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Background and commercial relationship
The dispute arose from a cross-border financing arrangement for private educational institutions in Afghanistan. The appellant, Roeen Rahmani, an Afghani citizen resident in Ontario, founded a university and several schools, including the Kardan School and Kardan School for Girls. Under a September 2020 Term Loan Agreement, the respondent, InFrontier AF LP, a UK-based private equity firm, advanced a substantial loan to the two schools. Mr. Rahmani personally guaranteed repayment of the loan. The Term Loan Agreement contained a dispute resolution clause requiring that any disputes be resolved by arbitration seated in the Dubai International Financial Centre (DIFC). The clause specified that the arbitration would be conducted under the “Rules of Arbitration of the DIFC-LCIA Arbitration Centre” (the DIFC-LCIA Rules), and that arbitrators would be appointed in accordance with those rules. By referencing the DIFC-LCIA Rules, the parties also incorporated the DIFC-LCIA Rules’ preamble, which provided that any agreement to arbitrate under those rules was deemed an agreement to apply not only the then-current rules but also “such amended version” of those rules as the DIFC-LCIA Arbitration Centre might adopt, provided those amendments took effect before the commencement of arbitration. This made the arbitration clause a dynamic reference to a potentially evolving rule set rather than a static reference frozen as of the date of contracting.
Regulatory changes in Dubai and institutional rules
After the Term Loan Agreement was executed, significant institutional and legislative changes occurred in Dubai’s arbitration framework. First, in September 2021, Dubai issued Decree 34, which abolished the DIFC Arbitration Institute and transferred its rights and obligations to the Dubai International Arbitration Centre (DIAC). Decree 34 provided that arbitration rules previously adopted by the DIFC Arbitration Institute would remain in force only until DIAC’s board approved new DIAC rules of arbitration. Second, DIAC’s Board approved a new set of arbitration rules (the DIAC Rules), effective March 21, 2022. Those rules stated they would apply to arbitrations conducted under DIAC’s administration regardless of the date of the underlying contract, “unless the parties agree otherwise.” Third, on March 29, 2022, DIAC and the LCIA issued a joint press release clarifying how existing DIFC-LCIA references would be handled after Decree 34 and the introduction of the DIAC Rules. The press release confirmed that arbitrations commenced after March 21, 2022, under agreements referring to the DIFC-LCIA Rules would be administered by DIAC and conducted in accordance with DIAC’s procedural rules, again “unless otherwise agreed” by the parties. This press release was treated by the courts as evidence that the institutions themselves—DIFC Arbitration Institute, DIAC, and LCIA—had taken the position that the DIAC Rules would function as the operative procedural rules for cases that had originally referenced the DIFC-LCIA Rules, absent a different agreement by the parties after the change.
The arbitration and the award
By late 2022, the schools allegedly defaulted on their repayment obligations under the Term Loan Agreement. In 2023, InFrontier AF LP commenced arbitration in the DIFC, asserting that the Kardan School, the Kardan School for Girls, and Mr. Rahmani (as guarantor) were in default. By this time, Decree 34 was in force and the DIAC Rules were effective. Over the appellant’s objections, an arbitrator was appointed and the arbitration was administered under the DIAC Rules rather than under the original DIFC-LCIA Rules as they existed in 2020. During the proceedings, the arbitrator made various case-management and procedural rulings, including decisions on deadlines, extensions of time, and representation. The appellant later argued that these rulings were driven by the DIAC Rules and resulted in an unduly compressed timetable, allegedly denying him and the schools sufficient opportunity to obtain and instruct counsel and to prepare their case properly. Despite these objections, the arbitrator rejected the defences advanced, found that the schools and the guarantor were liable for the unpaid loan, and made an award (the Award) in favour of InFrontier AF LP. The Award required the schools and Mr. Rahmani to pay USD 2.5 million in outstanding principal under the Term Loan Agreement, plus additional sums for interest, penalties, and costs. The exact quantum of those additional sums was not specified in the Ontario Court of Appeal’s reasons.
