Conflicts – Between Domestic and Indigenous Legal Systems?
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
Tag Archive for: Ontario
New International Commercial Arbitration Statute for Ontario
/in /by Stephen PitelOntario has enacted and brought into force the International Commercial Arbitration Act, 2017, SO 2017, c 2, Sched 5 (available here) to replace its previous statute on international commercial arbitration. The central feature of the new statute is that it provides that BOTH the 1958 New York Convention and the 1985 Model Law have the force of law in Ontario. Previously, when Ontario had given the Model Law the force of law in Ontario it had repealed its statute that had given the New York Convention the force of law in Ontario. This made Ontario an outlier within Canada since the New York Convention has the force of law in all other provinces (as does the Model Law).
The previous statute did not address the issue of the limitation period for enforcing a foreign award. The new statute addresses this in section 10, adopting a general 10 year period from the date of the award (subject to some exceptions). Section 8 deals with the consolidation of arbitrations and section 11 deals with appeals from arbitral decisions on jurisdiction.
Supreme Court of Canada Allows Courts to Sit Extraterritorially
/in /by Stephen PitelIn Endean v British Columbia, 2016 SCC 42 (available here) the Supreme Court of Canada has held that “In pan-national class action proceedings over which the superior court has subject-matter and personal jurisdiction, a judge of that court has the discretion to hold a hearing outside his or her territory in conjunction with other judges managing related class actions, provided that the judge will not have to resort to the court’s coercive powers in order to convene or conduct the hearing and the hearing is not contrary to the law of the place in which it will be held” (quotation from the court’s summary/headnote).
The qualifications on the holding are important, since some of the earlier lower court decisions had been more expansive in asserting the inherent power of the superior court to sit outside the province (for example beyond the class proceedings context). I am concerned about any extraterritorial hearings that are not expressly authorized by specific statutory provisions, but I do appreciate the utility (from an efficiency perspective) of the court’s conclusion in the particular context of this dispute. It remains to be seen if attempts will be made to broaden this holding to other contexts.
The court has also held that “A video link between the out-of-province courtroom where the hearing takes place and a courtroom in the judge’s home province is not a condition for a judge to be able to sit outside his or her home province. Neither the [class proceeding statutes] nor the inherent jurisdiction of the court imposes such a requirement. The open court principle is not violated when a superior court judge exercises his or her discretion to sit outside his or her home province without a video link to the home jurisdiction” (quotation from the court’s summary/headnote).
This aspect of the decision concerns me, since my view is that the open court principle requires that members of the Ontario public and the media can see the proceedings of an Ontario court in an Ontario courtroom. It is a hollow claim that they can fly to another province to watch them there. The separate concurring decision appreciates this aspect of the case more than the majority decision, though it too stops short of requiring a video link. In its view, “While the court should not presumptively order that a video link back to the home provinces be set up where the court sits extraprovincially, members of the public, the media, or counsel can request that a video link or other means be used to enhance the accessibility of the hearing. If such a request is made, or the judge considers it appropriate, a video link or other means to enhance accessibility should be ordered, subject to any countervailing considerations” (quotation from the court’s summary/headnote).
Supreme Court of Canada Evolves Test for Taking Jurisdiction
/in /by Stephen PitelThe Supreme Court of Canada has released its decision in Lapointe Rosenstein Marchand Melancon LLP v Cassels Brock & Blackwell LLP, 2016 SCC 30 (available here). The decision builds on the court’s foundational decision in Club Resorts Ltd v Van Breda, 2012 SCC 17, which altered the law on taking jurisdiction in cases not involving presence in the forum or submission to the forum.
In Club Resorts the court held that to take jurisdiction in service ex juris cases the plaintiff had to establish a presumptive connecting factor (PCF) and it identified four non-exhaustive PCFs for tort claims. The fourth of these was that a contract connected with the dispute was made in the forum. This was viewed as unusual: there was very little precedential support for considering such a connection sufficient to ground jurisdiction in tort cases. Commentators expressed concern about the weakness of the connection, based as it was on the place of making a contract, and about the lack of a clear test for determining whether such a contract was sufficiently connected to the tort claim. Both of these issues were squarely raised in Lapointe Rosenstein.
