of Arbitration Place and JAMs.

As to experience, Cherniak adds that "in Canada we have experienced arbitrators and counsel in the two principal areas of law in which arbitrations would be held — common and civil law." He also notes that Canada is an UNCITRAL jurisdiction, which facilitates international arbitration.

"Toronto is a very cosmopolitan city; when you think of New York, London, Hong Kong, we’re getting that kind of cachet," says Kim Neeson, Founder and President of Neeson Arbitration Chambers in Toronto. She cites new hotels, Trump International Hotel, Ritz-Carlton Hotel, Shangri-La Hotel and a slew of new and proposed office towers and high-end condominiums in the city’s downtown core.

This high-profile urban development "provides an independent way to look at how the international business world is viewing Toronto. It speaks to the vision of the city as a destination in the minds of the business traveler," says Neeson, who after three decades of providing court reporting and related services, decided, three years ago, to open Neeson Arbitration Chambers in conjunction with her existing services.

Cherniak speaks also of Toronto and Canada’s financial stability, and the attractive and competitive cost of retaining those experienced in arbitrations: "[The rates] of our arbitrators and counsel are modest in comparison to London, Paris and New York, but the work is as high quality," he says.

Adds Neeson: "The fact that our dollar is still competitive and we have a very stable financial and banking system has been recognized worldwide."

And while Canada isn’t generally seen as a flashy, in-your-face kind of country, "since the recession began in 2008, the business infrastructure we have in place – ‘old conservative Canada’ as it’s been written about time and again – it turns out that our way of doing business in terms of stability is really a good thing," says Neeson.

Then there’s Canada’s worldwide reputation as a neutral site, says Henri Alvarez, a partner with Fasken Martineau DuMoulin LLP and co-chair of the firm’s International Arbitration Practice Group. "C

anada is seen as a different, independent country from the US, although located next door, and is seen as being neutral," he says. "So, in disputes involving a foreign party with a US party (of which there are many given the amount of business involving US companies) it is a good and convenient compromise: different from the US for the foreign party and familiar and convenient for the US party."

"Canada is largely a common-law jurisdiction and English and French are commonly used languages in international arbitration. So, depending on the language of the arbitration and the law/legal system involved, a Canadian seat (whether in a common-law jurisdiction or in Québec) can be [an] attractive compromise for parties who would otherwise attempt to negotiate the place of arbitration to be their country," he says.

As to language, "Toronto, I think it can be fairly said, is the most multicultural city in the world," says Cherniak. "There’s a varied cultural community and the availability of translation services in virtually every language."

William Horton, of William G. Horton Professional Corporation, feels that "a unique feature of arbitration in Toronto – and perhaps throughout Canada – is that counsel do not appear to have much difficulty agreeing on arbitrators without the help of arbitration institutions." He attributes this to "the large selection of well-qualified arbitrators and the more reasonable, business-like approach of the lawyers."

About 30 per cent of the commercial arbitrations in which Horton has served as an arbitrator over the last five or six years have been international, in that they involved parties from different countries. But arbitration institutions have only been involved in a very few instances.

When he relates this to arbitrators from outside Canada, he says "a number of senior arbitration practitioners from other major arbitration centers express surprise and disbelief when I tell them this."

He contrasts his experience versus "the norm internationally for lawyers to fight over everything starting with who the arbitrator should be. This means that it is impossible to avoid the extra costs associated with either a three-person panel – with each side appointing one arbitrator – or an institutionally administered arbitration."

According to Horton, he is not unique in his experience. "I have done arbitrations as sole arbitrator, where the amounts in dispute have ranged into many tens of millions of dollars, without the parties having had any apparent difficulty agreeing on the appointment. I know of many other Toronto arbitrators who have had the same experience," he adds.

Sector expertise plays a big part in attracting US counsel to site arbitrations in Canada. The Canadian economy fires on all cylinders in a number of sectors and industries that are common also in the US, with resulting expertise among lawyers and arbitrators.

Referring to sector-specific expertise, Alvarez notes that "Calgary has arbitrators, lawyers and courts well versed in oil and gas law and its substantive law is familiar to players in that industry."