The enforcement application in Ontario
InFrontier AF LP then applied to the Ontario Superior Court of Justice under the International Commercial Arbitration Act, 2017 (ICAA) for recognition and enforcement of the foreign Award in Ontario. The ICAA gives the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards force of law in Ontario. Under Article V of the Convention, a party resisting enforcement may oppose recognition on limited, enumerated grounds. Before the application judge, Mr. Rahmani relied on three principal Convention grounds. First, under Article V(1)(d), he argued that the composition of the tribunal and the arbitral procedure were not in accordance with the parties’ agreement, because the arbitration had been conducted and the arbitrator appointed under the DIAC Rules, not the DIFC-LCIA Rules specified in the Term Loan Agreement. Second, under Article V(1)(b), he maintained that the arbitral procedure left him “unable to present his case” due to compressed timelines, constraints on legal representation, and limitations on access to relevant documents. Third, under Article V(2)(b), he contended that recognition and enforcement would be contrary to Ontario public policy because Decree 34 and the DIAC Rules allegedly altered the arbitration agreement without the parties’ consent and resulted in a fundamentally unfair procedure.
Contractual interpretation of the arbitration clause and rules
The application judge began by identifying the key interpretive question: what arbitral procedure had the parties actually agreed to in their Term Loan Agreement? While the Agreement expressly named the DIFC-LCIA Rules, those rules’ own Preamble provided that any reference to them would be treated as an agreement to arbitrate under those rules or “such amended version” as the DIFC-LCIA Arbitration Centre might adopt before arbitration began. The judge interpreted this language as a referential incorporation of a dynamic set of rules, such that the parties had agreed in advance that any future “amended version” of the DIFC-LCIA Rules, in effect at the time arbitration was commenced, would govern. To determine whether the DIAC Rules were an “amended version” of the DIFC-LCIA Rules, the judge turned to Dubai law and institutional actions. He examined Decree 34, which abolished the DIFC Arbitration Institute and transferred its assets and responsibilities to DIAC, while preserving existing rules only until new DIAC rules came into effect. He then considered the DIAC Rules and the joint DIAC–LCIA press release confirming that arbitrations commenced after March 21, 2022, under clauses referring to the DIFC-LCIA Rules would thereafter be administered and conducted pursuant to DIAC’s procedural rules unless the parties agreed otherwise. From this, he concluded that Decree 34 and the subsequent institutional measures effectively transformed the DIAC Rules into an “amended version” of the DIFC-LCIA Rules, within the meaning of the DIFC-LCIA Preamble that the parties had adoptively incorporated. In his view, the parties were taken to have consented to these amendments in advance when they signed an agreement tying their arbitration procedure to the DIFC-LCIA Rules “as amended” prior to the commencement of any arbitration. On this interpretation, the arbitrator’s use of the DIAC Rules was consistent with the parties’ agreement, and Article V(1)(d) was not satisfied.
Alleged inability to present the case and public policy
The application judge next addressed the argument under Article V(1)(b) that the appellant had been unable to present his case. After reviewing the arbitral record and the challenged case-management decisions, he rejected the contention that the procedure was unfairly compressed or that there had been unfairness in decisions relating to counsel or disclosure. He found no evidentiary basis to conclude that the appellant had been deprived of a meaningful opportunity to advance his claims and defences. Turning to public policy under Article V(2)(b), the judge applied the high Ontario standard that refusal to enforce must be reserved for awards that fundamentally offend basic principles of justice and fairness or display intolerance-worthy ignorance or corruption by the tribunal. He concluded that Decree 34 did not unilaterally amend the parties’ arbitration agreement but rather created a revised version of the procedural rules of a type that the parties’ clause had expressly contemplated. As the arbitrator had applied rules regarded, by the institutions themselves, as the operative successors to the DIFC-LCIA Rules, and as there was no demonstrated procedural unfairness rising to the level of a fundamental affront to Ontario public policy, the judge granted recognition and enforcement of the Award in Ontario.
