2019 QCCA 1869, 2019 QCCA 1869

Lakah c. UBS 2019 QCCA 1869 COURT OF APPEAL CANADA PROVINCE OF QUEBEC REGISTRY OF MONTREAL No: 500-09-028611-192 ( 500-11-056733-195 ) MINUTES OF HEARING DATE: November 1, 2019 THE HONOURABLE PATRICK HEALY, J.A.

APPLICANT COUNSEL Michel Lakah Mtre ramy amine M tre LEON J.GREENBERG ( Sternthal Montigny Greenberg St-Germain ) RESPONDENTS COUNSEL UBS AG island capital ltd national bank of oman national bank of abu dhabi Mtre Matthew Liben M tre rémi leprévost ( Stikeman Elliott s.e.n.c.r.l., s.r.l. ) DESCRIPTION: Application for leave to appeal from a judgment rendered in the course of the proceeding on September 11 2019 by the Honourable Justice Peter Kalichman of the Superior Court , District of Montréal . (Art. 30 al.3, 32 and 357 C.p.c.) Clerk at the hearing : Elisabeth Lepage Courtroom: RC-18

HEARING 9:34 Commencement of the hearing. Identification of counsel. Preliminary remarks by the judge. 9:35 Submissions by Mtre Amine. 9:45 Discussion between the Judge and Mtre Amine. 9:51 Discussion between the Judge and Mtre Liben. 9:54 Submissions by Mtre Liben 9:55 Reply by Mtre Amine. 9:57 Judgment – see page 3 Conclusion of the hearing.

Elisabeth Lepage, Clerk at the hearing JUDGMENT [ 1 ] The petitioner seeks leave to appeal the judgment of the Superior Court, District of Montreal (the Honourable Perter Kalichman), rendered on 11 September 2019 , [1] that ordered a stay of proceedings with respect to the respondents’ Application to Homologate a Foreign Arbitral Award , on condition that the petitioner provide a suretyship in the amount of $ 1,000,000 within thirty days of the judgment and maintain that suretyship for as long as the stay of proceedings remains in place.

The judgment’s disposition reads as follows : [ 39 ] STAYS the proceedings on the Application to Homologate a Foreign Arbitration Award; [ 40 ] ORDERS that the stay remain in place for a period of sixty (60) days following the decision of the United States District Court for the Southern District of New York on Respondent’s Motion to Vacate the November 2, 2018 arbitration award; [ 41 ] ORDERS Respondent to provide a suretyship in the amount of $ 1,000,000 within thirty (30) days of the present judgment and to maintain the suretyship for as long as the of proceedings shall remain in place, failing which the stay shall cease to have effect; [ 2 ] On 2 November 2018 an arbitration award was issued that ordered the petitioner and several other parties to pay the respondents US$151,603,902 with interest at 12% per annum (“the arbitral award”). [ 3 ] In February 2019 the petitioner made a motion to vacate the arbitral award before the United States District Court, Southern District of New York (“NY Court”). [ 4 ] In June 2019 the respondents brought an application before the Superior Court of Quebec to recognize and enforce the arbitral award.

The petitioner filed a motion to stay these proceedings until a final judgment was rendered by the NY Court on the motion to vacate. The respondents opposed the motion to stay the proceedings and, in the event the stay of proceedings was granted, they asked that the petitioner provide a suretyship in the amount of $5,000,000$. Both requests were based on

article 654 of the Code of Civil Procedure ( C.c.p. ) : 654. The court may stay its decision in respect of the recognition and enforcement of an arbitration award if an application for the annulment or suspension of the award is pending before the competent authority of the place where or under whose law the arbitration award was made. If the court stays its decision, it may, on the request of the party applying for recognition and enforcement of the award, order the other party to provide a suretyship. 654.

Le tribunal peut surseoir à statuer sur la reconnaissance et l’exécution d’une sentence arbitrale si une demande d’annulation ou de suspension de cette sentence a déjà été portée devant l’autorité compétente du lieu dans lequel ou d’après la loi duquel elle a été rendue. Il peut alors ordonner à l’autre

partie de fournir un cautionnement, à la demande de la

partie qui requiert la reconnaissance et l’exécution de la sentence.

[ 5 ] The trial judge granted the suspension and ordered the petitioner to provide a suretyship in the amount of $1,000,000. He found the respondents were justified in raising a concern over the possibility that the petitioner might seek to gain an advantage by delaying the proceedings. He also found that “[u]nder the circumstances, […] suretyship is an appropriate means for Mr. Lakah to demonstrate the seriousness of his position and a guarantee, albeit a relatively modest one, of his ability to satisfy an eventual judgment.” [ 6 ] The petitioner now seeks to appeal the judgment of the Superior Court.

He claims that the order to provide a $1,000,000 suretyship is unreasonable in light of the guiding principles of procedure.

He also claims the judgment is manifestly erroneous in fact and in law. [ 7 ] A stay of proceedings is a case-management measure. [2] In principle a judgment granting or refusing such a stay cannot be appealed. [3] However, in exceptional circumstances a judge of this court may grant leave to appeal if an applicant can demonstrate that the ruling appears unreasonable in light of the guiding principles of civil procedure and that a serious prejudice results from the decision. [4] [ 8 ] The decision to impose a surety of $1,000,000 is essentially a matter of discretion that is governed by a standard of reasonableness.

In an action of more than $150,000,000 a surety in the amount required by the judge cannot possibly be considered unreasonable. Indeed, as the judge said, it is “modest.” There is nothing in this file that could establish prima facie that the judge’s order is inconsistent with the principle of proportionality in civil proceedings [5] and there is nothing that would justify interference with the judge’s exercise of discretion under

article 654 C.C.P. FOR THESE REASONS the undersigned: [ 9 ] DISMISSES the motion for leave to appeal; [ 10 ] THE WHOLE with costs of justice to the respondents on the motion. PATRICK HEALY, J.A.