Powerex applied for an order recognizing and enforcing an arbitration award made in Portland, Oregon against Alcan. Alcan had applied in the United States to have the award set aside. Alcan argued, and the Court agreed, that the enforcement of the award should be adjourned pending the outcome of the United States appeal, with security to be paid to Powerex.

24. August 2004 0

Powerex Corp. v. Alcan Inc., [2004] B.C.J. No. 1349, British Columbia Supreme Court, June 30, 2004, Brown J.

In 1997, Alcan was required to supply a given amount of power to B.C. Hydro. Alcan designated Enron Power Marketing Inc. as the supplier, but remained liable for full and proper performance of its obligations and those of Enron to a limit of $100,000,000 USD. Enron went bankrupt, and Powerex, the B.C. Hydro subsidiary, took the position that the agreement was terminated and sought payment from Alcan in the amount of $100,000,000 USD.

In April of 2002, Powerex started arbitration proceedings pursuant to the agreement for the provision of power. The arbitration was conducted in Portland, Oregon and the arbitrator issued a decision that Alcan pay Powerex the $100,000,000 USD. Alcan applied to set aside the award and the issue worked its way up through the United States courts. A magistrate and a judge of the District Court both upheld the award, and Alcan appealed. The appeal was not likely to be heard before April 2005.

The application of Powerex to enforce the award was made pursuant to the International Commercial Arbitration Act R.S.B.C. 1996, c.233 (“ICAA”) and the British Columbia Foreign Arbitral Awards Act, R.S.B.C. 1996, c.154 (“FAAA”). Both the ICAA and FAAA are designed to promote the expeditious enforcement of international arbitral awards.

Alcan sought an adjournment pursuant to s.36(2) of the ICAA, which provides that a court may adjourn an application for enforcement if an application to set aside the award has been made to a competent court.

The Court held that Powerex had met the basic requirements to have the award enforced, namely a duly authenticated original award and a duly authenticated original arbitration agreement, and that the remaining question was whether the matter should be adjourned pending conclusion of the appeal process in the US.

The Court defined the test to be applied in determining whether to adjourn an application to enforce an arbitral award by reference to the Ontario decision of Dilks J. in Europcar Italia S.P.A. v. Alba Tours International Inc., [1997] O.J. No 133, and articulated the criteria as follows:

…In other words, the party seeking an adjournment must meet the threshold test of establishing that there is a serious issue to be tried. Then the court weighs the balance of convenience and irreparable harm. The remedy is discretionary. The application must show that proceedings to set aside the award have been commenced in the appropriate court of the originating jurisdiction.

In weighing the balance of convenience and irreparable harm, the court will heed to judicial comity and the possibility of inconsistent judgments. The court will recognize that a party seeking to enforce the arbitration award will necessarily be prejudiced by delay. Also, there is a potential prejudice to the party seeking the adjournment should the court refuse the adjournment and enforce the award, only to have the original jurisdiction set aside the award.

In assessing the balance of convenience, the court will consider a number of factors, including the estimated time to complete the case in the originating jurisdiction; whether the party opposing enforcement is merely delaying the inevitable; whether a court in the originating jurisdiction has already refused to set aside the award; the availability of security and the possibility of asset removal prior to enforcement; and the willingness of the party resisting enforcement to undertake diligent prosecution of the action in the originating jurisdiction.” (paras 24-26)

The Court held that there was an issue to be tried, and that Alcan’s action had a chance of success, and that Powerex had been and would continue to be prejudiced by the delay in payment of the award. The matter was ordered adjourned with Alcan posting security in the amount of the award, under conditions similar to those imposed in Voth Brothers Construction (1974) Ltd. v. National Bank of Canada (1987), 12 B.C.L.R. (2d) 43 (C.A.).

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