Supreme Court of Canada denies leave in two important international arbitration cases

The Supreme Court of Canada has denied leave to appeal in two high-profile cases relating to the setting aside and enforcement of international arbitral awards out of the Ontario and Québec Courts of Appeal, respectively. 

On September 18, 2025, the Supreme Court dismissed an application for leave to appeal the decision of the Court of Appeal for Ontario in Vento Motorcycles, Inc. v. Mexico (Vento Motorcycles) concerning when an international arbitral award will be set aside for arbitrator bias¹. The next day, the Court denied leave to appeal the decision of the Court of Appeal of Québec in Republic of India v. CCDM Holdings (Devas) concerning the scope of exceptions to state immunity from the enforcement of an international arbitral award under the State Immunity Act².

With leave denied, the appeal courts’ decisions remain the law in their respective provinces and are likely to be treated as persuasive authority across Canada, subject to questions about whether the approach taken by the Court of Appeal of Québec would apply equally in common law provinces.

What you need to know

• Even where it may not have directly impacted the outcome of the arbitration, a finding that a single arbitrator is biased requires an international arbitral award to be set aside.
• A state’s agreement to arbitrate constitutes an explicit waiver of immunity from the jurisdiction of a Canadian court under the State Immunity Act in proceedings to enforce an award.
• A court need not make a final decision on the applicability of state immunity prior to ordering conservatory measures in connection with the enforcement of an award.
• An award creditor may seek enforcement against a state or any of its alter egos upon a finding that the state is not immune under the State Immunity Act.

Vento Motorcycles, Inc. v. Mexico

The arbitration

Vento Motorcycles, Inc. (Vento), a motorcycle manufacturer, commenced an arbitration proceeding against Mexico pursuant to Chapter 11 of the North American Free Trade Agreement (NAFTA), alleging that Mexico attempted to drive Vento out of the Mexican motorcycle market by denying preferential import tariffs to motorcycles it assembled in the United States.

The arbitral tribunal consisted of a three-person panel, with one arbitrator appointed by each party and the third appointed by the International Centre for Settlement of Investment Disputes. The tribunal unanimously held that Mexico did not breach its obligations under NAFTA and dismissed Vento’s claim.

After the award was released, Vento learned that the arbitrator appointed by Mexico had been communicating with Mexican officials during the arbitration process regarding potential roster appointments to serve as a decision maker in other disputes. Vento commenced an application in Ontario (where the arbitration was seated) to set aside the award, including on the ground that the arbitrator’s conduct gave rise to a reasonable apprehension of bias.

Ontario Superior Court of Justice declines to set aside arbitral award

At first instance, the application judge held that the arbitrator’s conduct gave rise to a reasonable apprehension of bias. She declined to set the award aside, as the single arbitrator’s bias did not impact the ultimate outcome of the proceeding, since the other two arbitrators (a majority of the tribunal) had also voted to dismiss the claim.

Court of Appeal for Ontario reverses the application judge

The Court of Appeal for Ontario allowed Vento’s appeal of the application judge’s decision and set the award aside. On appeal, Mexico did not challenge the finding that there was a reasonable apprehension of bias and instead focused its appeal on whether the application judge, having made that finding, was required to set aside the award.

While courts retain the discretion to uphold an arbitration award where there have been certain kinds of procedural unfairness, the Court of Appeal held that a reasonable apprehension of bias is so serious a breach that the only appropriate remedy is the nullification of the award. Courts are empowered to set aside arbitration awards under article 34(2) of the UNCITRAL Model Law on International Arbitration, adopted into Ontario law by the International Commercial Arbitration Act, 2017³. In Popack v. Lipszyc⁴, the Court of Appeal set out a balancing test governing the exercise of a court’s discretion to set aside an arbitration award on the basis of a breach of procedural fairness and natural justice, taking into account the extent to which the breach undermines fairness and the effect of the breach on the award itself. However, Popack involved an ex parte meeting between the tribunal and a prior arbitrator without notice to the parties, which the Court of Appeal described as a “relatively minor” breach of procedural fairness that “clearly did not affect the outcome of the arbitration”⁵. The Court of Appeal clarified that more significant breaches of procedural fairness and natural justice, such as a reasonable apprehension of bias, cannot be balanced away and require setting aside an award.

This is the case regardless of whether the arbitrator rendered an award alone or as part of a multi-member panel, because parties to an arbitration are entitled to a completely independent and impartial tribunal—not the decision of a quorum of unbiased panel members. When a reasonable apprehension of bias is found in respect of even a single arbitrator on a multi-member panel, “the bias of one member taints the tribunal”⁶. This is because it is impossible to know whether and how the participation of the biased member affected the ultimate decision.

In so holding, the Court of Appeal distinguished the Supreme Court’s obiter remarks in Wewaykum Indian Band v. Canada⁷ that a reasonable apprehension of bias on the part of a single judge does not taint the rest of the court, which the Manitoba, Alberta, and Saskatchewan Courts of Appeal have endorsed in judicial and non-judicial adjudicative contexts. In Wewaykum, the Supreme Court made these remarks after finding that one judge’s connection to an appeal from his prior work for the government did not give rise to a reasonable apprehension of bias, which would have disqualified him from sitting on the appeal. The Court of Appeal rejected Mexico’s argument in Vento Motorcycles that Wewaykum changed the law relating to arbitrator bias, holding that the Supreme Court’s comments were made in obiter and should be interpreted in the unique context of the Supreme Court’s decision-making process.