The majority (6-1) agreed with the motions judge and the Court of Appeal for Ontario that this PCF was established on the facts of this case. Justice Cote dissented, concluding both that the contract was not made in Ontario and that it was not sufficiently connected with the tort claim.
The facts are somewhat complex. After the 2008 financial crisis the Canadian government bailed out General Motors of Canada Ltd (GM Canada). In return for this financial support, GM Canada agreed to close dealerships (ultimately over 200) across Canada. Each dealership being closed was compensated under a Wind-Down Agreement (WDA) between GM Canada and the dealer. The WDA was governed by Ontario law and contained an exclusive jurisdiction clause for Ontario. The WDA required each dealer to obtain independent legal advice (ILA) about the consequences of signing the WDA.
Some time after the dealerships closed over 200 dealers brought a class action in Ontario against GM Canada disputing the legality of the WDAs. They also sued Cassels Brock & Blackwell, the lawyers for the Canadian Automobile Dealers Association, for negligent advice to the dealers. In turn, Cassels Brock brought third-party claims against 150 law firms which had provided the ILA to the dealers. Many of the law firms, including those in Quebec, challenged the court’s jurisdiction over the third-party claim. Cassels Brock argued that the WDAs were contracts made in Ontario and that the WDAs were connected with the tort claim Cassels Brock was advancing in the third-party claim (which was for negligence in providing the ILA).
The court had the chance to adjust or move away from this PCF, given the criticism which it had attracted (see para 88). But it affirmed it. Worse, the Court of Appeal for Ontario had at least expressed a willingness to be flexible in determining the place of making of the contract (which in part got around the central weakness in this PCF). In contrast the majority stresses the “traditional rules of contract formation” (para 31). Insisting on the traditional rules is what gives rise to the core difference between the majority (Ontario: paras 42-43) and the dissent (Quebec: paras 74-80) on where the WDAs were made. Those rules mean the dissent is right to point out (para 81) that related connections between the WDAs and Ontario (such as the applicable law and the jurisdiction clause: see para 48) do not, strictly speaking, have anything to do with where the contract is made and so must be ignored on that issue. The more robust approach of the Court of Appeal allows more to be assessed and thus for an easier (more consensual) conclusion that the WDAs were “made” in Ontario. There is reason to be quite concerned that the Supreme Court of Canada’s approach will lead to more disputes about where a particular contract has been made, focusing on technical rules, which is unwelcome.
The court also splits on whether the contract, if made in Ontario, is connected to the tort claim. I am inclined to think the majority gets it right when it finds that it is. Note, though, that I think it is wrong to claim, as the majority does (para 47 last sentence), that somehow the law firms were brought “within the scope of the contractual relationship” by providing the advice about it. The best part of the dissent is the demolition of that claim (para 86). The real problem is that a close enough connection should be available to be found even in the absence of bringing the defendant “within” that contractual relationship. This PCF, if the misguided narrow focus on place of contracting could be overcome, can be broader than that and thus broader than the dissent would make it (para 87).
Here a local Quebec law firm is asked by its local client to provide it with advice about the client’s entering into the WDA. The terms of the WDA expressly say that to so enter into it the client has to get that advice. The WDA is clearly very connected to Ontario. It seems to me right to say that the WDA is a contract related to any subsequent negligent advice claim the client would advance against the firm. The WDA is not just context, bearing peripherally on the advice. The advice entirely centers on the WDA and whether the client should enter into it. The WDA is what the advice is about. The majority gets all of this right in para 47 except for its last sentence. Of the 11 judges who addressed this issue in the three levels of court, only Justice Cote finds the connection between the contract and the tort claim to be insufficient.
So I think the decision is right but the majority errs by stressing the traditional rules of contract formation for assessing the place of making and by using the “within the scope of the contractual relationship” test for the requisite connection.
