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Digest: Yugraneft Corp. v. Rexx Management Corp.

[2010] S.C.J. No. 19
2010 SCC 19

Court File No. 32738

Supreme Court of Canada

May 20, 2010
On appeal from the Court of Appeal for Alberta, [2008] A.J. No. 843.

Yugraneft Corp. v. Rexx Management Corp

[2010] S.C.J. No. 19

International law -- Proceedings -- Practice and procedure -- General principles -- Legislation -- Interpretation -- Statutes -- Limitation periods -- Appeal by Yugraneft Corporation from decision by Alberta Court of Appeal affirming decision dismissing its application for recognition and enforcement of foreign arbitration award dismissed -- Under international arbitration law, the matter of limitation periods was left to local procedural law of jurisdiction where recognition and enforcement was sought -- As an arbitral award was not a judgment or court order for the payment of money, application for recognition and enforcement in Alberta was not eligible for 10-year limitation period set out in section 11 of Limitations Act -- Rather, application was subject to general two-year limitation period applicable to most causes of action, which was found in section 3 of Act.

Civil litigation -- Limitation of actions -- General principles -- Legislation -- Interpretation -- Time -- When time begins to run -- Discoverability -- Expiry of limitation periods -- Appeal by Yugraneft Corporation from decision by Alberta Court of Appeal affirming decision dismissing its application for recognition and enforcement of foreign arbitration award dismissed -- As an arbitral award was not a judgment or court order for the payment of money, application for recognition and enforcement in Alberta was not eligible for 10-year limitation period set out in section 11 of Limitations Act -- Rather, application was subject to general two-year limitation period applicable to most causes of action, which was found in section 3 of Act -- Even taking into account the discoverability rule in s. 3(1)(a) of Act, Yugraneft’s proceedings were time-barred.

Appeal by Yugraneft Corporation from a decision of the Alberta Court of Appeal affirming a decision dismissing its application for recognition and enforcement of a foreign arbitration award. Yugraneft was a Russian corporation that developed and operated oil fields in Russia. Rexx Management Corporation was an Alberta corporation that at one time supplied materials to Yugraneft for its oil field operations. Following a contractual dispute, Yugraneft commenced arbitration proceedings before the International Commercial Arbitration Court at the Chamber of Commerce and Industry of the Russian Federation. The arbitral tribunal issued its final award on September 6, 2002, ordering Rexx to pay US$952,614 in damages to Yugraneft. Yugraneft applied to the Alberta Court of Queen’s Bench for recognition and enforcement of the award on January 27, 2006, more than three years after the award was rendered. The Alberta Limitations Act created two limitation periods, one for “remedial orders” (s. 3) and one for the enforcement of “judgments or orders for the payment of money” (s. 11). Applications under s. 3 were subject to a two-year limitation period, while those under s. 11 were subject to a 10-year time limit. The court dismissed the application, ruling that it was time‑barred under the two‑year limitation period in section 3 of the Alberta Limitations Act. The Court of Appeal upheld the ruling. Yugraneft argued that a foreign arbitral award should be treated as a domestic judgment under section 11 of the Limitations Act because arbitration was an adjudication of a legal dispute and as such possessed all the characteristics of a judgment. In the alternative, it argued that foreign arbitral awards should be treated as at least equivalent to a foreign judgment, and that foreign judgments fell within the meaning of “judgment” under section 11 of the Limitations Act.

HELD: Appeal dismissed. Under international arbitration law, the matter of limitation periods was left to local procedural law of the jurisdiction where recognition and enforcement was sought. The applicable limitation period in this case therefore had to be found in the limitations law of Alberta. The Limitations Act was intended to apply to all claims for a remedial order not expressly excluded by statute. By necessary implication, the recognition and enforcement of foreign arbitral awards was subject to the Limitations Act. As an arbitral award was not a judgment or a court order for the payment of money, an application for recognition and enforcement in Alberta was not eligible for the 10-year limitation period set out in section 11 of the Limitations Act. Rather, the application was subject to the general two-year limitation period applicable to most causes of action, which was found in section 3 of the Limitations Act. Even taking into account the discoverability rule in s. 3(1)(a) of the Limitations Act, Yugraneft’s proceedings were time-barred. A remedial order had to be brought within two years after the claimant first knew or ought to have known that the non-performance of an obligation had occurred, that it was attributable to the conduct of the defendant and that it warranted bringing a proceeding. The date of the issuance of the award would not normally be considered as the date of non-performance of the obligation to pay. The limitation period under s. 3 of the Limitations Act would not be triggered until the possibility that the award might be set aside by the local courts in the country where the award was rendered had been foreclosed. In this case, there was a three-month appeal period so Rexx’s obligations under the award did not crystallize until three months after Yugraneft had received the award, which was issued on September 6, 2002. Finally, enforcement proceedings would only be warranted in Alberta once an arbitral creditor had learned, exercising reasonable diligence, that the arbitral debtor possessed assets in that jurisdiction. Rexx was identified as an Alberta corporation in the parties’ contract, and Yugraneft could not claim that it did not know or ought not to have known that a proceeding was warranted in Alberta at the time of the expiry of the three-month appeal period following receipt of notice of the award.

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