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Europcar Italia S.p.A ('Europcar'), a major European motor vehicle rental agency, and Alba Tours International Inc. ('Alba'), a tour operator based in Toronto, entered into an agreement in Rome for car rental services. A dispute brought the parties to arbitration resulting in an award in favour of Europcar. Alba Tours asked the Italian courts to set aside the award on the ground that the arbitrator had made a serious error of fact which resulted in a loss of his jurisdiction. In the interim, Europcar sought enforcement of the arbitral award against Alba in Ontario.

The Court began by noting that, in accordance with article 35 of the MAL, it was obliged to recognize an arbitral award unless one of the grounds for refusal, listed in article 36, was available. Even then, it noted that a discretion remained to recognize the award under that provision on the basis that the word "may" is used in the preamble to article 36(2). The Court found that it is "therefore clear that even should one of the circumstances [set out in article 36(1)] exist, enforcement could still be ordered in the exercise of judicial discretion".

Alba objected to recognition on the basis of article 36(1)(a)(iii) and (v). Under the first provision, Alba argued that by misinterpreting the agreement, the arbitrator lost jurisdiction, and that accordingly his award contained decisions on matters beyond the scope of the submission to arbitration. The Court rejected this argument on two grounds: first, that this issue was already before the Italian courts and should therefore not be considered by the Ontario Court, and second, that in any event, the evidence did not indicate that any errors committed by the arbitrator substantially affected his conclusions. The Court also rejected the submission based on subparagraph. (v), holding that the conditions for its application had not been met.

The Court considered that the conditions for the application of article 36(2) had been met by Alba's appeal in Italy. The only issue was the exercise of the Court's discretion under article 36(2). In exercising its discretion, the Court considered the balance of convenience to the parties. It found that Alba Tours would suffer extreme prejudice if the award were enforced in Ontario only to be set aside later in Italy. The Court thus ordered an adjournment of the enforcement proceedings in Ontario, conditional upon Alba furnishing security pending a determination of the appeal in Italy.

Reproduced on this web site (www.interarb.com) with the kind permission of the United Nations, New York.
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