ONTARIO
SUPERIOR COURT OF JUSTICE
COMMERCIAL LIST
COURT FILE NO.: CV-13-10170-00CL
DATE: 20130906
IN THE MATTER OF an Application to recognize an International Commercial Arbitral Award, pursuant to Section 11 of the International Commercial Act and Rule 14.05(3)(d) and (h) of the Rules of Civil Procedure
BETWEEN:
NEW YORK STOCK EXCHANGE, LLC
Applicant
– and –
ORBIXA TECHNOLOGIES, INC.
Respondent
Jason Squire, for the Applicant
Morris Cooper and Sabrina A. Bandali, for the Respondent
HEARD: August 29, 2013
L. A. PATTILLO J.:
Introduction
[1] The New York Stock Exchange, LLC (the “NYSE”) moves for a judgment recognizing an arbitral award in its favour made in New York on April 29, 2013 (the “Award”) against the respondent, Orbixa Technologies, Inc. (“Orbixa”).
Background
[2] On July 8, 2008, the NYSE and Orbixa, which is headquartered in Toronto, entered into a contract providing for the provision of certain market data by the NYSE to Orbixa and Orbixa’s right to disseminate that data to certain third party users upon payment to the NYSE of its applicable charges (the “Contract”). The Contract contains the following arbitration clause:
- ARBITRATION – The parties shall settle any controversy or claim arising out of or relating to this Agreement, or to its breach or alleged breach, by arbitration in New York, New York under the Commercial Arbitration Rules of the American Arbitration Association. The arbitrator(s) may issue injunctive and other equitable relief, but may not modify this Agreement. Either party may enter in any court having jurisdiction judgment upon any award that the arbitrator(s) render. For the purposes of so entering any such judgment, each party submits to the jurisdiction of the State of New York. Nothing in this Paragraph 16 derogates any right Customer, any Authorizing SRO, or any other person may have to appeal to the Securities and Exchange Commission any action taken or the failure to act under the 1934 Act, or any of its rules, or to pursue any claim relating to the unauthorized publication or use of Communications under the Communications Act of 1934, as amended, at any time, whether before or after the commencement of any arbitration proceeding.
[3] In 2012, a dispute arose between the parties concerning Orbixa’s designation of its third party users and the respective fees it was required to pay under the Contract. The NYSE gave Orbixa notice that it would terminate the Contract effective April 27, 2012 and subsequently sent it an invoice for the unpaid fees.
[4] In 2012, Orbixa submitted the dispute to arbitration pursuant to the arbitration clause in the Contract. It sought injunctive relief to prevent the NYSE from terminating the Contract and claimed for amounts it alleged were overbilled by the NYSE. The NYSE, by counter claim, sought the amounts it had invoiced as owing under the Contract and also sought a declaration that it had the right to terminate the Contract.
[5] The parties selected an arbitrator who was well qualified and knowledgeable in the securities industry. The arbitration included documentary discovery, a two day evidentiary hearing and written and oral submissions before the arbitrator, following which he released the Award. The Award denied all of Orbixa’s claims and provided, among other things, that Orbixa pay the NYSE $3,516,844.58 USD within 30 days of the date of the Award and declared that NYSE had the right to terminate the Contract. The Award noted that Orbixa withdrew its claim for preliminary injunctive relief seeking to prevent NYSE from terminating the Contract.
[6] Orbixa failed to pay the NYSE the amount of the Award within the 30 days.
[7] On May 28, 2013, Orbixa filed an application with the U.S. Securities and Exchange Commission (“SEC”) requesting, among other things, a review of the decision of the NYSE to deny services to Orbixa by terminating the Contract and the decision of the arbitrator. Orbixa further requested a stay of enforcement of the Award pending the SEC’s review of the application (the “SEC Application”). The NYSE has filed an initial response to the SEC Application.
[8] On June 14, 2013, the NYSE brought a motion to the SEC to dismiss the SEC Application on the basis that there is no statutory basis for Orbixa to ask the SEC to review the Award. Orbixa has filed a reply to the motion. In it, Orbixa expressly states that it is not seeking a review of the Award by the SEC. To date, the SEC has not issued a decision in respect of the NYSE’s motion.
