Ontario Court of Appeal: Dismisses ICAA S. 11 Arbitration Appeal

• The Ontario Court of Appeal quashed Mexico's appeal of a Superior Court decision that set aside an arbitral award in *Grace v. United Mexican States, 2026 ONCA 700*.
• The court ruled that section 11 of Ontario's *International Commercial Arbitration Act, 2017* (ICAA) prohibits appeals from Superior Court decisions on an arbitral tribunal's jurisdiction.
• Mexico had argued that s. 11 applied only to preliminary rulings, not final awards, and that Article 34 of the UNCITRAL Model Law allowed for appeal.
• The Court of Appeal rejected Mexico's position, stating the statutory language clearly barred the appeal, and Article 16(2) of the Model Law did not alter this prohibition.
• The claimants were awarded $20,000 in costs, and the court did not address the bias finding due to quashing the appeal on jurisdictional grounds.

The court specifically found that section 11 of the *International Commercial Arbitration Act, 2017* (ICAA) precludes appeals from Superior Court judgments concerning an arbitral tribunal's jurisdiction, even when that determination is embedded within a final award.

The Ontario Court of Appeal recently dismissed an appeal initiated by the United Mexican States, upholding a lower court's decision to set aside an arbitral award. This significant ruling, documented in *Grace v. United Mexican States, 2026 ONCA 700*, clarifies the stringent limitations on appealing jurisdictional determinations under Ontario's arbitration framework. The court specifically found that section 11 of the *International Commercial Arbitration Act, 2017* (ICAA) precludes appeals from Superior Court judgments concerning an arbitral tribunal's jurisdiction, even when that determination is embedded within a final award.

The underlying dispute originated in 2018 when several claimants initiated arbitration proceedings against Mexico in Toronto. These proceedings were conducted under Chapter 11 of the North American Free Trade Agreement (NAFTA), focusing on NAFTA Chapter 11 arbitration jurisdiction. After four years of arbitration, the tribunal issued an award in 2024, concluding that it lacked jurisdiction over the claims presented. Subsequently, the claimants sought to challenge this outcome by applying to the Ontario Superior Court of Justice to set aside the arbitral award. They contended that the tribunal had made errors in its jurisdictional analysis and that one of its members exhibited a reasonable apprehension of bias. In April 2026, the application judge sided with the claimants, agreeing with their arguments and consequently setting aside the award.

Following the Superior Court's decision to set aside the award, Mexico launched an appeal. In response, the claimants filed a motion seeking to quash Mexico's appeal, asserting that section 11 of the ICAA explicitly bars appeals related to jurisdictional findings. They further argued that the remaining issue of bias, if considered separately, would have no practical impact on the parties given the jurisdictional ruling.

Mexico, however, maintained a different interpretation of the ICAA. It contended that section 11 was intended to apply solely to preliminary jurisdictional decisions, not to final arbitral awards. Mexico argued that once an award is issued, the appropriate avenue for recourse falls under Article 34 of the UNCITRAL Model Law on International Commercial Arbitration, which, in its view, permits an appeal. This distinction was central to Mexico's argument for the permissibility of its appeal against the setting aside arbitral award Ontario decision.

The Ontario Court of Appeal ultimately rejected Mexico's arguments, providing a definitive interpretation of the *International Commercial Arbitration Act 2017 s. 11*. The court observed that the arbitral tribunal's 2024 award dealt exclusively with jurisdictional and bias matters, without delving into the substantive claims or determining liability or damages. The appellate court clarified that the tribunal's choice not to bifurcate the jurisdictional question from the main proceedings did not negate the applicability of section 11. The court's ruling emphasized that the statutory language unequivocally prohibits an appeal from the Superior Court's determination on jurisdiction. Furthermore, the court found that Article 16(2) of the UNCITRAL Model Law did not alter this explicit prohibition.

Consequently, the Ontario Court of Appeal quashed Mexico's appeal, declining to address the Superior Court's finding on bias, as the jurisdictional bar rendered it moot. This outcome reinforces the narrow scope of appeal rights in such cases. The claimants were also awarded $20,000 in agreed costs, marking a clear victory in their efforts to uphold the Superior Court's decision.

This decision by the Ontario Court of Appeal ICAA s. 11 arbitration appeal has significant implications for parties involved in international commercial arbitration within the province. It establishes a clear precedent that appeals from Superior Court decisions concerning an arbitral tribunal's jurisdiction are severely restricted under the ICAA, even when the jurisdictional finding is part of a final award. The ruling underscores the legislative intent to limit judicial intervention in arbitration proceedings, particularly regarding jurisdictional challenges.

Lawyers advising on international commercial arbitration in Ontario must take careful note of this judgment. The strict application of ICAA s. 11 means that strategic considerations for challenging or defending jurisdictional rulings must account for the limited avenues for appeal. The court's emphasis on the plain language of the statute, and its rejection of attempts to distinguish between preliminary rulings and final awards for appeal purposes, provides critical clarity on the finality of such decisions in Ontario.

Lawyers advising on international commercial arbitration in Ontario must note that s. 11 of the ICAA strictly limits appeals from Superior Court decisions on arbitral tribunal jurisdiction, even when the tribunal has issued a final award on jurisdiction. This clarifies the narrow scope of appeal rights and impacts strategy for challenging or defending jurisdictional rulings.

Source: Original reporting via legal news outlet