2025 in Review for Canada (Part 2): Institutional updates and developments in investor-State disputes involving Canada

2025 was an activity-filled year from a Canadian perspective. Accordingly, this “year in review” post proceeds in two parts. Whereas Part 1 tracked  the evolution of caselaw following three landmark arbitration-related Supreme Court of Canada (“SCC”) judgments (Vavilov, Uber and Petrowest) and highlights a few recognition and enforcement decisions, this Part 2 shines light on institutional updates and developments on the investor-State dispute settlement (“ISDS”) front. 

Institutional updates

Last year brought revisions to the ADR Institute of Canada’s (“ADRIC”) Arbitration Rules, which apply to both international and domestic disputes. The new rules aim to reflect ADRIC’s commitment to user feedback and continuous improvement, with the goal of enabling efficient, fair and flexible arbitration. As such, the rules envisage an “Interim Arbitrator” who is to resolve requests for urgent interim measures before the tribunal’s appointment or if there is an arbitrator challenge (Rule 3.7), and provide for “Expedited/Simplified Arbitration” (Rule 4.7.1).

Possibly in response to recent caselaw concerning arbitrator independence and impartiality, both in Canada and on the international scene, the ADRIC Arbitration Rules contain several provisions on the subject. For example:

1. Each party shall disclose, to the extent known or reasonably anticipated, any information that would enable an arbitrator to assess whether circumstances exist that may give rise to justifiable doubts as to the arbitrator’s independence or impartiality (such as all parties to the dispute, other individuals or entities  with a significant financial interest in the result of the arbitration, the expected witnesses, individual counsel and law firms) (Rule 3.3.2(a));

2. Arbitrators cannot be disqualified or challenged because they are involved in the same legal or arbitration related association or body or have jointly participated in any program, project or activity of any such association or body (Rule 3.3.5);

3. Arbitrator challenges are decided by “Challenge Adjudicators” appointed by ADRIC (Rule 3.6.3 and following);

4. A party is prohibited from changing its representation to a representative who would give rise to a disqualifying conflict of interest on the part of the tribunal or any member of the tribunal, or any other concern which the tribunal finds would affect the fairness of the proceedings (Rule 4.11.1). 

Other interesting features include the following:

1. There shall be one arbitrator unless otherwise agreed (Rule 3.1.2);

2. In appointing an arbitrator, ADRIC considers multiple factors, including equity, diversity and inclusion (Rule 3.2.2);

3. Remote hearings are expressly permitted (Rule 4.1.1);

4. Addition of new parties, even after the tribunal is appointment, is permitted if the existing parties and the new party all consent (Rule 4.3.1);

5. Confidentiality of proceedings is expressly regulated (Rule 4.12);

6. Arbitrators are expressly permitted to encourage settlement of the dispute and to recommend mediation, conciliation or other dispute resolution procedures at any time during the arbitration proceedings (Rule 4.20.1);

7. Final awards are to be made within 60 days after the hearings have been closed, unless the tribunal determines, in its sole discretion, that an extension is reasonably necessary (Rule 5.1.3);

8. If there is no majority decision, the decision of the chair is the award, ruling, order or decision (Rule 5.1.6);

9. Arbitrators and ADRIC are granted the same protections and immunity as judges of Canadian superior courts (Rule 6.1).

    

Developments on the ISDS front

There have been some developments in at least three publicly known investor-State disputes that Canada is currently defending: one under NAFTA and the ICSID Convention – Arbitration Rules (Ruby River Capital LLC v. Canada), the second one also under NAFTA but under the 1976 UNCITRAL Rules (Bilcon v. Canada), and the third one under the Canada-USSR FIPA and the 1976 UNCITRAL Rules (Volga-Dnepr v. Canada).

In Ruby River, a case brought by American investors in relation to the government's decision to refuse authorization for the construction of a liquefied natural gas facility project in Québec, the tribunal issued several procedural orders concerning document production. Of particular interest are the tribunal’s views on the “political or institutional sensitivity of the documents” (in PO9) and the professional secrecy of accountants (in PO11). With respect to the “political or institutional sensitivity,” while acknowledging the “legitimate and important public interest in refusing disclosure of documents relating to cabinet decisions taken at the federal and provincial levels,” the tribunal considered the following:

1. the need to distinguish “not only between authors and recipients of the documents, but also between documents prepared to inform cabinet deliberations and documents reflecting the content of such deliberations” (with the latter arguably involving a higher degree of sensitivity);

2. the balancing between the investor’s interest in obtaining the documents to support its claims against the government’s interest in not disclosing such documents;

3. the assessment as to whether the requested documents are the only evidence supporting the investor’s claims or whether the same could be supported through other accessible means of evidence (PO9, paras. 42, 56, 60-61).

When ruling on the professional secrecy of accountants, the tribunal considered that:

1. accountants’ professional secrecy is protected under both Québec and Canadian federal law;

2. Québec jurisprudence cited by both parties indicates “the need to balance the interests of justice through disclosure of protected documents against the interests of professional secrecy;”

3. the protection of the professional secrecy of accountants is less stringent than that of lawyers (PO11, para. 88).

In Bilcon, a case which was suspended after breaches of NAFTA Articles 1102 and 1105 were found, compensation was ordered, and set aside proceedings unravelled in Canadian courts, the investors sought to remove the entirety of the tribunal before it ruled on costs of arbitration. Among the many reasons for resignation, investors cited the alleged “arbitrary reasoning of the damages award,” and the fact that one of the arbitrators accepted the Companionship in the Order of Canada (PO28, para. 8). Having analyzed the investors’ request in light of Arts. 10 and 11 of the UNCITRAL Rules, the tribunal decided not to withdraw from their office. As such, the arbitration is reinstated and proceedings on costs will follow.

Finally, in Volga-Dnepr, a case arising out of the seizure of the claimant’s aircraft and other government measures imposed on the claimant in the context of sanctions against Russia, Canada sought to bifurcate proceedings. While refusing to determine whether Art. 21(4) of the 1976 UNCITRAL Rules established a presumption of bifurcation and noting that the “jurisdictional issues raised by Canada do require serious and substantive consideration of certain factual issues,” the tribunal nonetheless concluded that they were “sufficiently discreet and distinct from the factual issues and evidence which would be required to assess at the merits stage” (PO3, paras. 26, 32). Consequently, the tribunal bifurcated the arbitration into two phases : phase 1 on jurisdiction, and phase 2 on liability and quantum.

Looking ahead at 2026

If last year is any indication, in 2026 we can look forward to reading more pertinent judgments from courts across Canada, whether it be in the areas of recognition and enforcement, the intersection of insolvency and arbitration or the subject of standards of review of domestic arbitration awards. On the ISDS front, further developments could be expected not only in the above-mentioned cases, but also in Theodore David Einarsson, Harold Paul Einarsson and Russell John Einarsson v. Canada, wherein a merits hearing took place in the spring of 2025. These jurisprudential developments and other “hot topics” are likely to be discussed at multiple conferences in cities across Canada in the upcoming months : the WCCAS Conference in Calgary on 5 May 2026, CanArb Week in Toronto on 7-9 June 2026, the ICC Canada Conference in Montréal on 8-10 October 2026 and the ADRIC Conference on 22-23 October 2026 (which will be held remotely, in furtherance of the event's theme of fostering greater inclusion and accessibility). 

* The views expressed herein are those of the authors and do not necessarily reflect the views of Woods LLP or its partners.

This post is part of Kluwer Arbitration Blog's 2025 in Review series.  Other posts in the series can be seen here.