[9] On July 26, 2013, Orbixa filed an action in the United States District Court for the Southern District of New York against the NYSE, seeking to vacate the Award. Following preliminary discussions with the District Judge assigned to the action, Orbixa withdrew its complaint and the case was closed on August 9, 2013. In its reply to the NYSE’s motion to dismiss the SEC Application, Orbixa states that there are no grounds for appeal of the Award under the Federal Arbitration Act.
Position of the Parties
[10] The NYSE submits that, pursuant to paragraph 16 of the Contract, Rule 48(c) of the Commercial Arbitration Rules of the American Arbitration Association, s. 2 of the International Commercial Arbitration Act, R.S.O. 1990, c.I.9 (the “Act”) and Articles 34, 35 and 36 of the Model Law on International Arbitration adopted by the United Nations Commission on International Trade Law on June 21, 1985 (the “Model Law”), the NYSE is entitled to have the Award recognized as binding in Ontario and enforceable in the same manner as a judgment of this court.
[11] Orbixa position is that this court should decline to enforce the Award and dismiss the Application on the grounds that it is premature. It submits that the Award was not binding on the parties when the NYSE commenced the Application on June 13, 2013 and accordingly is not enforceable. In the alternative, it submits that in light of the SEC Application, this court should refuse to enforce the Award as a matter of public policy. In the further alternative and, in any event, the SEC Application currently underway fully satisfies the requirements of Article 36(2) of the Model Law and this court should adjourn its decision pending the outcome of the SEC Application.
Enforcement of the Award in Ontario
[12] As referred to above, paragraph 16 of the Contract provides, in part: “either party may enter into any court having jurisdiction judgment upon any award that the arbitrator(s) render.” Further, Rule 48(c) of the Commercial Arbitration Rules of the American Arbitration Association, pursuant to which the parties agreed to conduct the arbitration, provides:
Parties to an arbitration under these rules shall be deemed to have consented that judgment upon the arbitration award may be entered in any federal or state court having jurisdiction thereof.
[13] Section 2 of the Act adopts the Model Law in Ontario and provides that it applies to international commercial arbitration agreements and awards. Chapter VIII of the Model Law which contains Articles 35 and 36 sets out the requirements for recognition and enforcement of arbitration awards and the grounds for refusing recognition and enforcement. They provide as follows:
Article 35
(1) An arbitral award, irrespective of the country in which it was made, shall be recognized as binding and, upon application in writing to the competent court, shall be enforced subject to the provisions of this article and of article 36.
(2) The party relying on an award or applying for its enforcement shall supply the duly authenticated original award or a duly certified copy thereof, and the original arbitration agreement referred to in article 7 or a duly certified copy thereof. If the award or agreement is not made in an official language of this State, the party shall supply a duly certified translation thereof into such language.
Article 36
(1) Recognition or enforcement of an arbitral award, irrespective of the country in which it was made, may be refused only:
(a) at the request of the party against whom it is invoked, if that party furnishes to the competent court where recognition or enforcement is sought proof that:
(i) a party to the arbitration agreement referred to in article 7 was under some incapacity; or the said agreement is not valid under the law to which the parties have subjected it or, failing any indication thereon, under the law of the country where the award was made, or
(ii) the party against whom the award is invoked was not given proper notice of the appointment of an arbitrator or of the arbitral proceedings or was otherwise unable to present its case, or
(iii) the award deals with a dispute not contemplated by or not falling within the terms of the submission to arbitration, or it contains decisions on matters beyond the scope of the submission to arbitration, provided that, if the decisions on matters submitted to arbitration can be separated from those not so submitted, that part of the award which contains decisions on matters submitted to arbitration may be recognized and enforced, or
(iv) the composition of the arbitral tribunal or the arbitral procedure was not in accordance with the agreement of the parties or, failing such agreement, was not in accordance with the law of the country where the arbitration took place, or
(v) the award has not yet become binding on the parties or has been set aside or suspended by a court of the country in which, or under the law of which, the award was made; or
(b) the court finds that:
(i) the subject-matter of the dispute is not capable of settlement by arbitration under the laws of this State, or
(ii) the recognition or enforcement of the award would be contrary to the public policy of this State.
(2) If an application for setting aside or suspension of an award has been made to a court referred to in paragraph (1)(a)(v) of this article, the court where recognition or enforcement is sought may, if it considers it proper, adjourn its decision and may also, on application of the party claiming recognition or enforcement of the award, order the other party to provide appropriate security.
