Introduction

On 17 May 2018, British Columbia updated its International Commercial Arbitration Act, RSBC 1996, c. 233 ('ICAA') when royal assent was given to the International Commercial Arbitration Amendment Act, 2018.1 With these recent amendments, British Columbia became the second Canadian jurisdiction (after Ontario) to update its international commercial arbitration legislation in accordance with the 2006 amendments to the UNCITRAL Model Law ('Model Law').

In Canada, the legislation that each province enacts is critical in terms of the procedural law governing international commercial arbitration in that particular province. Canada is a federal state and the legislative competence over arbitration matters generally falls within the jurisdiction of the provinces (except for certain instances, e.g. where the federal government is a party to the arbitration or if it is a maritime or admiralty matter).

British Columbia's ICAA was first enacted in 1996 and was largely based on the 1985 UNCITRAL Model Law, like most other Canadian provinces. While the Model Law was significantly revamped in 2006, British Columbia had not amended its legislation to incorporate these updates. The recent amendments introduce updated rules to account for revisions to the Model Law and are a welcome step to position British Colombia (and specifically Vancouver) as a friendly venue for international commercial arbitrations.

I - Key amendments to British Columbia's ICAA

In large part, the recent amendments to British Columbia's ICAA incorporate the text of the 2006 Model Law, but there are also some areas where the amended ICAA differs from the Model Law, as explained below.

Definition of 'arbitration agreement'

Section 7 of the amended ICAA widens the scope of the definition of 'arbitration agreement', and also defines 'data message' and 'electronic communication'. Section 7(5) states that the writing requirement is met if the arbitration agreement exists in an electronic communication, as long as the information contained in the electronic communication is ‘accessible so as to be useable for subsequent reference’. This amendment brings the legislation up-to-date with technological advances, and is in line with the Model Law.

Stay of court proceedings

Where a party to an arbitration agreement commences domestic legal proceedings in breach of an arbitration agreement, section 8(1) previously allowed the other party to seek a stay before 'service of any pleadings or taking any other step in the proceedings'. The amended section 8(1) clarifies that parties may seek a stay before 'submitting the party's first statement on the substance of the dispute'. This less stringent standard allows the parties more flexibility and is in line with the Model Law.

Grounds for challenging an arbitrator

Section 12(3) of the ICAA sets out the grounds to challenge an arbitrator. An arbitrator may be challenged only if circumstances exist that give rise to 'justifiable doubts' as to the arbitrator's independence or impartiality. The new section 12(3.1) specifies that there are justifiable doubts as to the arbitrator’s independence or impartiality only if there is a real danger of bias on the part of the arbitrator in conducting the arbitration. The Model Law does not contain similar language. The threshold for challenging an arbitrator is thus more stringent in the ICAA than in the Model Law or in other Canadian jurisdictions, where the 'reasonable apprehension of bias' test generally prevails.2

Interim measures and preliminary orders

Recent amendments to the ICAA introduce a new regime for interim measures and preliminary orders. Under the amended section 17, arbitral tribunals have the power to order interim measures including temporary measures to maintain or restore the status quo, prevent a party from taking action likely to cause harm or prejudice to the arbitral process, preserve assets, preserve evidence, or 'provide appropriate security for costs in connection with arbitral proceedings'. Article 17 of the Model Law is not as explicit on the power of tribunals to order security for costs.

Section 17.01 sets out the conditions that must be satisfied for a tribunal to order an interim measure. Section 17.02 provides that a party may request an interim measure without notice to any other party, together with an application for a preliminary order directing a party not to frustrate the purpose of the interim measure requested. The arbitral tribunal further enjoys the power to grant an ex-parte order if it considers that prior disclosure risks frustrating the purpose of the interim measure. Sections 17.03 through to 17.10 address the procedure, duration, disclosure, costs, recognition and enforcement, and binding nature of interim measures and preliminary orders. These provisions are in accordance with the Model Law.

Representation in arbitral proceedings

Section 21.01 is a new provision stating that a party may be represented in an arbitration by any person, 'including, but not limited to, a legal practitioner from another state'. Furthermore, this section specifically excludes the application of section 15 of British Columbia's Legal Profession Act (which sets out the parameters of who has authority to practice law in British Columbia) to any non-member of the Law Society of British Columbia who is appearing as counsel, giving advice, or preparing documentation in arbitral proceedings. This is a noteworthy amendment not only because it deviates from the Model Law, but also because it opens the door to non-legal professionals making submissions in arbitral proceedings.

Enforcement of consolidation agreements

The new section 27.01 allows parties to apply to the British Columbia Supreme Court to enforce an agreement by the parties to consolidate arbitral proceedings (although it does not limit the parties' ability to consolidate arbitral proceedings without a court order). Where parties have agreed to consolidation but have not agreed on other procedural matters (such as the composition of the tribunal, place of arbitration, applicable procedural rules), the British Columbia Supreme Court, may, on an application by the parties, determine such matters, subject to certain conditions and considerations listed in sections 27.01(4) and 27.01(5). While these amendments do not specifically emanate from the Model Law, they are consistent with its Article 5, which states that all instances of court intervention in an arbitral proceeding have to be provided for in the legislation enacting the Model Law.

