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Editorial

On 1 June two leading law firms joined Norton Rose Group: Ogilvy Renault LLP of Canada (now Norton Rose OR LLP) and Deneys Reitz of South Africa (now Norton Rose South Africa, incorporated as Deneys Reitz Inc.). With more than 2,600 lawyers, the enlarged Norton Rose Group is a top ten international legal practice by number of lawyers, with 39 offices throughout Europe, Asia Pacific, Canada, Africa and the Middle East.

Our strengthened arbitration practice has over 100 arbitration specialists. Five of our partners are listed in the International Who's Who of Commercial Arbitrators, including L. Yves Fortier, who is recognised as one of the world's top arbitrators and features on the back page Q&A of this newsletter.

In this issue we focus on Canada and look at both the development of arbitration in Canada and the increasing importance of investor-state arbitration. We also provide a commentary on the new IBA guidelines on drafting arbitration clauses.

Legal update

Hong Kong's new arbitration ordinance came into force on 1 June 2011 It brings together Hong Kong's previous domestic and international arbitration regimes under the same rules. This is based largely on the UNCITRAL model law subject to a few modifications.

The new legislation will make Hong Kong's arbitration law more user-friendly and cement Hong Kong's position as a leading arbitration centre in Asia, and as a regional centre for legal services and dispute resolution.

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B v S [2011] EWHC 691 (Comm)

In the High Court case of B v S, Flaux J has held that the Scott v Avery clause used in the Federation of Oilseeds and Fats Association (FOSFA) 54 standard form sales contract excludes the right to apply to the court for interim relief under section 44 of the Arbitration Act 1996 (the 1996 Act). Flaux J did not consider any of the other provisions of the 1996 Act. This decision has significant implications for all entities, especially in the commodities sector. The interplay between Scott v Avery clauses and clause 44 of the 1996 Act has not previously been considered by the courts and many within the commodities industry will not have predicted this decision. Parties may need to consider amending standard form contracts if they want to preserve the right to seek interim relief.

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The Australian government's new policy on investor-state dispute resolution procedures On 12 April 2011 the Australian government released a trade policy statement, its agenda for future trade policy. Whilst a number of the announcements are welcomed, the government's rejection of investor-state dispute resolution procedures in trade bilateral and multilateral agreements may cause problems for Australian and foreign investors alike.

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International arbitration in Canada

By Stephen L. Drymer and Michael Kotrly

Canada's bilingual heritage and its legal system, which is rooted in both common and civil law, gives it a unique ability to grapple with the challenges of international commercial arbitration.

Canadian courts generally have a positive attitude towards arbitration, respecting the jurisdiction of arbitrators and following modern, liberal international standards on enforcement of awards. Canada became the first country to adopt the UNCITRAL model law on International Commercial Arbitration (the model law) in 1986 when the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the "New York Convention") also came into force in Canada.

After early experience suggesting an ambivalent approach to arbitration, the Supreme Court of Canada now sets the tone for courts across the country by unambiguously recognizing arbitration as a legitimate and valuable method of dispute resolution. It respects and gives full effect to the intentions of parties who agree to resolve their disputes this way.

Implementation of the model law The model law has full force in Canada (although, as in most states, the 2006 amendments to it have yet to be adopted). However, in light of Canada's federal structure and the division of powers between the federal Parliament, on the one hand, and the provincial (and territorial) legislatures, on the other, implementation of the model law required legislation at both levels of government and took various forms. Given that jurisdiction over most arbitration agreements and enforcement matters lies within the provincial sphere, each province has enacted legislation giving effect to the model law, and it is before provincial Superior Courts that most arbitration-related issues are resolved judicially in the first instance.

First adopted by the federal Parliament in 1986 by means of the Commercial Arbitration Act, the model law and the New York Convention were soon rolled into provincial legislation, with the model law often simply incorporated by reference (and attached as a schedule) to it. With the exception of the federal government and Quebec, Canadian jurisdictions maintain discrete (albeit similar) legal regimes for domestic and international arbitration.

Enforcement Arbitration awards, whether domestic or foreign, are not self-enforcing. They must be recognized by court order. Article 36 of the model law sets out the limited grounds for a court to refuse to enforce an award and is fully incorporated in Canadian law. Canadian courts have been consistent in holding that the reasons to review an award pursuant to Article 34 of the model law and to refuse enforcement of an award under Article 36 of the model law are to be narrowly construed. In addition, courts have maintained that there is no scope for review on grounds of error of law or fact, and that there is a powerful presumption that a tribunal acted within its powers. Judges engage sparingly in judicial review of awards.

Canada's approach to kompetenz-kompetenz The principle of kompetenz-kompetenz, the...

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