An International Commercial Arbitral Award Is Enforced Even Though It Provided No Reasons


In Canada, the obligation of a tribunal to give reasons has become one of the hallmarks of justice. But do arbitrators have an obligation to give reasons? Not if the parties agree that no such reasons need be given and the arbitration is an international commercial arbitration conducted pursuant to the UNCITRAL Model Law. That is what the Ontario Superior Court recently decided in Activ Financial Systems Inc. v. Orbixa Management Services Inc.

The first basis for the decision raises an interesting contrast with domestic arbitral awards. Under section 38 of the Ontario Arbitration Act, 1991, the award "shall state the reasons on which it is based" unless it is a consent award. Section 3 of that Act does not list Section 38 as one of the sections which the parties cannot vary or exclude. Accordingly, one would think that the parties can contract out of Section 38.

Moreover, Section 38 expressly states that consent awards are an exception to the obligation to give reasons. That exception suggests that the legislature thought about the issue and provided for that exception and did not provide for an exception for "no reasons" decisions.

Does that mean that the parties to a domestic arbitration cannot waive the provisions of Section 38? That argument will face the fact that Section 3 does not refer to Section 38 as an obligation which the parties cannot exclude. And if the parties agree that no reasons need be given, then it seems difficult to argue that the absence of reasons is unfair.

See Heintzman and Goldsmith on Canadian Building Contracts (4th ed.) Chapter 10, part 3.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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