Canada: BC's Arbitration Act: New Legislation Aims To Modernize And Streamline Domestic Arbitration

On September 1, 2020, in a development aimed at modernizing and streamlining the domestic arbitration regime, the Arbitration Act, S.B.C. 2020, c. 2 (the Act) will come into force in British Columbia, repealing and replacing the Arbitration Act, R.S.B.C. 1996, c. 55 (the old act). The Act more closely aligns BC's domestic arbitration legislation with its International Commercial Arbitration Act, R.S.B.C. 1996, c. 233, as well as with the standards contained in the UNCITRAL Model Law on International Commercial Arbitration. In so doing, the Act advances the objective of achieving greater uniformity in modern arbitration laws across Canada.

Below, we highlight some of the most significant changes and updates brought about by the Act, including elements that contracting parties and arbitration practitioners should keep in mind going forward.

Modernized procedural framework

The Act contains a number of provisions intended to enhance the efficiency and speed of proceedings. For example, s. 21 of the Act imposes a general duty on the arbitral tribunal to strive to achieve a “just, speedy and economical determination of the proceeding on its merits,” while s. 22 imposes a correlative obligation on the parties to do “all things necessary” to achieve this objective.

The Act eliminates the default application of the British Columbia International Commercial Arbitration Centre (BCICAC) Rules, which applied under the old act unless the parties agreed otherwise. The BCICAC is a local arbitration institution with its own procedural rules of arbitration. Such rules must now be specifically incorporated into the arbitration agreement in order to apply.

The Act itself fills a number of procedural gaps in the old act that had been addressed, in part, through the default application of the BCICAC Rules. For example, the Act stipulates specific steps for commencing arbitration proceedings (s. 8). Arbitrations are to be commenced pursuant to the arbitration agreement, or, if the agreement does not specify how proceedings are to be commenced, by delivering one of the notices prescribed in the Act.

The Act prescribes the structure for witness evidence. While the old act did not stipulate any requirements for the form of witness evidence, s. 28 of the Act requires that direct evidence be in written form (unless otherwise agreed by the parties or directed by the tribunal).

The Act contains an entire section (Part 6) on interim measures and preliminary orders, whereas the old act contained no such provisions. Interim measures are defined as specific temporary measures, which may or may not be in the form of an arbitral award, and which may be enforced through application to the BC Supreme Court (the Act also contains limited specific grounds on which the BC Supreme Court may refuse to enforce an interim measure). Sections 37 and 38 set out a specific regime for obtaining interim measures as a preliminary order (that is, without notice to any other party). Preliminary orders are expressly deemed not to be arbitral awards; while binding, they are not subject to enforcement by a court.

A further, significant change relates to the creation of a “designated appointing authority.” Under the old act, if a dispute arose with respect to the appointment of an arbitrator, the available recourse was application to the court. Unless the parties otherwise agree, the mechanism contained in the new Act first requires application to the designated appointing authority to resolve appointment issues and, only where the designated appointing authority does not make the appointment, or take other necessary measures, is recourse available to the BC Supreme Court (s. 14).

The designated appointing authority has other functions as well. In particular, it may summarily resolve issues arising in respect of tribunal fees and expenses (s. 55) and may impose terms for the delivery of an arbitral award where the tribunal has not received full payment of fees and expenses (s. 52). Pursuant to the new regulations, the former BCICAC (which is being rebranded as the Vancouver International Arbitration Centre) will be the designated appointing authority.

Expanded tribunal powers

Under the old act a tribunal was required to adjudicate each matter by reference to law (unless the parties agreed that the matter may be decided on equitable or other grounds). The new Act expressly requires tribunals to decide the substance of disputes in accordance with the applicable law, including any equitable rights or defences available under that law (s. 25).

Streamlined appeal process and harmonized grounds for set aside

The process for appeal of an arbitral award has been streamlined, in keeping with the effort to achieve just, speedy and economical results. Jurisdiction over appeals on questions of law, on leave, will now reside directly with the BC Court of Appeal. The Court of Appeal may confirm, amend, or set aside the arbitral award, or remit the award to the tribunal, together with the Court of Appeal's opinion on the question of law at issue. The limitation period for appeals has also been shortened from 60 days under the old act, to 30 days (s. 60).

The grounds on which an award may be set aside now substantially mirror the grounds available under the International Commercial Arbitration Act and the UNCITRAL Model Law (s. 58). The Act also clarifies the standard applicable to justifiable doubts as to the arbitrator's independence or impartiality that may result in the set aside of an award. As with the time limit for appeals, the time limit for set-aside applications has also been shortened to 30 days.

New recognition and enforcement procedure for Canadian awards

Under the old act, there was no process provided for recognition and enforcement of arbitral awards from other Canadian jurisdictions. The Act now contains specific provisions governing the recognition and enforcement of such awards on application to the BC Supreme Court. Awards from other provinces must be recognized and enforced save very limited circumstances, such as where the court does not have jurisdiction to grant the relief sought or where the award has been set aside by a court of competent jurisdiction.

Confidentiality

The Act also expressly provides for the confidential nature of arbitration proceedings (unless otherwise agreed by the parties). Pursuant to s. 63 of the Act, all hearings and meetings in the proceedings are held in private, and the parties (and the tribunal) must not disclose any of the proceedings, evidence, documents or information in connection with the arbitration, including an arbitral award, that are not otherwise in the public domain.

Transition provisions

Pursuant to s. 70(1) of the Act, the Act applies to arbitral proceedings commenced on or after September 1, 2020. The old act will continue to apply to prior-commenced arbitrations. For clarity, a reference in an arbitration agreement to the old act, the Arbitration Act, R.S.B.C. 1979, c. 18, or the Commercial Arbitration Act, R.S.B.C. 1996, c. 55, will be deemed to be a reference to the Act.

As with the old act, the Act does not apply where the International Commercial Arbitration Act applies. Consistent with the approach in other Canadian provinces, the International Commercial Arbitration Act applies to international commercial arbitrations whereas the new applies to all other arbitrations (save where excluded by law).

The Act also does not apply to an arbitration of a family law dispute, as defined under the Family Law Act, or to an arbitration under a prescribed agreement entered into by the government of BC or the government of Canada and the government of another jurisdiction in or outside Canada (except as provided in the regulations). Along with the Act, a new Arbitration Regulation will come into force, repealing the previous Arbitration Act Application Regulation, BC Reg. 96/2019.

Significance of the reform

The new legislation makes BC an attractive jurisdiction in which to resolve commercial disputes by way of arbitration, and is likely to further enhance Canada's reputation generally as an arbitration-friendly jurisdiction.

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