Yugraneft Corp. v. Rexx Management Corp., (2010) 401 N.R. 341 (SCC)

• Judge: McLachlin, C.J.C., Binnie, LeBel, Deschamps, Fish, Abella, Charron, Rothstein and Cromwell, JJ.
• Court: Supreme Court (Canada)
• Case Date: December 09, 2009
• Jurisdiction: Canada (Federal)
• Citations: (2010), 401 N.R. 341 (SCC);2010 SCC 19;[2010] 1 SCR 649;[2010] SCJ No 19 (QL);318 DLR (4th) 257;482 AR 1;22 Alta LR (5th) 166;[2010] EXP 1696;401 NR 341;EYB 2010-174202;68 BLR (4th) 1;188 ACWS (3d) 330;[2010] 6 WWR 387;JE 2010-926

Yugraneft Corp. v. Rexx Mgt. Corp. (2010), 401 N.R. 341 (SCC)

MLB headnote and full text

[French language version follows English language version]

[La version française vient à la suite de la version anglaise]

.........................

Temp. Cite: [2010] N.R. TBEd. MY.014

Yugraneft Corporation (appellant) v. Rexx Management Corporation (respondent) and ADR Chambers Inc., Canadian Arbitration Congress, Institut de médiation et d'arbitrage du Québec and London Court of International Arbitration (intervenors)

(32738; 2010 SCC 19; 2010 CSC 19)

Indexed As: Yugraneft Corp. v. Rexx Management Corp.

Supreme Court of Canada

McLachlin, C.J.C., Binnie, LeBel, Deschamps, Fish, Abella, Charron, Rothstein and Cromwell, JJ.

May 20, 2010.

Summary:

In September 2002, the International Commercial Arbitration Court at the Chamber of Commerce and Industry of the Russian Federation granted an arbitration award in favour of Yugraneft Corp., a Russian corporation, against Rexx Management Corp., an Alberta corporation, for a total of $952,614 (U.S.). In January 2006, Yugraneft applied for recognition and enforcement of the award.

The Alberta Court of Queen's Bench, in a decision reported at (2007), 423 A.R. 241, dismissed the application on the basis that the action was statute-barred. Yugraneft appealed.

The Alberta Court of Appeal, in a decision reported at (2008), 433 A.R. 372; 429 W.A.C. 372, dismissed the appeal. Yugraneft appealed.

The Supreme Court of Canada dismissed the appeal.

Arbitration - Topic 5696

The award - Enforcement of award - Foreign awards - Defences - In September 2002, Yugraneft Corp. obtained a Russian arbitration award against an Alberta corporation - In January 2006, Yugraneft applied for recognition and enforcement of the award - The action was found to be statute-barred - At issue on Yugraneft's appeal was whether the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the Convention), which had been adopted into Alberta law in the International Commercial Arbitration Act, allowed local limitation periods to apply - Article III of the Convention stipulated that recognition and enforcement was to be "in accordance with the rules of procedure of the territory where the award is relied upon" - The Supreme Court of Canada concluded that the Convention was intended to allow contracting states to impose local time limits on the recognition and enforcement of foreign arbitral awards if they so wished - In the case of federal states, such limitations were to be determined by the law of the enforcing jurisdiction within the federal state - The lack of any explicit restriction in the Convention on a contracting state's ability to impose a limitation period could be taken to mean that, for the Convention's purposes, any limitation period that, under domestic law, was applicable to the recognition and enforcement of a foreign arbitral award was a "rule of procedure" under art. III - Even if the court were to characterize a given limitation period as "substantive" in nature, that would not in and of itself prevent the limitation period from applying - Instead, the court would have to determine whether a potentially applicable limitation period was intended to apply to the recognition and enforcement of foreign arbitral awards - If so, then it was properly applicable as a local "rule of procedure" under art. III - Nor did art. III bar a province from imposing a limitation period shorter than the longest limitation period available anywhere in Canada for the recognition and enforcement of domestic arbitral awards, as asserted by an intervenor - This assertion was at odds with Canada's federal constitution and was a misreading of the Convention - In order to comply with the Convention, Alberta only had to provide foreign awards with treatment as generous as that provided to domestic awards rendered in Alberta - See paragraphs 14 to 34.

Arbitration - Topic 5696

The award - Enforcement of award - Foreign awards - Defences - In September 2002, Yugraneft Corp. obtained a Russian arbitration award against an Alberta corporation - In January 2006, Yugraneft applied for recognition and enforcement of the award - The action was found to be statute-barred - At issue on Yugraneft's appeal was what limitation period applied to the recognition and enforcement of foreign arbitral awards under Alberta law - The Supreme Court of Canada found that the recognition and enforcement of foreign arbitral awards in Alberta was subject to the Limitations Act - The Act was intended to create a comprehensive and simplified limitations regime - Section 2(1) provided that it applied in all cases where a claimant sought a "remedial order" as defined in the Act - The definition used very broad language that encompassed virtually every kind of order that a court could grant in civil proceedings with only certain types of relief excluded - Section 12 provided that the Act applied to claims subject to foreign law - This indicated that the Act was intended to apply to all claims for a remedial order not expressly excluded - According to the maxim expressio unius est exclusio alterius, the fact that the legislature enumerated specific exceptions to the definition of "remedial order" indicated that anything fitting the general description and not expressly excluded was, by implication, deemed to fall within the meaning of the term - Thus, by necessary implication, the recognition and enforcement of foreign arbitral awards was subject to the Act - See paragraphs 35 to 41.

