Update: British Columbia’s New Arbitration Act Comes into Force on September 1, 2020

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In March 2020, we previewed anticipated changes the British Columbia (“BC”) government had tabled to the Arbitration Act, R.S.B.C. 1996, c. 55 (the “Old Act”). By way of Order in Council, these changes will come into force on September 1, 2020.

The Arbitration Act, S.B.C 2020, c. 2 (the “New Act”), which will repeal and replace the Old Act, contains a regenerated set of rules for domestic arbitrations which will bring BC in line with international best practices and enhance its profile as a desirable venue for domestic arbitrations.

The new Arbitration Regulation (“Regulation”) will also come into force on September 1, 2020, at which time the Arbitration Act Application Regulation, B.C. Reg. 96/2019, will be repealed.

Key Changes in the New Act

 

Old Act

New Act

Commencing Arbitral Proceedings

· Does not provide clear procedure

· Provides clear procedure for starting proceedings if not specified in the arbitration agreement

Designated Appointing Authority

· Does not delegate powers to resolve secondary disputes

· Delegates power to the Vancouver International Arbitration Centre (“VIAC”) to resolve disputes about (1) appointing the arbitrator; (2) the arbitrator’s fees

Direct Evidence of Witnesses

· Does not provide a requirement as to the form of the direct evidence of witnesses

· Requires that the direct evidence of witnesses be in written form, unless otherwise agreed by the parties or directed by the arbitrator

Interim Orders

· Provides authority to grant interim awards, but does not provide clear procedure

· Provides clear procedure for obtaining and enforcing certain interim measures

· Provides specific procedure for obtaining preliminary orders without notice to other parties

Appeals

· Provides right of appeal to the Supreme Court of British Columbia (the “BC Supreme Court”)

· Provides right of appeal to the BC Court of Appeal

· Parties may opt out of appeal rights

· Preserves the BC Supreme Court’s jurisdiction to set aside awards on specific grounds of procedural fairness

Confidentiality

· Does not provide explicit requirement

· Expressly prohibits disclosure of confidential information

Expanded Powers and Duties of Arbitrators

· Arbitrator must adjudicate the dispute with reference to law unless parties agree otherwise.

· No explicit provisions on delay

· Arbitrators must consider equitable rights and defences in addition to legal principles

· General duty to achieve a just, speedy, and economical determination of the issues.

Enforcing Arbitral Awards From Other Canadian Jurisdictions

· No explicit process provided - parties must rely on the cumbersome two step enforcement process under the Court Order Enforcement Act, R.S.B.C. 1996, c. 78 (the “COEA”)

· Parties may apply to the BC Supreme Court to recognize and enforce arbitral awards made in another Canadian jurisdiction

Clear procedures for commencing arbitral proceedings

If parties have expressly agreed on how to commence arbitration, the New Act requires them to adhere to their agreement. However, if the parties have not agreed on how to initiate arbitration, the New Act provides that a party may do so by sending one of several types of notice to another party, including notice that an arbitrator has been appointed (if authorized by the agreement to do so), notice requesting the other party participate in appointing an arbitrator, or notice demanding arbitration.[1]

Powers of the Designated Appointing Authority

The VIAC, currently titled the British Columbia International Commercial Arbitration Centre, will be the Designated Appointing Authority under the New Act[2] and will have the authority to resolve disputes that may occur within the arbitral proceedings.

In particular, the VIAC will handle two kinds of secondary disputes: [3]

  • The appointment of an arbitrator - Under the Old Act, if parties disagree on the arbitrator, a party may apply to the BC Supreme Court for a court appointed arbitrator. Under the New Act, a party will be able to apply to the VIAC to appoint the arbitrator.
  • The arbitrator’s fees - Under the Old Act, parties apply to a registrar or officer of the BC Supreme Court for a review of the account. Under the New Act, parties or an arbitrator will apply to the VIAC for summary determination of the arbitrator’s fees and expenses.

There is no right of appeal from appointment decisions or fee determinations made by the VIAC

Direct Evidence of Witnesses

The New Act requires that the direct evidence of witnesses be in written form unless otherwise agreed by the parties or directed by the arbitrator.[4] No such requirement exists under the Old Act. Oral hearings will be confined to cross-examination, which will expedite proceedings.

Interim Measures and Preliminary Orders

The New Act sets out a clear process for obtaining and enforcing interim measures and preliminary orders. [5] The Old Act does not provide any such process.

