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Nip & Tuck: BC Becomes a Model Law Jurisdiction for International Commercial Arbitration
Posted in Commercial

On Thursday, May 17th, 2018, the International Commercial Arbitration Amendment Act received Royal Assent. The Act significantly modernizes British Columbia’s international arbitration legislation, the International Commercial Arbitration Act (“ICAA”), bringing the province in line with current international practices in the discipline. The most notable changes to the ICAA were the incorporation of the 2006 amendments to the UNCITRAL Model Law; a template legislation drafted by the United Nations to harmonize arbitration practices across jurisdictions. The amendments allow the province to market itself as “Model Law” jurisdiction, a term synonymous with modern, pro-arbitration practices.

This blog will outline some of the major changes to the ICAA and how they affect commercial parties interested in conducting their arbitration in BC.

  1. Expanding the definition of an “arbitration agreement”
    The amendments broaden the definition of arbitration agreements to capture contemporary business practices. Under the new definition of “arbitration agreements”, a replica of option 1 of section 7 of the UNCITRAL Model Law, arbitration agreements are considered “in writing” as long as their contents are “recorded in any form” and useable for subsequent reference.[1] In other words, the new definition allows for arbitration agreements to be recorded orally (i.e., a voice recording), compared to previously when agreements had to be written and either signed or exchanged by both parties. Further, the amendments also allow parties to conclude arbitration agreements via “electronic communication”, including email or text, which had been a point of contention under the previous definition.

    While the amendments bring arbitration agreements in line with modern contract practices, they also expose parties to modern contract risks. Parties no longer have to sign, exchange, or even agree to arbitration agreements in order to be bound by them. If an arbitration clause is contained within a contract, parties may become bound when they orally agree to, or begin performing, the underlying contract.        
  2. Arbitrators can grant interim measures
    Under the revised ICAA, arbitrators in BC will also have the power to grant interim measures that are enforceable by court. Interim measures are relief orders granted to a party, pending the final outcome of the dispute. Their purpose is to preserve the status quo of arbitral proceedings, particularly by preventing “adverse parties from destroying or removing assets so as to render final arbitral awards meaningless.”[2] Previously, an arbitrator’s ability to grant interim measures was dependent upon the parties’ agreement, such as the selection of a particular arbitral centre or procedural rules. The new provisions on interim measures were also adopted from the UNCITRAL Model Law and have the effect of making interim measures enforceable by a court in any jurisdiction that has also adopted the Model Law provisions. The grounds for appealing interim measures overlap with those for appealing final awards.
  3. Arbitrations are now both private and confidential
    Under the revised ICAA, arbitrations conducted in BC are now private and confidential. This is perhaps the most progressive change to the ICAA and will position the province among the most “arbitration-friendly” of jurisdictions. Despite their apparent similarities, privacy and confidentiality are distinct concepts within the arbitration context. Privacy refers to the exclusion of third parties from arbitral hearings, and is considered an implied term, or alternatively, an inherent feature of arbitration agreements.[3] Confidentiality refers to the non-disclosure of information and documents from an arbitration to the public.[4] Jurisdictions and arbitral centres differ on whether confidentiality is an implied condition of arbitration; for example, in England, confidentiality is considered implicit in arbitrations, whereas the Australian High Court has rejected such an interpretation.[5] The Supreme Court of Canada has yet to decide whether confidentiality is an implicit condition of arbitration.

The difference between privacy and confidentiality, therefore, is important for parties to consider. A third-party is implicitly barred from attending an arbitral hearing unless the parties or arbitrator(s) specify otherwise. However, once in, the third-party may not be under any implicit obligation to keep the information they learn confidential.

In BC, the rules of procedure for the British Columbia International Commercial Arbitration Centre (“BCIAC”) contain a confidentiality provision between the parties, the arbitral tribunal and the centre itself, but this provision only extends to parties that have explicitly chosen the BCIAC to govern their arbitration. The new provisions in the ICAA therefore, will impact parties that have either opted for an arbitration centre that does not require confidentiality, or chosen their own procedural rules (known as “ad-hoc arbitration”).  

We will continue to update you on the progress of these amendments as they will significantly alter international arbitration practices in BC.

With thanks to summer student Eman Jeddy for his assistance drafting this post.

Footnotes
[1] International Commercial Arbitration Act, R.S.B.C. 1996, c. 233, s. 7(3) [ICAA]; see also UNCITRAL Model Law on International Commercial Arbitration, with amendments adopted in 2006,UNGAOR, 61th Sess, Supp No 17, UN DOC  A/61/17 (2006) 1 at 4–5.
[2] Lee Anna Tucker, “Interim Measures under Revised UNCITRAL Arbitration Rules: Comparison to Model Law Reflects both Greater Flexibility and Remaining Uncertainty” (2011) 1:2 Arbitration Brief 15 at 16.
[3] J. Kenneth McEwan & Ludmila B. Herbst, Commercial Arbitration in Canada (Toronto: Thomson Reuters, 2017) (loose-leaf updated 2017, release 15) ch. 7 at 62.3.
[4] Ibid at ch. 7 at 62.4.
[5] Maynak Samuel “Confidentiality in International Commercial Arbitration: Bedrock or Window-Dressing?Kluwer Arbitration Blog (21 February 2017)

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This blog is authored by members of the Litigation and Dispute Resolution Department. We follow new and interesting issues emerging in the legal and business communities. The wide range of experience among the members of our litigation group will provide a diverse and insightful examination of current legal trends and topics. Our goal is to provide a source of valuable information and insight on a wide variety of matters for our readers.

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