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The respondents, together referred to as 'STET', are an Italian company and its Netherlands subsidiary. They commenced the arbitration against the four corporate applicants (collectively referred to as 'COTISA') who are Mexican companies that are owned and/or controlled by the personal applicant, Javier Garza Caldern (" Garza"). STET had entered into a share subscription agreement with COTISA to purchase an indirect interest in the Cuban national telephone company. In June 1999, pursuant to the arbitration clause in the subscription agreement, STET sought rescission of the subscription agreement. A three-person I.C.C. arbitral tribunal was constituted and arbitration proceedings were held in Ottawa. The arbitral tribunal concluded that it had jurisdiction in respect of all the parties and issues presented to it and went on to find that the applicants were all jointly and severally liable to compensate STET for losses of approximately US$305-million incurred as a result of breaches of the subscription agreement. Before the Ontario court, the applicants sought to have the award set aside while the respondents asked for its enforcement.

The applicants challenged the arbitral award on several grounds provided for in articles 34(2)(a)(ii) and (b)(ii) of the Model Law: namely that the tribunal was without jurisdiction over three of the parties, that they had been denied equality of treatment and opportunity to present their case contrary to Article 18 of the Model Law; and that the award was in conflict with public policy in Ontario, which is a ground for setting aside an award.

The Court held that under Article 34 of the Model Law, the applicant had the onus of proving that the award should be set aside. If the applicants fails to do so, then Articles 35 and 36 require the court to recognize and enforce the award. The court also noted that the grounds for refusing to enforce an award are to be construed narrowly and that the public policy ground for resisting enforcement should apply only where enforcement would violate basic notions of morality and justice of which corruption, bribery or fraud are examples. The Court also held that the "due process" protection of art. 34(2)(a)(ii) included both procedural and substantive fairness, which made it overlap with the public policy defense in 34(2)(b)(ii).

After considering the facts of the case, the Court found that the applicants failed to establish grounds to set aside the award. In particular, there was no unfairness in the Arbitral Tribunal's handling of the applicants' request that STET disclose certain purchase agreements involving the shares in the Cuban telephone company. In the circumstances, there was a fair balancing of the considerations of both sides. The applicants' arguments that the Arbitral Tribunal's decision about rescission was wrong on the facts and the law was no more than the presentation of evidence and arguments that COTISA could have presented. The Court noted that a party that refuses to participate in an arbitration is deemed to have forfeited the opportunity to be heard (art. 25 MAL). The purpose of Article 18, in the Court's view, is to protect a party from egregious and injudicious conduct by a tribunal. It is not intended to protect a party from its own failures or strategic choices. Further, that the award might be legally or factually wrong was not, in the Court's view, grounds for setting it aside. On the issue of compelling testimony, the Court held that the arbitral tribunal had no power, under art. 27 of the MAL, to compel witnesses to testify. Failure of the applicant to seek judicial assistance cannot be imputed to the tribunal. Finally, the Court found that the tribunal had jurisdiction over all of the applicants because Article 7 of the Model Law and the Mexican law both contemplate that parties may enter into a valid arbitration agreement by entering into a contract that incorporates by reference another document that provides for arbitration.

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