Webuilding Barriers to Enforcement: Ontario Court adds further hurdle to international enforcement of arbitral award

This article sets out the latest development in the global attempts to enforce the arbitral award in Sociedad Concesionaria Metropolitana de Salud S.A. v. Webuild S.P.A.

As we discussed in an earlier blog, this case arises from a contract between Chile’s Sociedad Concesionaria Metropolitana de Salud S.A. (SCMS) and Italian construction company, Astaldi S.p.A., to build a hospital in Santiago, Chile.  A dispute arose and was addressed by an arbitration seated in Santiago. SCMS secured an award against Astaldi in January 2022, which is now worth over USD 140M.  Astaldi’s vacatur and set-aside attempts have been exhausted.

During the arbitration, Astaldi entered into insolvency proceedings in Italy, and per agreement in July 2021, merged into Webuild, a multinational Italian construction company.  SCMS alleges that Webuild continues to operate Astaldi’s construction, infrastructure, and engineering businesses, and that it assumed Astaldi’s liabilities.

SCMS sought to recognize the award and enforce it against Webuild in Delaware, Ontario and Quebec. In September 2024, the Delaware Court rejected the attempt for lack of personal jurisdiction (this blog covers that decision).

Roughly one week later, the Ontario Superior Court of Justice released its decision.  While Webuild carries out significant business in Ontario, it argued that before considering the enforcement application, there was a threshold issue: had Webuild assumed the liabilities of Astaldi with respect to the award? Webuild argued that this issue could only be determined by an Italian court considering Italian bankruptcy law, and that the issue had to be decided before Ontario courts consider enforcing the award.

The Ontario court agreed with Webuild and granted a temporary stay on the grounds that Ontario was not the most convenient forum to decide the threshold issue of whether Webuild had assumed Astaldi Italy’s labilities and obligations under the award.  The court acknowledged that forum non conveniens is rarely successful in enforcement proceedings, but explained:

“Generally, forum non conveniens will not apply in a recognition and enforcement application because there is no other jurisdiction that can enforce against Ontario assets.  However, as noted by Webuild, SCMS’s underlying application is not a standard recognition and enforcement matter.  This is because SCMS seeks to enforce against a third party to the Arbitral Award (Webuild) instead of against the judgement debtor (Astaldi).  Whether Webuild is liable for Astaldi’s debts under the Arbitral Award must be determined before the award can be enforced against Webuild.  This is a severable issue from the issue of enforcement of the Arbitral Award in Ontario (para. 38).” 

The Court noted that the contract under which Webuild acquired Astaldi’s assets was governed by Italian law, the relevant documents were in Italian and the witnesses did not speak English. These types of concerns can often be overcome with expert evidence, but the parties had filed conflicting expert reports, including about the degree to which the Italian courts had exclusive jurisdiction to determine this threshold question.

The court also noted that because enforcement proceedings were also ongoing in Delaware and Ontario, there was a heightened risk of inconsistent findings, so the threshold question should be determined in a single proceeding in Italy.

This outcome adds further expense and delay to SCMS’s efforts to collect its award, which is now almost three years old.  It is unclear from the Ontario court’s decision whether it recognized that by sending the matter to the notoriously slow Italian courts SCMS’s recovery efforts now face what is known by some as the “Italian Torpedo”. As in many high-value enforcement efforts, resources and persistence are key to pursuing justice.