The appeal and the Ontario Court of Appeal’s reasoning
Mr. Rahmani appealed to the Ontario Court of Appeal, arguing that the application judge had adopted the wrong legal approach under Article V(1)(d). He framed Article V(1)(d) as requiring a simple comparison between (a) the arbitral procedure actually followed and (b) the procedure set out either in the parties’ agreement or, only in the absence of such agreement, in the law of the seat of arbitration. Because the Term Loan Agreement expressly specified the DIFC-LCIA Rules, he contended that the application judge erred by allowing Dubai law (Decree 34) and DIAC’s internal changes to modify that agreed procedure. In the appellant’s view, the law of the seat could be relevant only under the “failing such agreement” branch of Article V(1)(d), which was not engaged here. InFrontier AF LP responded that the application judge had correctly understood his task as one of contractual interpretation—determining the content of the parties’ agreed procedure in light of a clause that referenced rules “as amended”—and that, on that characterization, Decree 34 and the press release were relevant facts necessary to ascertain what the agreed rules had become by the time the arbitration commenced. The Court of Appeal agreed with the respondent’s characterization. It emphasized the Convention’s “enforcement-facilitating thrust” and its respect for party autonomy, including the ability of parties to choose procedural rules that may derive from foreign law or institutional frameworks. The court accepted that Article V(1)(d) has two mutually exclusive branches but held that nothing in the first branch prevents a court from examining the law of the seat or institutional acts when the parties’ own agreement makes those sources relevant to defining the agreed procedure. The court endorsed the application judge’s approach of treating the DIFC-LCIA Preamble as part of the arbitration clause and held that the judge was entitled to find that the parties had not agreed to a frozen set of rules but rather to whatever “amended version” existed when arbitration began. Reviewing Decree 34 and the institutional press release, the Court of Appeal held it was open to the application judge to conclude that the DIAC Rules constituted an amended version of the DIFC-LCIA Rules for arbitrations seated in the DIFC, including those based on existing DIFC-LCIA clauses. The reference in Decree 34 and the DIAC Rules to application of those rules “unless the parties agree otherwise” was reasonably interpreted as permitting the parties, after March 21, 2022, to opt out of the DIAC Rules in favour of the original DIFC-LCIA text or some other rules, which they did not do. On this view, the arbitrator’s use of the DIAC Rules was in accordance with the parties’ agreement, and Article V(1)(d) was not engaged.
Disposition on procedural fairness and public policy
On the alleged inability to present the case under Article V(1)(b), the Court of Appeal deferred to the application judge’s factual assessment and found no reversible error. The judge had undertaken a careful review of the specific rulings challenged by the appellant and concluded that there was no unfair compression of the schedule, no improper denial of legal representation, and no unfair restriction on access to relevant documents. The appellate court saw no basis to interfere with that evaluation. On public policy under Article V(2)(b), the Court of Appeal reiterated the stringent Ontario standard: only awards that fundamentally offend the most basic and explicit principles of justice and fairness, or manifest intolerable ignorance or corruption, warrant non-enforcement. It agreed with the application judge that these circumstances were not present. The mere fact that Dubai law and DIAC’s institutional re-organization had the effect of channeling existing DIFC-LCIA clauses into a DIAC-administered regime, where the parties had already agreed to be bound by amended rules of that institution, did not amount to a public policy violation.
Outcome and monetary consequences
In the result, the Ontario Court of Appeal dismissed Mr. Rahmani’s appeal and upheld the Superior Court’s order recognizing and enforcing the foreign arbitral award in Ontario. InFrontier AF LP, as the award creditor and respondent on the appeal, remained the successful party. Substantively, the recognized Award obliges the Kardan School, the Kardan School for Girls, and Mr. Rahmani to pay InFrontier AF LP at least USD 2.5 million in outstanding principal under the Term Loan Agreement, along with additional amounts for interest, penalties, and arbitral costs awarded in Dubai, which are not quantified in the appellate reasons and therefore cannot be precisely determined from this decision alone. On top of confirming that liability, the Ontario Court of Appeal ordered Mr. Rahmani to pay InFrontier AF LP CAD 30,000 in all-inclusive costs of the appeal, bringing the total quantifiable amount ordered in favour of the successful party, on the record available here, to at least USD 2.5 million in principal under the Award plus CAD 30,000 in appeal costs, with the exact total including interest, penalties and other costs remaining indeterminable from the text of this judgment.
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Appellant
Respondent
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Court of Appeal for OntarioCase Number
COA-25-CV-1016Practice Area
International lawAmount
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RespondentTrial Start Date