Some smaller points:
1. I am somewhat puzzled by the idea (para 31) that parties would expressly think about how they would go about making their contracts so as to have them made in a particular place so as to get to subsequently take advantage of this PCF. Do parties think like that? Did they before this PCF was created? I suppose it is easier to say they now do think like that since they are being told to do so by the court.
2. For future debates about where contracts are made, I worry about some of the court’s language. One example is para 40’s reference to where the acceptance “took place”. Is that compatible with the postal acceptance rule which looks, for some contracts, at the place of posting rather than place of receipt? Would we say the acceptance in such a case “took place” at the place of posting? See in contrast para 73.
3. Justice Cote’s dissent could be seen as a covert attempt to eliminate this PCF. She insists on a very tight connection between the contract and the tort claim. She refers to circumstances in which “the defendant’s breach of contract and his tort are indissociable” (para 95; emphasis in original) and states that this PCF “only provides jurisdiction over claims where the defendant’s liability in tort flows immediately from the defendant’s own contractual obligations” (para. 90). In such cases, this PCF (tied to the place of contracting) might safely be abolished and replaced with other, better PCFs relating to tort and contract claims (especially in light of para 99 of Club Resorts). It would not be needed for the court to be able to take jurisdiction, as it was on the facts of Club Resorts and Lapointe Rosenstein. I am sympathetic to a desire to eliminate this PCF, but I think that result needed to be confronted directly rather than indirectly. In the wake of the majority decision, it is now unlikely to happen at all.
Ontario Court Enforces American Judgments Against Iran
/in /by Stephen PitelUnder the State Immunity Act, foreign states are generally immune from being sued in Canada. This includes being sued on a foreign judgment. However, in 2012 Canada enacted legislation to give victims of terrorism the ability to sue a foreign state that sponsored the terrorism. It also made it easier for foreign judgments against such a state to be enforced in Canada.
In Tracy v The Iranian Ministry of Information and Security, 2016 ONSC 3759 (released June 9, 2016; likely to be posted in the week of June 13, 2016, in CanLII) the Ontario Superior Court of Justice had to consider these legislative reforms and how they applied to a series of American judgments rendered against Iran in favour of American victims of terrorist acts which Iran was found to have sponsored. The court held that Iran was not immune from the enforcement proceedings and that accordingly the American judgments were enforceable against certain assets of Iran in Ontario.
The decision is reasonably detailed. It involves interpretation of the State Immunity Act and the Justice for Victims of Terrorism Act. It also considers issues relating to the limitation period and the enforcement of punitive damages awards (in this case, in the hundreds of millions of dollars). Not all of the analysis resonates as convincing and there is considerable scope for a possible appeal. For example, Iran’s argument that the loss or damage suffered by the victim had to have been, on the language of s 4(1) of the JVTA, suffered after January 1, 1985, did not prevent the enforcement of American decisions in respect of acts of terror which happened before that date because, the court held, the victims continued to suffer harm on an ongoing basis. This seems vulnerable to challenge. In addition, the court’s reasoning as to why the enormous punitive damages awards were not contrary to public policy is extremely brief.
However, on any appeal, Iran does have a significant procedural problem to overcome. It did not defend the enforcement actions when they were initially brought in Ontario. All of the immunity arguments were canvassed by the court as part of Iran’s motion to have the resulting default judgments set aside, on the issue of whether Iran might have a viable defence on the merits. But at no point did Iran offer any explanation for the initial failure to defend. While not conclusive, this weighs against setting the judgments aside even if Iran can show merit to its position on immunity.
The timing of the court’s decision against Iran could pose challenges for the current Canadian government, which is currently working to re-engage with Iran after the previous government cut ties in 2012 (see news story here). In addition, a Montreal-based professor has recently been jailed in Iran and this has caused considerable concern in Canada (see news story here).
