PDF version: Much Ado about Little: The Supreme Court’s Decision in Yugraneft Corp. v. Rexx Management Corp.

Case considered: Yugraneft Corporation v. Rexx Management Corporation, 2010 SCC 19

An Alberta company, Rexx Management Corporation, was ordered to pay an almost $1 million US arbitration award in favour of a Russian company, Yugraneft Corporation. Yugraneft waited more than three years before applying to the Alberta Court of Queen’s Bench for recognition and enforcement of that arbitration award. When Yugraneft failed to gain recognition from the Court of Queen’s Bench, it appealed to the Alberta Court of Appeal and, when unsuccessful again, was granted leave to appeal and did appeal to the Supreme Court of Canada. Thirteen judges have now heard the case and all thirteen judges have agreed: the two-year limitation period in section 3 of Alberta’s Limitations Act applied to Yugraneft’s application for recognition and enforcement and thus Yugraneft acted too late. With that degree of unanimity, one has to wonder what all the fuss in the international commercial arbitration community has been about. The case was monitored closely as it wound its way through the courts and several arbitration institutions intervened at the Supreme Court of Canada.

In this post, after briefly setting out the facts and procedural history, I will focus on one of the issues dealt with by the Supreme Court, the threshold issue. The key decision by all the levels of court that considered the matter was the decision that domestic legislation imposing any kind of limitation period was applicable. I will then deal with the question of which limitation period: ten years, six years or two years? After this discussion of the case itself, I will comment on two matters. The first is the question of whether this case really is a case of public importance. The second is speculation about what action proponents of international commercial arbitration might take now, following their loss in the Supreme Court. (more…)

PDF version: The GM Saga So Far

The current financial crisis is arguably the largest corporate debacle and multi-market crash since the Great Depression. Its costs for corporations are substantial and many high profile companies have filed for bankruptcy protection under Chapter 11 (U.S. Code, Title 11, Chapter 11) or the Companies’ Creditors Arrangement Act (R.S., 1985, c. C-36) (”CCAA“). In the United States and elsewhere, this has even affected financial institutions, institutions previously viewed as “too big to fail”, namely AIG, Citigroup, Bear Stearns, IndyMac Bank, F.S.B. (the second largest bank failure in U.S. history), Federal National Mortgage Association (Fannie Mae), Federal Home Loan Mortgage Corporation (Freddie Mac), Lehman Brothers, and Wells Fargo. To date, many Canadian corporations have filed for CCAA protection.

(more…)

Cases Considered: Devon Canada Corporation v. PE-Pittsfield, LLC, 2008 ABCA 393.

PDF Version: Limited Partnerships: Devon Canada Corporation v. PE-Pittsfield, LLC

In Devon Canada Corporation v. PE-Pittsfield, LLC, the Alberta Court of Appeal clarified the law respecting foreign limited partnerships and discovery of limited partners in two respects. First, it determined that limited partners cannot be examined when the limited partnership is named as a defendant in an action. Second, it determined that a foreign, unregistered limited partnership has the same rights and obligations of a limited partnership under Alberta law.

(more…)

Cases Considered: Hi Hotel Limited Partnership v. Holiday Hospitality Franchising Inc., 2008 ABCA 276

PDF Version:  “Not Just Pious Passages”: The Disclosure Requirements of the Franchises Act

In this Court of Appeal decision, three of Alberta’s most experienced justices determined that the disclosure requirements of the Franchises Act, R.S.A. 2000, c. F-23 were indeed required and that “must” meant “must.” The Franchises Act gives franchisees a right to accurate and complete information about franchisors and franchises and backs up that right with the remedy of rescission. The reserved reasons for judgment of Madam Justice Elizabeth McFadyen, concurred in by Madam Justice Carole Conrad, are a restrained seventeen paragraphs long (including statements of the relevant facts and applicable statutory provisions). The much lengthier reserved reasons for judgment of Mr. Justice Jean Côté are a tour de force, providing a thorough review of the policies behind the laws requiring disclosure in the franchising context and thus much fodder for arguments by counsel in future cases. In the end, both sets of reasons recognize the exclusively statutory nature of franchisors’ obligations and franchisees’ remedies.

(more…)

Cases Considered: Kerr Interior Systems Ltd. (Re), 2008 ABQB 286

PDF Version: Classifying Creditors under the Companies’ Creditors Arrangement Act

In an application for an order to sanction a Plan of Arrangement (Plan), the Alberta Court of Queen’s Bench refused to allow the two protesting creditors to form their own class for the purpose of voting on the Plan in Kerr Interior Systems Ltd. (Re). For the purpose of this post, I will lay out the facts then focus on the principles underlying the classification of creditors under the Companies’ Creditors Arrangement Act, R.S.C. 1985, c. C-36 (CCAA). Pursuant to section 4 CCAA, different classes of unsecured creditors can be created, such that each class would have a separate vote on whether to approve a Plan. This case is one of the most recent to deal with the technical and difficult issue regarding the classification of creditors and Madam Justice M.B. Bielby provides a thorough discussion of the principles that need to be considered before a court will sanction a plan of arrangement.

(more…)

Cases Considered: Apex Corporation v Ceco Developments Ltd., 2008 ABCA 125

PDF Version:  An Equity Rationale for the Enforcement of the Corporate Veil?: The Alberta Court of Appeal Considers a Joint Venture Agreement in the Shadow of Corporate Reorganization 

Common law courts have demonstrated a willingness to ‘pierce the corporate veil’ in circumstances when upholding the assumption of separate corporate legal identity would, for example: endorse an instrument that appears simply a sham; would permit for behaviour “akin to fraud”(Gilford Motor Company Ltd. v. Horne, [1933] Ch. 935 (C.A.)); or lead to a result “too flagrantly opposed to justice”(Kosmopolous v. Constitution Insurance Co. of Canada [1987] 1 S.C.R. 2). This latter language of justice, authored by Madame Justice Bertha Wilson, in particular signals a potential equitable limit to the invocation of separate corporate legal identity. And so while there are rare, if established, instances for piercing the corporate veil based upon justice concerns, the instances of an equitable enforcement of corporate personality are rarer still, and indeed may be difficult to conceive of. Involved would be a court enforcement of separate legal entity despite the claims of a corporation’s ownership. Yet, just such a curious result occurred in the Alberta Court of Appeal’s recent decision in Apex Corporation v. Ceco Developments Ltd. (per Justice Jean Côté, Justices Ellen Picard and Peter Martin concurring).

(more…)