Background:

• Luxtona Limited, a former shareholder in Russian energy company Yukos, claimed that Russia violated investment protection provisions of the Energy Charter Treaty, which Russia has signed but not ratified. Luxtona seeks damages of US $701 million.
• An arbitral tribunal in Toronto determined it had jurisdiction over the dispute, prompting Russia to challenge this decision in Ontario courts based on the UNCITRAL Model Law, arguing that the tribunal's jurisdictional ruling was incorrect.

Key Legal Issues and Court Decisions:

1. Introduction of New Evidence: Russia attempted to introduce new evidence not presented to the arbitral tribunal. The initial judge allowed this, but a subsequent judge, Justice Penny, reversed this decision, stating that new evidence could only be introduced under specific stringent conditions. The Divisional Court later disagreed, asserting that hearings on jurisdiction are de novo, allowing new evidence as of right.
2. Competence-Competence Principle: The appeal considered whether this principle, which allows an arbitral tribunal to determine its own jurisdiction, prevents courts from considering new evidence when reviewing tribunal decisions. The Court of Appeal upheld that it does not, and courts can conduct an independent assessment of jurisdiction.

Outcome:

• The Court of Appeal dismissed the appeal, affirming the Divisional Court's view that the proceedings to challenge an arbitral tribunal's jurisdiction are to be treated as de novo. This allows the parties to introduce new evidence in court that was not before the arbitral tribunal.
• Luxtona is entitled to costs of the appeal fixed at $75,000.