China Yantai Friction Co. Ltd. v. Novalex Inc.

Decision 1: Pre-empt the public policy defence, or wait for it?

The conventional approach in enforcement applications is to file a clean application establishing the prima-facie elements (a valid arbitration agreement, a final award, proper notice) and let the respondent identify whatever Article 36 grounds it intends to rely on. We then rebut in reply.

That approach is sound and many counsel choose it. Its weakness is that it leaves the framing of the defences to the respondent. When public policy is raised, the court’s first encounter with the issue is in the respondent’s words, citing the respondent’s authorities, in the respondent’s narrative.

We chose to brief public policy proactively in the moving party’s factum — setting out the doctrinal narrowness of the exception, the controlling authorities, and why a contract dispute over product quality does not engage it. The cost was approximately fifteen pages more in our materials and a longer record for the court to read. The benefit was that the legal framework was anchored before Novalex’s response landed. That mattered, because Article 36 grounds are narrow and well-known — the law is settled; the case turns on framing.

Decision 2: Engage with the basic-justice standard, or argue tribunal procedural decisions are unreviewable?

Novalex’s headline argument was that the CIETAC tribunal had violated natural justice by refusing to appoint independent appraisers after the evidentiary hearings closed. There were two ways to respond.

The over-broad framing: argue that tribunal decisions on procedure are entirely insulated from review. This is appealing because it makes Novalex’s challenge collapse without engaging it on the merits. The problem is that it overstates the law — Article 36(1)(a)(ii) and the cases applying it require a real procedural-fairness violation, not blanket immunity. A court reading the over-broad framing recognizes the over-reach and treats the rest of the factum more skeptically.

The narrower framing: accept that the tribunal’s procedural decisions are reviewable on a basic-justice standard, and explain why a refusal to reopen the evidentiary record after closing arguments is squarely within tribunal discretion. We chose the narrower framing. It is the more conservative read of the law and it wins on the facts. A request to appoint appraisers after the close of evidence is not a procedural unfairness — it is a request to start the evidentiary phase over again.

Decision 3: Mareva injunction, or hold the option in reserve?

With $1,571,971.06 at stake against a private Ontario corporation that was actively contesting enforcement, asset dissipation was a real concern. Mareva was on the table.

We did not seek one. Two reasons. First, the Mareva threshold — demonstrating a real risk of dissipation supported by evidence, not just suspicion — is high. An unsuccessful Mareva motion immediately before the enforcement hearing would have signalled to the same court that we did not trust our own application. Second, we did not yet have evidence of dissipation; we had concern. Filing on concern alone is the kind of overreach the template warns against.

This was not a confident decision. Had Novalex actually dissipated assets between application and judgment, the calculus would have been wrong. We watched the file closely and held Mareva in reserve. The decision was a calculated bet that the court’s perception of restraint was more valuable than the marginal protection a Mareva would have provided at that stage.

1. In international arbitration enforcement, brief the defences before the respondent raises them. Article 36 grounds are narrow and well-known. Public policy and natural justice will be raised by any competent respondent. Pre-empting framing in the moving party’s factum is cheaper and more effective than rebutting in reply, because settled law turns on framing.

2. The “unable to present case” defence rarely succeeds against a tribunal’s procedural ruling. The standard is whether basic notions of justice were violated — not whether the losing party disagrees with how the tribunal handled evidence. A request to reopen evidence after closing arguments is, on its face, a request to redo the case. Courts read it that way.

3. The public policy exception is not a back-door appeal. Arguments like “the manufacturer was actually wrong about the contract” or “there was an unwritten oral agreement that wasn’t honoured” do not engage Ontario public policy. The exception is reserved for conduct that offends fundamental Canadian legal principles, and the bar is rarely met. Counsel arguing public policy should expect the court to apply Schreter v. Gasmac and Yugraneft strictly.