In Sociedad Concesionaria Metropolitana de Salud SA v Webuild SpA, 2026 ONCA 28, the Court of Appeal for Ontario considered the issue of jurisdiction for determining issues of liability when trying to enforce a foreign arbitral award against a non-party to the arbitration.
In this case, the Court confirmed that enforcement proceedings for a foreign arbitral award may be stayed where the party against whom enforcement is sought was not a party to the arbitration and disputes liability for the award. The Court held that in such circumstances, determining the threshold issue of liability may require adjudication in a more appropriate foreign forum before enforcement can proceed in Ontario.
Background
The dispute originally arose from a construction contract relating to the construction of a hospital in Chile.
In 2015, Sociedad Concesionaria Metropolitana de Salud S.A. (“Sociedad”) contracted with the Chilean branch of Astaldi S.p.A. (“Astaldi”), an Italian construction company, to build the hospital. The project experienced delays and payment issues after Astaldi entered restructuring proceedings in Italy in 2018.
Following termination of the contract, the parties commenced arbitration in Chile. In December 2021, a Chilean arbitrator awarded Sociedad approximately CAD $188 million in damages against Astaldi.
Meanwhile, Astaldi continued with its restructuring proceedings in Italy, and ultimately, its business was divided into two parts. Certain assets were transferred to a third-party, Webuild S.p.A. (“Webuild”), through a partial spin-off agreement governed by Italian law, while other assets remained with Astaldi. As a result, Sociedad took the position that Webuild had assumed Astaldi’s liabilities related to the Chilean project through this transaction.
Webuild disputed that interpretation.
Rather than pursue liability proceedings in Italy, Sociedad brought an application in Ontario seeking recognition and enforcement of the Chilean arbitral award against Webuild, even though Webuild was not a party to the arbitration.
Motion Judge’s Decision
Webuild moved to stay the Ontario enforcement proceeding, claiming that a key issue to be resolved was whether Webuild had assumed Astaldi’s liability; answering that question required interpretation of Italian restructuring law and the spin-off agreement between Astaldi and Webuild.
The motion judge agreed, holding that liability and enforcement were distinct issues, and that Italy was clearly the more appropriate forum to determine whether Webuild assumed Astaldi’s obligations. The motion judge temporarily stayed the Ontario application, pending the outcome of Italian proceedings addressing the liability issue.
Court of Appeal for Ontario Decision
Sociedad appealed, but the Court of Appeal dismissed the appeal and upheld the temporary stay of the Ontario proceedings pending the determination of the issue of liability, which was to be determined in Italy.
First, the Court made it clear that this was not a “typical” recognition and enforcement proceeding. It rejected Sociedad’s argument that forum non conveniens should not apply to recognition and enforcement actions.
The Court stated that unlike a standard enforcement case, there was no adjudicated obligation binding Webuild; Webuild was not a party to the original Chilean adjudication, and in fact, disputed liability for Astaldi’s debt.
Accordingly, the Court determined that this proceeding required adjudication of liability before enforcement could occur, making forum non conveniens relevant.
Second, the Court confirmed that the issue of liability may be severed from enforcement, and that it was appropriate to do so in this case.
The Court stated plainly that if Webuild was not liable for the award, there would be nothing to enforce against it. Conversely, if liability were established, enforcement proceedings could proceed afterwards.
Finally, the Court held that because liability was still to be determined, Italy clearly was the more appropriate forum to decide that issue. Applying the forum non conveniens analysis from the Supreme Court of Canada’s decision in Club Resorts Ltd v Van Breda, 2012 SCC 17, the Court held that Italy was the more appropriate forum because of the following facts:
- the spin-off agreement was made in Italy and governed by Italian law;
- the restructuring proceedings occurred in Italian bankruptcy courts;
- resolving the dispute required expert evidence on Italian law;
- most witnesses and documents were located in Italy; and
- parallel proceedings elsewhere created a risk of conflicting judgments.
Key Takeaways
This decision underscores the reality that enforcement of foreign arbitral awards in Ontario is not always a purely procedural exercise, particularly where enforcement is sought against a non-party to the original arbitration. In such cases, courts may need to first determine whether that party is legally liable for the award, which can transform the proceeding into a substantive dispute.
Parties seeking to commence enforcement proceedings of foreign awards in Ontario need to carefully consider whether all substantive issues have been resolved, otherwise they face the possibility of being “sent back” to adjudicate those issues in the jurisdiction most closely connected to the dispute, before continuing with their enforcement proceedings in Ontario.