The New Act provides that parties may request certain orders as interim measures, such as orders for provision of security for costs, preservation of assets and preservation of evidence. Parties may enforce interim measures by applying to the BC Supreme Court, which may refuse only on limited procedural grounds. 

The New Act also establishes a specific regime under which parties may request interim measures as a preliminary order – that is, without notice to any other party. The arbitrator may grant the request if disclosure of the request risks frustrating the purpose of the interim measure. Preliminary orders are not considered to be an arbitral award, nor are they enforced by the BC Supreme Court

Appeals to the British Columbia Court of Appeal

Under the New Act, the jurisdiction to grant leave to appeal on any question of law arising out of an arbitral award is transferred from the BC Supreme Court to the BC Court of Appeal. While the legal test for leave to appeal of an arbitral award remains unchanged, parties must now seek leave within 30 days of the award, as opposed to the 60 day period provided under the Old Act.[6]

While the New Act preserves the BC Supreme Court’s jurisdiction to set aside an arbitral award, this jurisdiction is limited to certain enumerated grounds related to procedural fairness.[7] 

Confidentiality

Unlike the Old Act, which is silent on confidentiality, the New Act expressly provides that, unless otherwise agreed by the parties, proceedings will be conducted in private and kept confidential, and the parties and arbitrator are prohibited from disclosing information about the proceedings, evidence, documents, or the award.[8]

Expanded Powers and Duties of Arbitrators

The New Act expands arbitrators’ powers. For example, where the parties have not designated the law applicable to the dispute, the arbitrator may choose the applicable law. In addition, while the Old Act limited the arbitrator to adjudicating by reference to law, the New Act requires that arbitrators consider equitable rights and defences in addition to legal principles.[9]

Arbitrators are further required to treat parties fairly and provide each party with a reasonable opportunity to present their case.[10] The New Act also imposes on both arbitrators and parties a general duty to achieve a just, speedy, and economical determination of the issues, and a further obligation on parties to not willfully cause delays.[11]

Enforcement of Arbitral Awards from Other Provinces

The New Act simplifies the current two-step enforcement process of first obtaining a court order or judgment in the foreign province, followed by an enforcement order in BC under the COEA. Under the New Act, parties will be able to apply to the BC Supreme Court to recognize and enforce arbitral awards made in another Canadian jurisdiction.[12]

Transition

The New Act applies to arbitral proceedings commenced on or after September 1, 2020, the date the New Act comes into force.[13] The Old Act remains operative in relation to any arbitration proceedings initiated prior to this date.

For the purposes of arbitral proceedings to which the New Act applies, references to any of the following Acts in the arbitration agreement is deemed to be a reference to the New Act:[14]

  • Arbitration Act, R.S.B.C. 1979, c. 18;
  • Commercial Arbitration Act, R.S.B.C. 1996, c. 55;
  • Arbitration Act, R.S.B.C. 1996, c. 55.

Significance of the New Act Coming into Force

The New Act is comprised of numerous revisions which simplify the arbitration process and provide both clarity and predictability to arbitrations in British Columbia. The New Act also brings BC’s arbitration legislation in step with present-day international standards as set out in the UNCITRAL Model Law, which have already been largely adopted throughout the country in both domestic and international arbitration legislation, including British Columbia’s own International Commercial Arbitration Act, RSBC 1996, c 233 (“ICAA”).[15]

By adding certainty to arbitral proceedings and expanding the scope of an arbitrator’s jurisdiction, the New Act modernizes and streamlines British Columbia’s arbitration regime, making the province a more desirable seat for arbitrations.

[1]Arbitration Act, S.B.C. 2020, c. 2, s. 8 [New Act].

[2] Regulation, s. 2.

[3]New Act, ss. 14, 55.

[4]Ibid, s. 28(3).

[5]Ibid, ss. 36-45.

[6]Ibid, ss. 59–60.

[7]Ibid, s. 58.

[8]Ibid, s. 63.

[9]Ibid, s. 25.

[10]Ibid, ss. 21-22.

[11]Ibid, s. 22.

[12]Ibid, s. 61.

[13]Ibid, s. 70(1).

[14]Ibid, s. 70(2).

[15] For instance, s 23 of the New Act now parallels s 16 of the ICAA, which details the arbitrator’s competence to rule on their own jurisdiction.

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