Tag Archive for: choice of law

Ontario Court Holds Law of Bangladesh Applies to Rana Plaza Collapse Claim

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The Court of Appeal for Ontario has upheld a decision of the Superior Court of Justice dismissing a $2 billion claim against Loblaws relating to the 2013 collapse of the Rana Plaza building in Savar, Bangladesh.  In Das v George Weston Limited, 2018 ONCA 1053 (available here) the court concluded that the claims were governed by the law of Bangladesh (not Ontario).  It went on to conclude that most of the claims were statute barred under the Bangladeshi limitation period and that it was “plain and obvious” that the remaining claims would fail under Bangladeshi tort law.

Unlike some of the recent cases in this area, this was not a case about a Canadian parent corporation and the operations of its own foreign subsidiary.  It was a case about a contractual supply relationship.  Loblaws bought clothes (to sell in its Canadian retail stores) from corporations whose workers manufactured the clothes in Rana Plaza.

The key conflict of laws point was the choice of law issue.  The rule in Ontario is that tort claims are governed by the law of the place of the tort: Tolofson v Jensen, [1994] 3 SCR 1022.  The plaintiffs had argued that they were suing Loblaws for negligent conduct that exposed those working in Rana Plaza to harm.  They argued that Loblaws had, by adopting corporate social responsibility policies and hiring Bureau Veritas to conduct periodic “social audits” of the workplace, assumed a degree of responsibility for the safety of the workplace in Bangladesh (para 20).  They argued that the key steps and decisions by Loblaws took place in Ontario rather than in Bangladesh and therefore Ontario was the place of the tort (para 80).  The court rejected these arguments.  It held that the place where the alleged wrongful activity occurred was Bangladesh (para 85), that the alleged duty was owed to people in Bangladesh (para 87) and that the injury suffered in Bangladesh “crystallized the alleged wrong” (para 90).

The court also refused to apply Tolofson‘s narrow exception to the place of the tort rule.  One reason the plaintiffs raised for triggering the exception was the lack of punitive damages under the law of Bangladesh.  The court noted that the lower court’s decision had suggested such damages might actually be available under that law, but in any case “the absence of the availability of punitive damages is not the type of issue that offends Canadian fundamental values” (para 95).  The court raised no basis on which to disagree with this analysis.

Because the applicable law was that of Bangladesh, and because some of the claims were not statute-barred, the court was required to do a detailed analysis of Bangladeshi tort law on the duty of care issue in order to determine whether those claims were to be dismissed as not viable.  This aspect of the decision may be the most disquieting, since there was little if any on-point authority in the Bangladeshi jurisprudence (para 130).  The court had to rely on experts who were relying on a considerable volume of Indian and English cases and then debating the extent to which these would impact the issue if determined by a Bangladeshi court.  Ultimately the court concluded that under Bangladeshi law the claims could not succeed.

Double Counting the Place of the Tort?

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In common law Canada there is a clear separation between the question of a court having jurisdiction (jurisdiction simpliciter) and the question of a court choosing whether to exercise or stay its jurisdiction.  One issue discussed in the Supreme Court of Canada’s recent decision in Haaretz.com v Goldhar (available here) is the extent of that separation.  Does this separation mean that a particular fact cannot be used in both the analysis of jurisdiction and of forum non conveniens?  On its face that seems wrong.  A fact could play a role in two separate analyses, being relevant to each in different ways.

Justice Cote, with whom Justices Brown and Rowe agreed, held that “applicable law, as determined by the lex loci delicti principle, should be accorded little weight in the forum non conveniens analysis in cases where jurisdiction is established on the basis of the situs of the tort” (para 90).  She indicated that this conclusion was mandated by the separation of jurisdiction and staying proceedings, which extends to each being “based on different factors”.  So if the place of the tort has been used as the basis for assuming jurisdiction, the same factor (the place of the tort) should not play a role in analyzing the most appropriate forum when considering a stay.  And since the applicable law is one of the factors considered in that analysis, if the applicable law is to be identified based on the connecting factor of the place of the tort, which is the rule in common law Canada, then the applicable law as a factor “should be accorded little weight”.