Arbitration - Topic 5696

The award - Enforcement of award - Foreign awards - Defences - In September 2002, Yugraneft Corp. obtained a Russian arbitration award against an Alberta corporation - In January 2006, Yugraneft applied for recognition and enforcement of the award - The action was found to be statute-barred - At issue on Yugraneft's appeal was what limitation period applied to the recognition and enforcement of foreign arbitral awards under Alberta law - The Supreme Court of Canada, having found that the recognition and enforcement of foreign arbitral awards in Alberta was subject to the Limitations Act, considered how to characterize the application - The court rejected Yugraneft's assertion that its order was a "remedial order" based on a "judgment or order for the payment of money", subject to a 10 year limitation period under s. 11 - An arbitral award was not a judgment or a court order - Yugraneft's application fell outside of s. 11 - There was no ambiguity as to whether a foreign arbitral award fell under s. 3 (two year limitation period) or s. 11 - The legislature had made it clear elsewhere that when it intended the word "judgment" to include a foreign arbitral award, words to that effect were expressly provided - In the absence of express words, a foreign arbitral award could not fall within the meaning of "judgment" - An application for recognition and enforcement of a foreign arbitral award was an application for a remedial order within the meaning of s. 3 - This interpretation was consistent with the overall scheme of Alberta limitations law - It also provided more generous treatment for foreign awards than for domestic awards, which was consistent with art. III of the Convention on the Recognition and Enforcement of Foreign Arbitral Awards - The limitation period in s. 3 was subject to the discoverability rule, while the time limit set out for domestic awards in s. 51 of the Arbitration Act was not - This made ample allowance for the practical difficulties faced by foreign arbitral creditors - See paragraphs 42 to 49.

Arbitration - Topic 5696

The award - Enforcement of award - Foreign awards - Defences - In September 2002, Yugraneft Corp. obtained a Russian arbitration award against Rexx Management Corp., an Alberta corporation - In January 2006, Yugraneft applied for recognition and enforcement of the award - The action was found to be statute-barred - The Supreme Court of Canada dismissed Yugraneft's appeal - The application was barred by s. 3 of the Limitations Act - Under the UNCITRAL Model Law on International Commercial Arbitration (the Model Law), which was incorporated into Alberta Law by the International Commercial Arbitration Act, a party to an arbitration had three months to apply to the local courts to have an award set aside - As Russia was a Model Law jurisdiction, Rexx's obligations under the award did not crystallize until three months after Yugraneft received the award - Non-performance of Rexx's obligation to pay Yugraneft did not occur until December 2002 - Yugraneft had two years after December 2002 to commence proceedings against Rexx in Alberta - As the action was brought in January 2006, it was clearly time-barred - However, under s. 3(1)(a)(iii) of the Limitations Act, the commencement of the limitation period was subject to the discoverability rule - This allowed the court to consider aspects of an arbitral creditor's circumstances that would lead a reasonable person to conclude that there was no reason for the arbitral creditor to know whether proceedings were warranted in Alberta - Recognition and enforcement proceedings would only be warranted in Alberta once an arbitral creditor had learned, exercising reasonable diligence, that the arbitral debtor possessed assets in Alberta - Nevertheless, a delay was not open to Yugraneft in the circumstances here - The contract entered into by Yugraneft and Rexx in 1998 identified Rexx as an Alberta corporation - Yugraneft could not claim that it did not know or ought to have known that a proceeding was warranted in Alberta at the time of the expiry of the three month appeal period - See paragraphs 50 to 63.

Limitation  of Actions - Topic 15

General principles - Discoverability rule - Application of - [See fourth Arbitration - Topic 5696 ].

Limitation of Actions - Topic 4802

Arbitration - General - Application of Limitations Acts - [See all Arbitration - Topic 5696 ].

Limitation of Actions - Topic 7056

Actions on a judgment - Time - Action to enforce foreign judgment - [See third Arbitration - Topic 5696 ].

Statutes - Topic 515

Interpretation - General principles - International convention - Effect of - [See third Arbitration - Topic 5696 ].

Statutes - Topic 1554

Interpretation - Construction where meaning is not plain - Implied meaning - Stating one thing implies exclusion of another (expressio unius est exclusio alterius) - [See second Arbitration - Topic 5696 ].