Republic of India v. CCDM Holdings

The arbitration

Devas has a long and complex history. In 2005, Antrix Corporation Limited (Antrix), an Indian state-owned aerospace company, contracted with Devas Multimedia Services (Devas), a private Indian telecommunications company, to lease satellite spectrum capacity that would allow Devas to provide wireless services across India. Antrix terminated the contract in 2011 under the instructions of the Indian Department of Space, claiming force majeure.

In 2012, Mauritian shareholders of Devas commenced an investor-state arbitration against India pursuant to the bilateral investment treaty (BIT) between India and Mauritius. The Tribunal held that India had breached the BIT by unlawfully expropriating the shareholders’ investments in Devas and failing to treat them fairly, and ordered India to pay US$111 million as compensation (the Treaty Award).

Seizure and enforcement proceedings at the Superior Court of Québec

In 2021, the Devas shareholders brought an application to have the award recognized and enforced in Québec. The shareholders also brought ex parte applications for seizure before judgment of sums belonging to the Airport Authority of India (AAI) and Air India held by the International Air Transport Association (IATA), headquartered in Montréal, which were granted.

AAI, Air India, and IATA brought applications to quash the seizure orders. The Superior Court set aside the seizure order respecting AAI’s assets, as it found that the question of AAI’s immunity under the State Immunity Act needed to be decided on the merits first. In response to the seizure orders that remained in force, the Québec government adopted An Act respecting the International Air Transport Association (IATA Act), which provided that money held by IATA for the benefit of foreign states is exempt from seizure. The Québec Superior Court considered the new legislation and held that it made sums paid to IATA unseizable after the legislation came into force in May 2022, but refused to decide whether it prevented the seizure of the sums previously received.

India filed an application to dismiss the shareholders’ application for recognition and enforcement of the Treaty Award in 2022 on the basis that it was immune from the jurisdiction of Canadian courts. The Québec Superior Court held that India was not immune from its jurisdiction based on the exceptions under the State Immunity Act for waiver and where a state is engaged in commercial activity.

Appeals to the Court of Appeal of Québec

The Court of Appeal of Québec heard appeals from three decisions of the Superior Court of Québec in the Devas matter (the decision to quash the initial seizure in respect of AAI’s assets, the decision concerning the application of the IATA Act, and the decision on India’s immunity).

The Court of Appeal confirmed that India was not immune from enforcement proceedings. Section 4(2)(a) of the State Immunity Act provides that a state loses the protection of immunity where it “explicitly” submits to the jurisdiction of Canadian courts, “by written agreement or otherwise”⁸. The Court of Appeal held that India had explicitly waived immunity by ratifying the Convention on the Recognition and Enforcement of Foreign Arbitral Awards, which gives full effect to arbitration agreements, and by signing the BIT, which contains an arbitration clause. Voluntary submission to arbitration amounts to an explicit waiver of jurisdictional immunity, as it necessarily implicates the recognition and enforcement of any resulting award.

The Court of Appeal reinstated the AAI seizure, holding that a court can issue a pre-judgment seizure before conclusively determining immunity questions to avoid the risk that assets may otherwise no longer be available by the time the immunity claim is determined. The Court of Appeal also held that there was sufficient evidence for the authorization judge to conclude that AAI was prima facie an inseparable organ of India, as opposed to an “agency of the state”, which is a separate legal entity under section 2 of the State Immunity Act⁹.

Finally, the Court of Appeal held that the IATA Act did not apply retroactively to the seizures authorized against the assets of AAI prior to the legislation coming into force.

Implications

Vento Motorcycles and Devas provide important guidance to award creditors and debtors.

Vento Motorcycles endorses a strict approach to remedying arbitrator bias and affirms that a finding that an arbitrator has a reasonable apprehension of bias will inherently result in the setting aside of an award, regardless of whether the outcome of the arbitration theoretically would have been the same if other tribunal members had voted the same way.

Devas clarifies the applicability of exceptions to state immunity from the jurisdiction of Canadian courts under the State Immunity Act. First, a state’s agreement to arbitrate constitutes an express waiver of its jurisdictional immunity in subsequent enforcement proceedings. Second, the commercial activity exception to immunity requires a broad contextual approach to the characterization of the state activity. This approach was affirmed in the judgment of the Superior Court of Québec, which remains undisturbed as the Court of Appeal declined to address the exception. The commercial exception under section 5 of the State Immunity Act provides that a foreign state is not immune from the jurisdiction of Canadian courts in proceedings that relate to commercial activity of the state. In this case, the Superior Court found that the state activity at issue, “the ROI’s [Republic of India’s] breaches of a commercial treaty arising from its annulment of a commercial contract without fair and equitable compensation,” was properly characterized as commercial and therefore the commercial activity exception was engaged¹⁰.

Devas is also favourable to award creditors insofar as the Supreme Court seemingly endorsed the position that pre-judgment seizure can be granted prior to determining claims of state immunity (though it should be noted that the circumstances under which pre-judgment seizure may be available may differ from Québec depending on where a creditor seeks to enforce an award), and by enabling execution upon a finding of non-immunity against not only the state itself but also any of its alter egos. The latter has the potential to increase avenues for execution of awards against a foreign state in Canada.