Ontario – Arbitration – Recognition and Enforcement Application in Ontario of an Italian Arbitral Award against a non-party was temporarily stayed on the basis of forum non conveniens pending the outcome of an Italian court proceeding on whether the Respondent (not a party to the arbitration) assumed liability under the foreign arbitral award.

Ontario – Arbitration – Stay of Proceeding – The stay was final even though it was temporary because it was granted pending resolution of a foreign proceeding where the foreign proceeding would substantially reduce the issues to be determined or the foreign proceeding could render the local proceeding “substantially moot” or otherwise have a “material impact” on the outstanding issues in the case.

Sociedad Concesionaria Metropolitana de Salud S.A.
v. Webuild S.p.A.
2026 ONCA 28 (CanLII)
Ontario Court of Appeal (Thorburn, Copeland and Gomery JJ.A)

Issue

Whether the Ontario court should stay an application for recognition and enforcement of a foreign arbitral award against a non-party who contested liability on the basis of forum non conveniens pending the outcome of the decision in the foreign proceeding.

Background

The Appellant Sociedad Concesionaria Metropolitana de Salud S.A. (“Sociedad”) a Chilean construction company was awarded significant damages in an arbitral award ($188M CDN) by a Chilean Arbitrator as against Astaldi, an Italian construction company in December 2021 (para. 2). The award related to construction of a hospital in Chilli. (para. 21) The award was upheld but the amount was varied by a Chilean court. (para. 34)

Astaldi underwent a very complex restructuring process in Italy, which concluded in September 2018 and resulted in the Respondent Webuild acquiring some of Astaldi’s assets, including liabilities pursuant to a “Partial Spin-Off Agreement”). (para. 3)

Astaldi’s restructuring plans under Italian insolvency legislation known as “Concordato” enabled it to carry on some business activities and the Concordato was completed in the bankruptcy court in Rome in July 2021.The Concordato is similar to the Canadian Companies Creditors Arrangement Act, RSC 1985 c, C.35 in that the purpose is to generate a preferable outcome for creditors and stakeholders by avoiding liquidation and preserving value. (paras. 18–19)

Around January 2 ,2019, Astaldi defaulted in payments to creditors and Sociedad terminated its contract with Astaldi. The parties requested arbitration with a Chilean arbitrator. (para. 21)

Shortly afterward Astaldi commenced insolvency proceedings in Chili. Astaldi also applied to the Bankruptcy Court in Rome for a separate proposal for reorganization of Astaldi in the Chilean Courts to restructure debts to Chilean Creditors. (paras. 22–23)

The scope of Webuild’s acquisition of Astaldi’s “Continuity Business” and whether it included the debt to Sociedad was at issue. (para. 24)

In July 2020 the Italian court approved Astaldi’s plan to divide its business into two parts: “Earmarked Assets” and “Continuity Business”. (paras. 25–27)

Astaldi’s Concordato plans were fully implemented by July 28 2021. At this point, pursuant to the “Partial Spin-Off Agreement” Webuild acquired the “Continuity Assets”. (paras. 28 –29)

The operative section of the Partial Spin-Off Agreement provided as follows:

“As a result of the Spin-Off, all of the Astaldi equity investments, capital Assets, legal relationships (including inter alia, employment relationships) and liabilities (as a result of the debt settlement resulting from the execution of the Arrangement with Creditors) relating solely to the Spun-Off Assets will be assigned to Webuild.” (para. 31)

The Ontario Application

In 2023, Sociedad brought an application in Ontario for recognition and enforcement of the Chilean Arbitral Award against the non-party Webuild. (para. 37)

Sociedad claimed Webuild was liable under the award because it acquired Astaldi’s liabilities pursuant to the Partial Spin-Off Agreement. Webuild disagreed.

In response Webuild brought an Ontario application for a stay or a dismissal of the proceedings for want of jurisdiction on the basis that Ontario is forum non conveniens. (para. 4). Webuild also took the position that it was not liable under the Chilean Arbitral Award because it was: 1) an unsecured debt, and 2) the debt was not included in the Partial Spin-Off Agreement.

