Executive Summary: Key Legal and Evidentiary Issues

• Dispute over the proper arbitration rules following institutional changes in Dubai.

• Enforcement of a foreign arbitral award under Ontario law and the New York Convention.

• Jurisdictional objection raised due to change from DIFC-LCIA to DIAC Arbitration Rules.

• Claim of procedural unfairness due to compressed arbitration timeline and lack of counsel.

• Allegation that enforcement would violate Ontario public policy standards.

• Determination of whether changes in institutional rules invalidated the arbitration process.

Background and dispute

InFrontier AF LP, a private equity firm based in the United Kingdom, entered into a Term Loan Agreement with two Afghan schools, the Kardan School and the Kardan Girls Private School, in 2020. Roeen Rahmani, a resident of Ontario and the founder of these schools, signed the agreement as guarantor. The agreement included an arbitration clause stating that any disputes would be resolved through arbitration in the Dubai International Financial Centre (DIFC) under the DIFC-LCIA Arbitration Rules.

In 2022, the schools defaulted on the loan, prompting InFrontier to initiate arbitration proceedings. However, by that time, significant changes had occurred in Dubai’s arbitration framework. A 2021 Decree dissolved the DIFC Arbitration Institute and transferred its responsibilities to the Dubai International Arbitration Centre (DIAC). As of March 21, 2022, the new DIAC Arbitration Rules were in effect. Accordingly, the arbitration proceeded under these new rules, with DIAC administering the process.

Rahmani opposed the arbitration and later the enforcement of the award in Ontario, arguing that the arbitration had been conducted under rules and with a tribunal composition that differed from what was originally agreed. He also claimed he had been denied a fair hearing due to compressed timelines and lack of legal representation, and that enforcement would contradict Ontario public policy.

Legal analysis and court findings

The court examined whether the arbitration adhered to the agreement between the parties. The DIFC-LCIA Arbitration Rules included a clause allowing for amended versions of the rules to apply. The court interpreted the 2021 Decree as legally substituting the DIAC Arbitration Rules in place of the DIFC-LCIA Rules for arbitrations initiated after March 21, 2022. Since the parties had not otherwise agreed to retain the older rules, the use of DIAC rules was deemed valid.

The court also assessed whether the arbitration had been unfair. Although Rahmani complained of a rushed process and inability to secure counsel, the arbitrator had permitted procedural input, responded to requests for extensions, and issued a reasoned award. The court found no denial of procedural fairness.

Regarding public policy, the court found no basis to conclude that enforcing the award would violate Ontario norms. The application of the updated rules was consistent with the agreement, and no conduct in the arbitration rose to the level of being contrary to public policy.

Outcome

The Ontario Superior Court of Justice granted InFrontier’s application and recognized and enforced the arbitral award. Rahmani’s objections based on jurisdiction, procedural fairness, and public policy were all rejected. The decision affirms Ontario’s support for international arbitration and the enforceability of awards rendered under evolving institutional rules.