Thursday, May 27, 2010

Beware Limitation Period for Foreign Arbitral Awards

From Eugene Meehan's Supreme Court of Canada Lawletter:

"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 held (unanimously) that the appeal is dismissed.

Justice Rothstein wrote as follows (at pages 2, 33):

"Under international arbitration law, the matter of limitation periods is left to local procedural law of the jurisdiction where recognition and enforcement is sought. The applicable limitation period in this case must therefore be found in the limitations law of Alberta. As an arbitral award is not a judgment or a court order for the payment of money, an application for recognition and enforcement in Alberta is not eligible for the 10-year limitation period set out in s. 11 of the Limitations Act, R.S.A. 2000, c. L-12. 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 Limitations Act.

...In addition to claiming that Yugraneft's application is time-barred, Rexx has also argued that enforcement of the award should be refused on public policy grounds (Convention, art. V(2)(b)), alleging that it was tainted by fraud. In light of my conclusion regarding the applicable limitation period, there is no need to rule on this issue and I refrain from doing so."



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