Third party funding not contrary to public policy

Section 36(3) is a new provision which explicitly provides that in the context of recognition or enforcement of an arbitral award, third party funding of arbitration proceedings is not contrary to the public policy in British Columbia. This is a significant development, as it shields an arbitral award obtained as a result of arbitral proceedings funded by a third-party from the threat of a possible argument against recognition or enforcement on the ground that the award would be contrary to the public policy in British Columbia. This language is not drawn from the Model Law, but aligns British Columbia with modern views on third-party funding, both nationally and internationally.

Privacy and confidentiality

Section 36.01 is a new section addressing issues of privacy and confidentiality in arbitration. It provides that all hearings and meetings in arbitral proceedings must be held in private, and that unless otherwise agreed, the proceedings, evidence, documents, arbitral award and information relating to the arbitration that are not otherwise in the public domain must not be disclosed. While the Model Law does not contain similar language, section 36.01 of the ICAA reflects international standards on confidentiality in arbitration proceedings. The express reference to privacy and confidentiality does however go a step further than the legislation of other arbitration friendly jurisdictions, many of which do not have any explicit statutory provisions dealing with confidentiality.

Immunity for arbitrators

Section 36.02 is another new section, stating that arbitrators are not liable for anything done or omitted in connection with an arbitration, unless the act or omission is in bad faith or the arbitrator has engaged in intentional wrongdoing. Although the Model Law does not contain similar language, this amendment reflects international standards regarding arbitrator immunity and will provide reassurance to arbitrators.

II - How British Columbia's legislation differs from Ontario's legislation

While Ontario also updated its legislation in line with the Model Law in March 2017,3 Ontario and British Columbia adopted different approaches to implement the 2006 Model Law. Whereas Ontario enacted a completely new piece of legislation and attached the Model Law to it as a schedule, British Columbia incorporated the 2006 Model Law amendments along with other developments into the text of the legislation. There are also substantive differences between the updated legislations in Ontario and British Columbia, including:

  • Section 12(3.1) of British Columbia's ICAA provides that an arbitrator may only be challenged if there are justifiable doubts as to the arbitrator’s independence or impartiality, which must involve a 'real danger of bias'. The legislation in Ontario does not mention the 'real danger of bias' requirement and therefore has a lower test for challenging an arbitrator. The practical consequences of the requirement of 'real danger of bias' and whether this feature will truly impact parties’ choice of British Columbia (or Vancouver) over other seats of arbitration is however difficult to predict;
  • Section 17(2)(e) of British Columbia's ICAA specifically gives tribunals the power to order that a party provides security for costs in connection with arbitral proceedings as an interim order. Ontario's legislation is not as explicit on security for costs. It is however arguable that the power to order security for costs falls under general powers of the tribunal to order interim measures under Article 17 of the Model Law;
  • Section 21.01 of British Columbia's ICAA allows a party to be represented by any person of that party's choice, including someone who is not a legal practitioner, whereas Ontario's legislation provides no such option;
  • Section 36(3) of British Columbia's ICAA states that third party funding is not contrary to the public policy in British Columbia. There is no equivalent provision in Ontario's legislation. The explicit reference to third party funding in British Columbia's ICAA could prompt other provinces to include similar language in their respective provincial legislations and further promotes British Columbia as a seat for international arbitration. Indeed, in addition to providing clarity, the explicit mention of third party funding may attract funders to explore opportunities in the province;
  • Section 36.01 of British Columbia's ICAA makes an explicit reference to privacy and confidentiality in arbitral proceedings, whereas Ontario's legislation is silent on this aspect; and
  • Section 36.02 of British Columbia's ICAA provides immunity to arbitrators from liability for acts or omissions in connection with an arbitration. There is no equivalent provision dealing with immunity of arbitrators in Ontario's legislation.

Conclusion

British Columbia's amended version of the ICAA implements a number of important and modern changes and contains clear language to bring the province in line with international standards and best practices. British Columbia has also joined Ontario in making its legislation more current, which will likely increase its status as another Canadian arbitration friendly jurisdiction. There are however some differences between the arbitration law in place in British Columbia and in Ontario. Although it remains to be seen how these differences will materialize in practice, arbitration users should bear them in mind when choosing to seat an international arbitration in either Vancouver or Toronto.


1
British Columbia's ICAA can be found at: http://www.bclaws.ca/civix/document/id/lc/statreg/96233_01

2
See Committee for Justice and Liberty v. National Energy Board, [1978] 1 S.C.R. 369 at 394, 395.

3
Ontario's ‘International Commercial Arbitration Act 2017’ can be found at: https://www.ontario.ca/laws/statute/17i02b . See also Sara Nadeau-Séguin, ‘Ontario Adopts a New International Commercial Arbitration Act’, ICC Dispute Resolution Bulletin, 2017 issue 3.