Executive Summary: Key Legal and Evidentiary Issues

• Application to enforce a U.S.-based international arbitration award under Saskatchewan’s ICAA and EFAA statutes.

• Respondent argued that the underlying grain contract was unconscionable and enforcement would violate public policy.

• The court found that unconscionability is not equivalent to public policy and cannot bar enforcement under Article 36 of the Model Law.

• Public policy doctrine was interpreted narrowly and applied only where enforcement would cause substantial, clear harm to the public interest.

• The doctrine of competence-competence required that arguments about contract unconscionability be made before the arbitral tribunal.

• The court ordered recognition and enforcement of the arbitration award and granted costs to the applicant.

Facts of the case
Parrish & Heimbecker Ltd. (P&H) entered into a standardized grain sales contract with Jeremy Welter on January 5, 2021, for the purchase and delivery of over 226 metric tonnes of canola. The contract incorporated by reference the National Grain and Feed Association (NGFA) Grain Trade Rules and Arbitration Rules. When Welter failed to deliver the canola by the agreed date, P&H issued a default notice, conducted a buy-in on the defaulted portion, and filed for arbitration through the NGFA. Welter did not meaningfully participate in the arbitration process, despite repeated communications with the NGFA. The NGFA issued a default award in P&H’s favour in August 2022, ordering Welter to pay $84,491.63 USD (converted to $106,466.27 CAD), plus interest.

Legal framework and arguments
P&H applied to the Saskatchewan Court of King’s Bench to have the award enforced as a judgment of the court under the International Commercial Arbitration Act (ICAA) and Enforcement of Foreign Arbitral Awards Act (EFAA), both of which incorporate the New York Convention and UNCITRAL Model Law. Welter opposed the application, claiming the contract was fundamentally unconscionable and enforcement would offend Saskatchewan public policy. His arguments focused on two clauses in the contract: (1) an “acts of God” clause that he claimed protected only the buyer, and (2) a damage stipulation clause allowing the buyer to calculate its own losses. He submitted that these terms made the contract so one-sided that enforcing the resulting award would be against public interest.

Court’s analysis and decision
Justice Elson rejected Welter’s opposition, finding that the doctrine of public policy under Article 36 of the Model Law has a narrow and exceptional application. The court emphasized that public policy is distinct from unconscionability: the former addresses societal harm, while the latter concerns fairness between private parties. The judge held that even if the contract were unconscionable, this did not meet the threshold of being injurious to public interests sufficient to trigger the public policy exception under the ICAA.

The court also ruled that unconscionability was a matter for the arbitral tribunal to decide, consistent with the doctrine of competence-competence, which gives arbitrators the authority to determine their own jurisdiction and related issues unless the challenge involves a pure question of law. Since Welter had the opportunity to raise these issues during arbitration but chose not to engage meaningfully, he could not now ask the court to revisit them.

The court cited prior Saskatchewan authority involving nearly identical contracts, affirming that unconscionability arguments should be raised during arbitration and not in subsequent enforcement proceedings. Ultimately, the court held that it had no discretion to refuse recognition and enforcement under the applicable legal regime and confirmed the enforceability of the NGFA arbitration award.

Conclusion
The Saskatchewan Court of King’s Bench granted P&H’s application to recognize and enforce the international arbitration award. It clarified that the doctrine of public policy is not a vehicle for relitigating claims of contractual unfairness and that procedural objections must be raised in the arbitral forum. P&H was awarded costs under Column 2 of the Tariff. This decision reinforces the strong pro-enforcement bias of Canadian courts when applying the UNCITRAL Model Law and the New York Convention to international commercial arbitration awards.