On Canada’s west coast, Vancouver, "where lawyers and arbitrators have expertise in mining and bio-technology, both areas have seen substantial business and an increasing number of arbitrations," adds Alvarez.

In addition, Vancouver is "well known in Asia and has large local Asian populations. We have been seeing growth in arbitrations involving Asian parties (from Korea, People’s Republic of China, Japan) in Vancouver. This is consistent with the rise of Asian economies and business there and the inevitable disputes which follow," he says.

What is also fueling the increasing number of arbitrations here is "the growing familiarity and acceptance of arbitration in those countries and acceptance of arbitral seats outside Asia (notably by Chinese parties)."

Kathryn Chalmers, a senior partner and litigator at Stikeman Elliott LLP in Toronto, feels that Canada offers the "best of both worlds" in European/US arbitrations.

"Americans import a lot of their trial procedures into their arbitrations, so, while it may be overblown, Europeans sometimes have a slight fear of the ‘Americanization’ of arbitration that can include procedural wrangles, pre-arbitration motions, and extensive broadly based depositions, including discovery of multiple witnesses that touch upon the issues," she says.

"Contrast the US system with the civil process in Europe where there is little documentary production and little or no discovery before you have your trial," she says. The result: "The two worlds have difficulty meeting in the middle somewhere."

To Chalmers’ way of thinking, "Canada is a bit of a compromise for both of them. It’s not as costly without all the disclosure and there’s still the comfort that there are procedural comforts in laying out your case."

Still, should the dispute end up in court, "the laws of Canada and the existence of the commercial court means that there’s a number of experienced judges who can deal with arbitration matters and are receptive and appreciative of arbitration issues," says Cherniak.

He says that’s true of the jurisprudence of Canada, generally. "There are a number of cases in the Supreme Court of Canada, which makes it clear that the courts are very supportive of the arbitration process and will enforce arbitration clauses and enforcement of judgments."

Neeson also speaks of courts’ willingness to respect the arbitration process. Speaking of Ontario, where her chambers are located and with which she is most familiar, "Ontario courts are supportive of arbitration and have shown a willingness to interpret the province’s modern arbitration legislation in a way that is consistent with party autonomy," says Neeson. In her experience, "the [arbitration] process the parties have gone through is very much respected by the courts."

Alvarez adds, "our courts and judges are generally very good and have taken a favorable approach to arbitration, showing an appropriate level of deference to the system of dispute resolution chosen by commercial users."

Historically, "Canada’s reputation as an international arbitration ‘player’ was built on legislation adopted over two decades ago, when the provinces and territories adopted the work of the Uniform Law Conference of Canada," says Ghikas. "That legislation brought the UNCITRAL Model Law and the New York Convention into force across Canada."

US lawyers will be interested to know that the conference has now established a project to make recommendations about the future of Canada’s arbitration legislation. The objective, says project chair Ghikas, is to "ensure that Canada remains at the leading edge in this area, and to respond to the continuing evolution of international arbitration practice. We are looking not just at the 2006 amendments to the UNCITRAL Model Law, but also at best practices around the world."

According to Ghikas, policy recommendations for possible changes to legislation were approved by the ULCC at its annual meeting in Whitehorse, Yukon, in August 2012. Consequently, the working group was directed to proceed to the next phase, which will involve continuing consultation and preparation of draft legislation. In an unexpected development, says Ghikas, "the group also was authorized to begin preliminary work concerning possible changes to the Uniform Domestic Commercial Arbitration Act. The whole concept of updating our arbitration laws received a very strong endorsement."

Ghikas expects that the Model Law will remain the cornerstone of any new legislation. "It is widely recognized as an excellent distillation of the international consensus on what an arbitration law should look like," he says. "Our courts have respected it. Foreign and Canadian practitioners understand it. Even though the United States has not adopted the Model Law as its federal arbitration law, it has been adopted by some states."

Looking forward, new initiatives to promote Canada will likely come to fruition. "Toronto has taken the lead, [in marketing itself as an attractive venue]," says Vancouver’s Alvarez. "[But] we may well see initiatives in other Canadian cities, which are well placed to serve as places or seats of arbitration, such as Vancouver, Calgary and Montréal."

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