International arbitration award from New York was recognized and enforced in Ontario, despite party’s argument that it was not yet “binding” within the meaning of the Model Law as they still intended to argue issues of costs before the arbitrator

Administrative law – Commercial Arbitrations – Arbitration and Award – Enforcement of Foreign Award – Judicial review – Appeals – Compliance with legislation – Standard of review – Correctness

Popack v. Lipszyc, [2018] O.J. No. 3716, 2018 ONCA 635, Ontario Court of Appeal, July 12, 2018, D.H. Doherty, D.M. Brown and I.V.B. Nordheimer JJ.A.

Popack and Lipzyc jointly invested in commercial real estate in Toronto. They agreed to submit a dispute between them to arbitration before the Beth Din of Mechon L’Hoyroa, a rabbinical court in New York, pursuant to their Agreement to Submit to Arbitration. The Agreement specified that the Beth Din was a tribunal subject to the International Commercial Arbitration Act. After the hearing, the Beth Din ordered Lipszyc to pay Popack $400,000.

Popack applied to the Ontario Supreme Court under art. 34 of the Model Law to set aside the award on a procedural ground concerning an ex parte meeting with a rabbi. The judge refused to set aside the award on that basis. Popack appealed, and his appeal was dismissed. After his failed proceedings, Popack requested that Lipszyc pay him the $400,000. Lipszyc declined, taking the position that the matter was still before the Beth Din as he was seeking to reduce the award by the amount of wasted costs and damages related to the failed court proceedings.

Popack then applied under arts. 35 and 36 of the Model Law for an order recognizing and enforcing the award. The court agreed with Lipszyc that the award was not yet “binding” on the parties within the meaning of art. 36(1)(a)(v) of the Model Law because Lipszyc intended to pursue further costs issues related to the subject matter arbitrated before the Beth Din, and the Beth Din had written two letters indicating they would consider those issues, suggesting the arbitration process was not complete and the tribunal was not functus officio. The court dismissed the application.

On Popack’s appeal, the Court of Appeal found the judge had made an error in law by finding that the award had not yet become binding on the parties. In the Court’s view, the judge erred in law by conflating two distinct issues: first, whether the award was “binding” for purposes of recognition or enforcement pursuant to Model Law; and second, whether the Beth Din had jurisdiction under the Arbitration Agreement to accept new claims from a party following the issuance of the award. The Court determined that on the facts of this case, the potential jurisdiction of the Beth Din to entertain a new issue about post-award events did not affect the binding nature of the award. The Court allowed the appeal and substituted the judge’s order with an order recognizing and enforcing the award.

This case was digested by Kara Hill, and first published in the LexisNexis® Harper Grey Administrative Law Netletter and the Harper Grey Administrative Law Newsletter.  If you would like to discuss this case further, please contact Kara Hill at [email protected].

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