A summary follows:
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Y Corp., a Russian corporation that develops and operates oilfields in Russia, purchased materials for its oilfield operations from R Corp., an Alberta corporation. Following a contractual dispute, Y Corp. commenced arbitration proceedings before the International Commercial Arbitration Court at the Chamber of Commerce and Industry of the Russian Federation.
On September 6, 2002, the arbitral tribunal ordered R Corp. to pay $952,614.43 US in damages to Y Corp. Y Corp. applied to the Alberta Court of Queen's Bench for recognition and enforcement of the award on January 27, 2006.
The court dismissed the application, ruling that it was time‑barred under the two‑year limitation period in s. 3 of the Alberta Limitations Act. The Court of Appeal upheld the ruling.
The Supreme Court of Canada dismissed the appeal.
Alberta is required to recognize and enforce eligible foreign arbitral awards. The recognition and enforcement of foreign arbitral awards in Alberta is governed by the International Commercial Arbitration Act, which incorporates both the Convention on the Recognition and Enforcement of Foreign Arbitral Awards and the United Nations Model Law on International Commercial Arbitration. The Convention requires all Contracting States to recognize and enforce arbitral awards made in the territory of another state, whether or not they are party to the Convention, except on enumerated grounds. It was ratified and implemented by legislation in Alberta and each of the other provinces. The Model Law, a codification of international "best practices", recommends terms identical to those in the Convention and has also been adopted, subject to some modifications, by every jurisdiction in Canada, including Alberta.
The Convention allows Contracting States to impose local time limits on the recognition and enforcement of foreign arbitral awards if they so wish. While limitation periods are not included in the list of grounds upon which a Contracting State may refuse to recognize and enforce a foreign arbitral award, the Convention stipulates that recognition and enforcement shall be "in accordance with the rules of procedure of the territory where the award is relied upon". If the competent legislature intended to subject recognition and enforcement proceedings to a limitation period, the limitation period in question will be construed as a "rule of procedure" as that term is understood under the Convention. The domestic characterization of limitation periods as substantive or procedural is immaterial. In the case of federal states, local time limits are to be determined by the law of the enforcing jurisdiction within the federal state. In those cases, the relevant unit will be the enforcing jurisdiction within the Contracting State, not the Contracting State in its entirety. In order to comply with the Convention, Alberta need only provide foreign awards with treatment as generous as that provided to domestic awards rendered in Alberta.
The only Alberta law applicable to the recognition and enforcement of foreign arbitral awards is the Limitations Act. The Arbitration Act expressly excludes foreign awards, and the Reciprocal Enforcement of Judgments Act only applies to judgments and arbitral awards rendered in reciprocating jurisdictions. Russia is not a reciprocating jurisdiction. By contrast, the scheme of the Limitations Act and its legislative history indicate that the Alberta legislature intended to create a comprehensive and exhaustive limitations scheme applicable to all causes of action except those excluded by the Act itself or covered by other legislation. Foreign arbitral awards are not so excluded and are therefore subject to the Limitations Act. An application for recognition and enforcement of a foreign arbitral award is an application for a "remedial order" within the meaning of the Act. However, as an arbitral award is not "a judgment or a court order for the payment of money", it is not eligible for the 10‑year limitation period set out in s. 11 of the Act. Rather, the application is subject to the general two‑year limitation period applicable to most causes of action, which is found in s. 3 of the Act.
The two‑year limitation period in s. 3 is subject to a discoverability rule. Where, as here, the injury is the "non‑performance of an obligation" and the arbitral creditor seeks to have a foreign arbitral award recognized and enforced, the date of the issuance of the award will not normally be considered to be the date of non‑performance of the obligation to pay. The limitation period under s. 3 will not be triggered until the possibility that the award might be set aside by the local courts in the country where the award was rendered has been foreclosed. In the case of Russia, a Model Law jurisdiction, there is no indication in the record that the three‑month appeal period to set aside an award set out in s. 34 of the Model Law on International Commercial Arbitration was modified, and no appeal was launched during that period. Failure to make payment on the date the award becomes final satisfies the first two elements of discoverability set out in s. 3(1)(a)(i) and (ii): the arbitral creditor would know that the injury has occurred and that it was attributal to the arbitral debtor. The third element is also met. Under s. 3(1)(a)(iii), a court could delay commencement of the limitation period until the arbitral creditor knew or ought to have known that the injury it received warrants bringing a proceeding. In this case, however, there was no need to delay the running of time. Since the debtor is registered in Alberta where its head office is located, Y Corp. could not claim — and has not claimed — that it did not know or ought not to have known that a proceeding was warranted in Alberta at the time of the expiry of the three‑month appeal period following receipt of notice of the award. Even taking into account the discoverability rule, Y Corp.'s application for recognition and enforcement of the foreign arbitral award was time‑barred as of December 2004.
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