Statutes - Topic 2466

Interpretation - Interpretation of words and phrases - Interpretation and definition clauses - Specific inclusions or exclusions following general provision - [See second Arbitration - Topic 5696 ].

Cases Noticed:

Morguard Investments Ltd. et al. v. De Savoye, [1990] 3 S.C.R. 1077; 122 N.R. 81, refd to. [para. 6].

Beals v. Saldanha et al., [2003] 3 S.C.R. 416; 314 N.R. 209; 182 O.A.C. 201; 2003 SCC 72, refd to. [para. 6].

Tolofson v. Jensen and Tolofson, [1994] 3 S.C.R. 1022; 175 N.R. 161; 77 O.A.C. 81; 51 B.C.A.C. 241; 84 W.A.C. 241, refd to. [para. 16].

Daniels v. Mitchell (2005), 371 A.R. 298; 354 W.A.C. 298; 2005 ABCA 271, refd to. [para. 36].

Dell Computer Corp. v. Union des consommateurs et al., [2007] 2 S.C.R. 801; 366 N.R. 1; 2007 SCC 34, refd to. [para. 44].

Desputeaux v. Editions Chouette (1987) inc., [2003] 1 S.C.R. 178; 301 N.R. 220; 2003 SCC 17, refd to. [para. 44].

Ordon et al. v. Grail, [1998] 3 S.C.R. 437; 232 N.R. 201; 115 O.A.C. 1, refd to. [para. 46].

Rizzo & Rizzo Shoes Ltd. (Bankrupt), Re, [1998] 1 S.C.R. 27; 221 N.R. 241; 106 O.A.C. 1, refd to. [para. 48].

Novak et al. v. Bond, [1999] 1 S.C.R. 808; 239 N.R. 134; 122 B.C.A.C. 161; 200 W.A.C. 161, refd to. [para. 59].

Statutes Noticed:

Limitations Act, R.S.A. 2000, c. L-12, sect. 3, sect. 11 [Appendix C].

Authors and Works Noticed:

Blackaby, Nigel, and Partasides, Constantine, Redfern and Hunter on International Arbitration (5th Ed. 2009), pp. 70, 72, 73 [para. 19]; 631, 632 [para. 22]; 649, 650 [para. 54].

Born, Gary B., International Commercial Arbitration (3rd Ed. 2009), p. 101 [para. 19].

International Chamber of Commerce, Guide to National Rules of Procedure for Recognition and Enforcement of New York Convention Awards (ICC Bull.)  (2008 Spec. Supp.), pp. 343 to 346 [para. 21].

Mustill, Michael John, Arbitration: History and Background (1989), 6, J.,Int'l Arb. 43, p. 49 [para. 10].

Poudret, Jean-François, and Besson, Sébastien, Comparative Law of International Arbitration (2nd Ed. 2007), pp. 868 [para. 19]; 869 [para. 22].

Sullivan, Ruth, Sullivan on the Construction of Statutes (5th Ed. 2008), pp. 243, 245 [para. 39].

United Nations Commission on International Trade Law, UNCITRAL, Report on the survey relating to the legislative implementation of the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (New York 1958), 41st Sess., U.N. Doc. A/CN.9/656/Add.1 (2008), pp. 2, 3 [para. 21].

van den Berg, Albert Jan, The New York Arbitration Convention of 1958: Towards a Uniform Judicial Interpretation (1981), p. 240 [para. 22].

Counsel:

Scott A. Turner and Sam de Groot, for the appellant;

David R. Haigh, Q.C., Michael J. Donaldson and Sonya A. Morgan, for the respondent;

Babak Barin, James E. Redmond, Q.C., and Andrew McDougall, for the intervenor, the ADR Chambers Inc.;

Ivan G. Whitehall, Q.C., and Paul M. Lalonde, for the intervenor, the Canadian Arbitration Congress;

Stefan Martin and Pierre Grenier, for the intervenor, Institut de médiation et d'arbitrage du Québec;

Pierre Bienvenu, Frédéric Bachand and Alison Fitzgerald, for the intervenor, the London Court of International Arbitration.

Solicitors of Record:

Burns, Fitzpatrick, Rogers & Schwartz, Vancouver, British Columbia, for the appellant;

Burnet, Duckworth & Palmer, Calgary, Alberta, for the respondent;

B C F, Montreal, Quebec, for the intervenor, the ADR Chambers Inc.;

Heenan Blaikie, Ottawa, Ontario, for the intervenor, the Canadian Arbitration Congress;

Fraser Milner Casgrain, Montreal, Quebec, for the intervenor, Institut de médiation et d'arbitrage du Québec;

Ogilvy Renault, Montreal, Quebec, for the intervenor, the London Court of International Arbitration.

This appeal was heard on December 9, 2009, by McLachlin, C.J.C., Binnie, LeBel, Deschamps, Fish, Abella, Charron, Rothstein and Cromwell, JJ., of the Supreme Court of Canada. On May 20, 2010, Rothstein, J., delivered the following judgment for the court in both official languages.