In separate concurring reasons, Justice Karakatsanis agreed that the applicable law “holds little weight here, where jurisdiction and applicable law are both established on the basis of where the tort was committed” (para 100).  In contrast, the three dissenting judges rejected this reason for reducing the weight of the applicable law (para 208).  The two other judges did not address this issue, so the tally was 4-3 for Justice Cote’s view.

As Vaughan Black has pointed out in discussions about the decision, the majority approach, taken to its logical conclusion, would mean that if jurisdiction is based on the defendant’s residence in the forum then the defendant’s residence is not a relevant factor in assessing which forum is more appropriate.  That contradicts a great many decisions on forum non conveniens.  Indeed, the court did not offer any supporting authorities in which the “double counting” of a fact was said to be inappropriate.

The majority approach has taken analytical separation too far.  There is no good reason for excluding or under-weighing a fact relevant to the forum non conveniens analysis simply because that same fact was relevant at the jurisdiction stage.  Admittedly the court in Club Resorts narrowed the range of facts that are relevant to jurisdiction in part to reduce overlap between the two questions.  But that narrowing was of jurisdiction.  Forum non conveniens remains a broad doctrine that should be based on a wide, open-end range of factors.  The applicable law, however identified, has to be one of them.

The Most Appropriate Forum: Assessing the Applicable Law

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Another issue in the recent Supreme Court of Canada decision in Haaretz.com v Goldhar (available here) involves the applicable law as a factor in the forum non conveniens analysis.  It is clear that one of the factors in determining the most appropriate forum is the applicable law.  This is because it is quite easy for the forum to apply its own law and rather more difficult for it to apply the law of another jurisdiction.

So if the defendant can show that the forum would apply not its own law but rather the law of another jurisdiction, that points to a stay of proceedings in favour of that other jurisdiction.  In contrast, if the plaintiff can show that the forum would apply its own law, that points against a stay of proceedings.  In Haaretz.com the plaintiff was able to show that the Ontario court would apply Ontario law, not Israeli law.  So the applicable law factor favoured Ontario.

Not so, argued the defendant, because an Israeli court would apply Israeli law (see para 88).  So as between the two jurisdictions neither was any more convenient than the other!

In the Supreme Court of Canada, four of the judges rejected the defendant’s rejoinder.  The dissenting judges held that “[i]t is entirely appropriate, in our view, for courts to only look at the chosen forum in determining the applicable law.  Requiring courts to assess the choice of law rules of a foreign jurisdiction may require extensive evidence, needlessly complicating the pre-trial motion stage of the proceedings” (para 207).  In separate concurring reasons, Justice Karakatsanis agreed with the dissent on this point (para 100).  So because Ontario would apply Ontario law, this factor favours proceedings in Ontario rather than proceedings in Israel.

In contrast, Justice Cote, with whom Justices Brown and Rowe agreed, stated that “I am concerned that disregarding the applicable law in the alternative forum is inconsistent with the comparative nature of the forum non conveniens analysis” (para 89).  She cited in support an article by Brandon Kain, Elder C. Marques and Byron Shaw (2012).  The other two judges did not comment on this issue, so the court split 4-3 against looking at the applicable law in the alternative forum.

There is force to the practical concern raised by the dissent, and even with the assistance of the parties in many cases the court will be unable to form a sufficiently strong view as to what law the foreign forum would apply.  But conceptually it does seem that if it is established that the foreign forum will apply its own law, that should go to negate the benefits of the plaintiff’s chosen forum applying its own law.  Neither is any more convenient where compared against the other.

Perhaps because of the novelty of the approach, Justice Cote’s application of it may have missed the mark.  She held that “[a]s each forum would apply its own law, the applicable law factor cannot aid Haaretz in showing that it would be fairer and more efficient to proceed in the alternative forum” (para 88).  But the true point flowing from establishing that Israel would apply Israeli law, it would seem, should be that the applicable law factor cannot aid Goldhar (the plaintiff) in showing that it would be fairer and more efficient to proceed in Ontario.  If it cannot aid Haaretz.com that Israel would apply its own law, then how is the factor relevant and why is the court indicating a willingness to consider it?  It surely could not aid Haaretz.com that Israel would apply some other law.