Analysis
[14] Orbixa submits that because the NYSE’s Application was commenced on June 13, 2013, within three months from the date of the Award, it is premature and should be dismissed. Article 34(3) of the Model Law provides for a three month time period following receipt of the arbitral award to bring an application to set the award aside. In this case, Orbixa was required to take steps to set the Award aside before July30, 2013.
[15] I am not prepared to give effect to this submission. In my view, Article 36(1)(a) of the Model Law makes it clear that the relevant date to consider whether the application for enforcement is premature is not when the “submission” for recognition or enforcement is made but rather at the time it comes before the court for a hearing.
[16] One of the grounds provided by the Model Law upon which a court may refuse recognition or enforcement of an arbitral award is if it is not yet binding (Article 36(1)(a)(v)). That Article requires, however, that in order to establish that, the person against whom the award is sought to be enforced must establish proof to that effect. In such circumstances, the date of the application to enforce cannot be the relevant date. Rather it must be the date the application comes before the court.
[17] Here there is no dispute that the Award is binding at the time of the hearing. While Orbixa commenced review proceedings in the US District Court within the three month period, that proceeding has been terminated. No other review is pending.
[18] While an applicant who brings their application before the award is binding runs the risk of a court refusing to exercise its discretion to enforce and an award of costs against it if, at the return of the application, it is still not binding, that is not the situation here.
[19] Orbixa also relies on the provisions of the arbitration clause in the Contract and its SEC Application in support of its submission that the Application is premature. It submits that to enforce the Award in the face of the SEC Application is contrary to public policy in Ontario.
[20] The SEC Application seeks review of the NYSE’s actions in invoicing Orbixa for amounts due under the Contract as a well as terminating the Contract on the grounds that the NYSE failed to obtain SEC approval of the terms of the contract and that its actions were discriminatory and a denial of access.
[21] As noted, although Orbixa also initially requested in the SEC Application that the SEC review the decision of the arbitrator, it is clear from its subsequent filings with the SEC that it is not requesting such a review. Accordingly, the Award is final.
[22] Further, Orbixa’s request for a stay of enforcement of the Award in the SEC Application recognizes that the Award is binding on it. In that regard, it is noteworthy that, beyond its initial request, although substantial time has passed, Orbixa has taken no steps to obtain such a stay.
[23] In my view, it is clear from the material filed, that the Award is final and binding. The SEC Application is a separate regulatory proceeding which does not render the Award invalid. The provisions of the arbitration clause providing for arbitration of disputes but permitting a party to apply to the SEC are separate and distinct procedures.
[24] Nor, in my view, is enforcement of the Award contrary to public policy (Article 36(1)(b)(ii)). It does not offend our principles of justice and fairness in a fundamental way: Schreter v. Gasmac Inc., 1992 7671 (ON SC), [1992] O.J. No. 257 at para 47 (Ont. Ct. J. (Gen. Div.)). Orbixa received a full hearing and argument and exercised its rights of review.
[25] Finally, as Orbixa has made no application to a court set aside or suspend the Award, Article 36(2) of the Model Law is not applicable.
Conclusion
[26] Accordingly, for the above reasons, Orbixa has raised no basis, in my view, for the court to exercise its discretion to refuse recognition and enforcement of the Award in Ontario as provided for by Article 36 of the Model Law. The Application is allowed and judgment shall issue recognizing the Award and requiring Orbixa to pay the NYSE the Canadian dollar equivalent of USD $3,516,844.58 plus prejudgment interest from April 29, 2013 at the rate of 1.5% per month.
[27] The NYSE is entitled to its costs of the Application on a partial indemnity basis, fixed at $12,000 inclusive of disbursements and taxes. Having regard to the amount involved, the issues raised and the costs outline of Orbixa, such amount is fair and reasonable and well within Orbixa’s contemplation of costs.
L. A. Pattillo J.
Released: September 6, 2013
COURT FILE NO.: CV-13-10170-00CL
DATE: 2013080906
ONTARIO
SUPERIOR COURT OF JUSTICE
COMMERCIAL LIST
IN THE MATTER OF an Application to recognize an International Commercial Arbitral Award, pursuant to Section 11 of the International Commercial Act and Rule 14.05(3)(d) and (h) of the Rules of Civil Procedure
BETWEEN:
NEW YORK STOCK EXCHANGE, LLC
Applicant
- and -
ORBIXA TECHNOLOGIES, INC.
Respondent
REASONS FOR JUDGMENT
L. A. PATTILLO J.
Released: September 6, 2013