In March 2024, Webuild commenced proceedings in Italy seeking a declaration that the arbitral award debt was not assigned to Webuild and remained with Astaldi and that the award was not enforceable against Webuild. (paras. 38-40)

Webuild’s position was that adjudication of its liability should take place in Italy not Ontario because the determination involved:

• Application and interpretation of Italian law;
• Experts in Italian law as well as Italian fact witnesses and translation witnesses; and
• Webuild was not a party to the arbitration. (para. 6)

Sociedad’s position was that its liability under the arbitral award was a question that should be determined by the judge hearing the recognition and enforcement application. (para. 7)

The motions judge agreed with Webuild that liability and enforcement were separate issues and that Italy was the appropriate forum to determine liability and granted a temporary stay of Sociedad’s enforcement application while liability was determined in Italy. (paras. 8–9) (para. 43)

ONCA Analysis

1. Final or Interlocutory Order

The ONCA held that the motions judge decision was final pursuant to s 6(1)(b) of the Courts of Justice Act. A decision to grant or dismiss a stay for forum non convenience is final for the purposes of an appeal. (para. 48)

2. Severance of Liability issue from Enforcement issues.

The ONCA held that the motions judge did not err in finding that the application was not purely a recognition and enforcement application. The ONCA further held that the motions judge did not err in finding that the issue of liability must be determined first as enforcement is only applicable if liability is established. (para. 60)

In coming to this decision, the ONCA reviewed Chevron Corp. v Yaiguaje 2015 SCC 43 at paragraph 44-46 in which the Supreme Court of Canada held that:

“T]he purpose of an action for recognition and enforcement is not to evaluate the underlying claim that gave rise to the original dispute, but rather to assist in enforcing an already-adjudicated obligation.…[T]he enforcing court’s role is not one of substance, but is instead one of facilitation…since enforcement concerns only local assets, ‘there is no basis for staying the proceedings on the grounds that the forum is inappropriate’. [Emphasis added; citations omitted.]”

The ONCA held that this case was distinguishable from the Chevron case and not a standard recognition and enforcement case because there was no “already-adjudicated” obligation, as Webuild, the non-party, contested liability and brought an application in Italy to determine the liability issue. (paras. 52-55)

The ONCA also rejected the Appellant’s argument that the court could consider case law on piercing the corporate veil to find third party liability at the enforcement stage of a foreign arbitral award. The ONCA held that Webuild and Astaldi were not related companies and cases about piercing the corporate veil to determine third party liability are not analogous to this situation. (paras. 56 and 58)

3. Application of Forum Non-Conveniens – Ontario not the more convenient forum

The ONCA held that there was no error in the motion judge’s decision that the more appropriate forum for determination of liability is Italy. To come to this conclusion the ONCA referred to Club Resorts Ltd. Van Breda 2012 SCC 17.

In the Club Resorts case, the SCC held that to apply forum non conveniens, there must be:

1. An alternative forum;
2. The alternative forum has a connection with the subject matter of the litigation, using the analytical approach for real and substantial connection; and
3. The alternative forum must be “clearly more appropriate.” (para. 63)

The ONCA held that significant deference is owed to the motions judge because of the highly discretionary nature of the application of forum non conveniens. (para. 64)

The ONCA disagreed that Italy is “not a competing forum” because the issues in the Italian proceeding are not identical to the Ontario issues. The comparison is the forums, not the proceedings. (para. 66)

The ONCA held that it was open for the motions judge to decide that there was a real and substantial connection over the subject matter of the litigation to Italy as the Partial Spin Off Agreement was made in Italy between two Italian companies governed by Italian law. The ONCA held that the connecting factors were established. (para. 67) The real and substantial connection applies to determination of liability, not recognition and enforcement.

The ONCA held that taken together, the legal interpretation issues to determine Webuild’s liability and the complexity of Italian bankruptcy law, the need for legal expertise in Italian law and translators being required for witnesses and documents led the motions judge to conclude that Italy was the most convenient forum and the ONCA owed deference to the motion judge’s decision. The Court did not find any error in the finding that Italy was the appropriate forum to decide liability. (paras. 69–74)

4. Temporary Stay

The ONCA referred to K.K. v M.M 2025 ONCA 446, in which the Court held that:

“Section 106 provides that a court may, on its own initiative or on motion by any person, whether or not a party, stay any proceeding in the court on such terms as are considered just. A stay is a discretionary remedy under s. 106.” (para. 77)

The Court held that appellate court interference in a s.106 stay is only warranted where the judge erred in law, seriously misapprehended the evidence, exercised their discretion based upon erroneous considerations, or failed to give any or sufficient weight to relevant considerations. (para. 78) The Court found no error of law.

The ONCA held that a stay is considered temporary if it is granted pending resolution of a foreign proceeding where the foreign proceeding would “substantially reduce the issues to be determined” or if success in the foreign proceeding could render the local proceeding “substantially moot” or otherwise have a “material” impact on the outstanding issues in the case.(para. 80.) This test is set out in Hollinger International Inc. v Hollinger Inc. (2004) 11 CPC (6^th) 245. (para. 80)

There was no error in application of the Hollinger test and in characterising the stay as temporary. (para. 83)

The ONCA dismissed the appeal. (paras. 93–96)