On a motion for a stay, if the court did know what law would be applied in both the chosen forum and the alternative forum, we would have four possible situations.  On Justice Cote’s approach, if both forums would apply their own law, this is a neutral factor.  Similarly, if both forums would apply law other than forum law, this is also a neutral factor.  In the other two situations, the applicable law factor favours the forum that would be applying its own law.  With the court splitting 4-3 against looking at the applicable law in the alternative forum, this is not the approach – but should it be?

Conflicts – Between Domestic and Indigenous Legal Systems?

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In Beaver v Hill, 2017 ONSC 7245 (available here) the applicant sought custody, spousal support and child support. All relevant facts happened in Ontario. Read more

Characterization of Unfunded Pension Liability Claims

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In Re Walter Energy Canada Holdings, Inc, 2017 BCSC 709 (available here) the British Columbia Supreme Court had to consider the validity of a large claim (over $1 billion) filed in restructuring proceedings underway in the province under federal legislation.  The claim was for unfunded pension liabilities and was based on an American statute, the Employee Retirement and Income Security Act of 1974, 29 U.S.C. § 1001.  So the court had to consider whether that statute could apply to a claim in British Columbia against entities organized in Canada (mostly in British Columbia).

Starting at para. 93 the court considered whether the claim against the entities being restructured was governed by Canadian or American law (in each case the relevant law was either federal rather than provincial or state or did not vary as between provinces).  This is a choice of law question which raises the issue of the characterization of the claim.  Canadian courts do not often analyze characterization in detail, but the court did so in this case, making the decision notable.  The claimant argued that the claim was one in the law of obligations and sought to identify the proper law of the obligation.  The entities being restructured in contrast argued the claim went to a point of corporate law, namely their separate existence from other entities in an international corporate group.  The court referred to several of the main general authorities about the characterization process but considered the specific issue before it to be one of first instance.  It sided with the entities being restructured – the claim went to the issue of separation of corporate personality and status.  The American statute was imposing liability by “lifting the corporate veil” (paras. 137-38) between international corporate entities.

Having characterized the issue, the court then had to identify the connecting factor for the choice of law rule.  It held:

[160] The issue as to whether the Walter Canada Group’s separate legal personalities can be ignored is subject to the Canadian choice of law rule that the status and legal personality of a corporation is governed by the law of the place in which it was incorporated, namely British Columbia and Alberta. Here, as with the corporations within the Walter Canada Group, both with limited liability and unlimited liability, it is admitted that all of the partnerships were organized under British Columbia law. Accordingly, the choice of law analysis leads to the same result in relation to the partnerships, namely British Columbia law, including under the Partnership Act, R.S.B.C. 1996, c. 348.

[161] The place of incorporation or organization is a matter of public record and all persons who would do business with or otherwise deal with the Walter Canada Group entities would or should be well aware of that fact.

[162] I agree that, under Canadian choice of law rules, the place of incorporation or organization of the Walter Canada Group entities is the appropriate “connecting factor” in relation to the issue arising from the 1974 Plan’s claim.  As a result, British Columbia and Alberta law determine whether the separate legal personalities of the Walter Canada Group entities can be ignored.

Given that the American statute is not part of British Columbia or Alberta law, the court concluded that the claim failed (paras. 177-78).

 I want to reflect more on the decision, but at this point I am not certain I agree with the characterization analysis.  It is true that the only way the American statute makes the Canadian entities liable is by imposing liability on others within a larger corporate group.  But to me it does not follow that the statute is a matter of corporate status and not of obligation.  The statute imposes an obligation and extends that obligation to various entities.  I think there is room to debate that the primary element of the statute is the obligation it imposes.

However, support for the decision could lie in Macmillan Inc v Bishopsgate Investment Trust (No 3), [1996] 1 WLR 387 (CA), which the court does mention (see for example para. 126), which stresses the possibility of characterizing a specific legal issue within the context of a broader claim.  The analysis could be that there is a nested issue – that of corporate separation or status – within the broader question of liability for an unfunded pension.

Private International Law in Commonwealth Africa

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Published this week is Private International Law in Commonwealth Africa (Cambridge University Press, 2013) by Prof. Richard Oppong of Thompson Rivers University. 

From the book’s website:

The book won the 2013 American Society of International Law prize in Private International Law.  The prize ‘recognizes exceptional work in private international law’.  The Secretary General of the Hague Conference on Private International Law, Dr. Christophe Bernasconi, observes in his foreword to the book that: ‘The publication of Private International Law in Commonwealth Africa marks a significant milestone in the history and development of private international law in Africa.  Its encyclopaedic analysis of fifteen national legal systems – which account for over 40 per cent of the continent’s population yet over 70 per cent of its economic output – will go a long way to filling a gap in knowledge in respect of this important region of the world’.

The book offers an unrivalled breadth of coverage in its comparative examination of the laws in Botswana, the Gambia, Ghana, Kenya, Lesotho, Malawi, Namibia, Nigeria, Sierra Leone, South Africa, Swaziland, Tanzania, Uganda, Zambia and Zimbabwe.  The book draws on nearly 1500 cases decided by courts in these countries (the majority of which have never been cited in any academic work) and numerous national statutes.  It covers the areas of jurisdiction, choice of law, foreign judgments and arbitral awards enforcement, and international civil procedure.  It also provides an extensive bibliography of the literature on African private international law. 

Copies of the book may be obtained from many sources including the Cambridge UK and Amazon websites (link here).

Rome III Regulation Adopted by Council

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As a Christmas gift for European PIL scholars, the first enhanced cooperation in the history of the EU has been achieved in the field of conflict of laws (on the origin of the initiative see our previous post here).

The Council, in its meeting of 20 December 2010, adopted the Rome III regulation implementing enhanced cooperation in the area of the law applicable to divorce and legal separation (for previous steps of the procedure, see here and here). As of mid-2012 (18 months after its adoption, pursuant to Art. 21), the Rome III reg. will apply in the 14 Member States which have been authorised to participate in the enhanced cooperation by Council decision no. 2010/405/EU: Belgium, Bulgaria, Germany, Spain, France, Italy, Latvia, Luxembourg, Hungary, Malta, Austria, Portugal, Romania and Slovenia. Further Member States which wish to participate may do so in accordance with the second or third subparagraph of Article 331(1) of the Treaty on the Functioning of the European Union.

The text of the new regulation is available in Council doc. no. 17523/10 of 17 December 2010; after the signing of the President of the Council, it will be soon published in the Official Journal. The regulation is accompanied by a Declaration of the Council regarding the insertion of a provision on forum necessitatis in reg. no. 2201/2003, worded as follows:

The Council invites the Commission to submit at its earliest convenience to the Council and to the European Parliament a proposal for the amendment of Regulation (EC) No 2201/2003 with the aim of providing a forum in those cases where the courts that have jurisdiction are all situated in Member States whose law either does not provide for divorce or does not deem the marriage in question valid for the purposes of divorce proceedings (forum necessitatis).

The European Parliament, merely consulted under the special legislative procedure provided by Art. 81(3) TFEU for measures concerning family law, gave its opinion on 15 December 2010 (informal contacts with the Council have ensured that the EP views were taken into account in the final text). In the preamble of the legislative resolution, the EP called “on the Commission to submit a proposal for amendment of Regulation (EC) No 2201/2003, limited to the addition of a clause on forum necessitatis, as a matter of great urgency before the promised general review of that Regulation”.

Many thanks to Federico Garau (Conflictus Legum blog) and to Marina Castellaneta for the tip-off.

New Articles in Canadian Publications

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Two recent publications contain several topical articles:

In the 2010 issue (volume 60) of the University of New Brunswick Law Journal are the following five articles: Catherine Walsh: “The Uses and Abuses of Party Autonomy in International Contracts”; Joshua Karton, “Party Autonomy and Choice of Law: Is International Arbitration Leading the Way or Marching to the Beat of its own Drummer?”; Stephen Pitel, “Reformulating a Real and Substantial Connection”; John McEvoy, “‘After the Storm: The Impact of the Financial Crisis on Private International Law’: Jurisdiction”; and Elizabeth Edinger, “The Problem of Parallel Actions: The Softer Alternative”.  This journal is available to subscribers, including through Westlaw.

In Jeff Berryman & Rick Bigwood, eds., The Law of Remedies: New Directions in the Common Law (Toronto: Irwin Law Inc., 2010) are four articles that relate to the conflict of laws: David Capper, “Mareva Orders in Globalized Litigation”; Scott Fairley, “Exporting Your Remedy: A Canadian Perspective on the Recognition and Enforcement of Monetary and Other Relief”; Garry Davis, “Damages in Transnational Tort Litigation: Legislative Restrictions and the Substance/Procedure Distinction in Australian Conflict of Laws”; and Russell Weaver & David Partlett, “The Globalization of Defamation”.  This collection of articles is available for purchase here.

Publication: Galgano & Marrella, Diritto e Prassi del Commercio Internazionale

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Galgano-Marrella Diritto e Prassi del Commercio InternazionaleProf. Francesco Galgano (emeritus in the University of Bologna Law School
and founder of Galgano Law Firm) and Prof. Fabrizio Marrella (“Cà Foscari” University of Venice) have recently published “Diritto e Prassi del Commercio Internazionale” (CEDAM, 2010), vol. LIV of the “Trattato di Diritto Commerciale e di Diritto Pubblico dell’Economia“, one of the most authoritative Italian legal series, directed by Prof. Galgano.

A presentation has been kindly provided by the authors (the complete TOC is available on the publisher’s website):

The problems affecting cross-border transactions from a legal standpoint as well as arbitration have boomed in the last years. This book is the first systematic and accurate analysis of International Business Law updated to the most important reforms in the European Union such as: the Lisbon Treaty; Regulation Rome I on the law applicable to contractual obligations and Regulation Rome II on the law applicable to non contractual obligations. New competences for international trade negotiations have been attributed by Member States to the EU. Moreover, an entirely new choice of law regime has been introduced in the European Union affecting world international contracts and transnational arbitration. In addition,new instruments have been generated from the business side such as the new UCP 600 (the Uniform Customs and Practice for Documentary Credits, i.e. a set of rules on the issuance and use of letters of credit utilised by bankers and commercial parties in more than 175 countries in trade finance).

Beautifully written by two world reputed Authors in the field, the purpose of this work is to closely examine actors and sources of International Commercial Law with particular reference to contracts for the sale of goods and other forms of exports; licensing of intellectual property; and foreign direct investment.

Title: Diritto e Prassi del Commercio Internazionale, by Francesco Galgano and Fabrizio Marrella, CEDAM (series: Trattato di Diritto Commerciale e di Diritto Pubblico dell’Economia, vol. LIV), Padova, 2010, XLVIII-956 pages.

ISBN: 978-88-13-28228-8. Price: EUR 98.

European Commission Presents Proposal on Succession and Wills

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According to a press release by the DG Freedom, Security and Justice (IP/09/1508), the long-awaited Proposal for a Regulation on succession and wills, whose presentation, initially expected in last March, had been significantly delayed, was finally released on 14 October 2009 by the European Commission.

The official reference should be the following: Proposal for a Regulation of the European Parliament and of the Council on jurisdiction, applicable law, recognition and enforcement of decisions and authentic instruments in matters of succession and the creation of a European Certificate of Succession, COM(2009)154 fin. of 14 October 2009.

The text of the proposed regulation, along with the Commission’s explanatory memorandum, is not yet available on the institutional websites. Interested readers may have a look at the press release and at a basic set of Q&A (MEMO/09/447) prepared by the Commission. References to the preparatory studies, the 2005 Green Paper and the subsequent public consultation can be found in our previous post here.