No Independent Jurisdiction Requirement for Proceeding to Enforce a Foreign Judgment in Canada
/in /by Stephen PitelThe Supreme Court of Canada has released its decision in Chevron Corp v Yaiguaje (available here). The issue before the court was whether the Ontario courts have jurisdiction to recognize and enforce an Ecuadorian judgment (for over $US 18 billion) where the foreign judgment debtor Chevron Corporation (“Chevron”) claims to have no connection with the province, whether through assets or otherwise. On one view, because the process for enforcing a foreign judgment is to commence a new domestic proceeding and thereby sue on the foreign judgment, the enforcement proceeding must have its own independent analysis of jurisdiction. Put another way, there cannot be a proceeding in respect of which the court does not have to have jurisdiction. On a different view, because the analysis of the claim on the foreign judgment considers, among other things, the sufficiency of the rendering court’s jurisdiction (Chevron defended on the merits in Ecuador), that is the only required analysis of jurisdiction and there is no need for a separate consideration of the enforcing court’s jurisdiction. The Supreme Court of Canada, agreeing with the Court of Appeal for Ontario, has held that the latter view is correct.
In summarizing its conclusion (para 3) the court stated “In an action to recognize and enforce a foreign judgment where the foreign court validly assumed jurisdiction, there is no need to prove that a real and substantial connection exists between the enforcing forum and either the judgment debtor or the dispute. It makes little sense to compel such a connection when, owing to the nature of the action itself, it will frequently be lacking. Nor is it necessary, in order for the action to proceed, that the foreign debtor contemporaneously possess assets in the enforcing forum. Jurisdiction to recognize and enforce a foreign judgment within Ontario exists by virtue of the debtor being served on the basis of the outstanding debt resulting from the judgment.”
While the court does not say that NO jurisdictional basis is required, it states that the basis is found simply and wholly in the defendant being served with process (see para 27). This runs counter to the court’s foundational decision in Morguard Investments Ltd v De Savoye, [1990] 3 SCR 1077 which separated the issue of service of process – a pure procedural requirement – from the issue of jurisdiction. To say the service itself founds jurisdiction is arguably to have no jurisdictional requirement at all.
Interestingly, a recent paper (subsequent to the argument before the court) by Professor Linda Silberman and Research Fellow Aaron Simowitz of New York University (available here) considers the same issue in American law and concludes that the dominant view of courts there remains that an action to enforce a foreign judgment requires a “jurisdictional nexus” with the enforcing forum. They note that only a minority of countries allow enforcement of a foreign judgment without any jurisdictional threshold for the enforcement proceedings. They argue that the New York decisions which subsequently are relied on by the Supreme Court of Canada (para 61) are the outliers.
Had the Supreme Court of Canada required a showing of jurisdiction in respect of the enforcement proceeding, it would have had to address how that requirement would be met. Of course, in most cases it would be easily met by the defendant having assets in the jurisdiction. The plaintiff would not have to prove that such assets were present: a good arguable case to that effect would ground jurisdiction. Evidence that assets might, in the future, be brought into the jurisdiction could also suffice.
While the court is correct to note that the considerations in defending the underlying substantive claims are different from those involved in defending enforcement proceedings (para 48), the latter nonetheless allow reasonable scope for defences to be raised, such as fraud, denial of natural justice or contravention of public policy. With no threshold jurisdiction requirement, judgment debtor defendants will now be required to advance and establish those defences in a forum that may have no connection at all with them or the judgment.
The enforcement proceedings were also brought against Chevron Canada, an indirect subsidiary of Chevron that does have a presence in Ontario, although it is not a named defendant in the Ecuadorian judgment. The Supreme Court of Canada held that the Ontario court had jurisdiction over Chevron Canada based on its presence, with no need to consider any other possible basis for jurisdiction. The decision is thus important for confirming the ongoing validity of presence-based jurisdiction (see paras 81-87).
On a pragmatic level, eliminating an analysis of the enforcing court’s jurisdiction may simplify the overall analysis, but hardly by much. The court notes (para 77) that ” Establishing jurisdiction merely means that the alleged debt merits the assistance and attention of the Ontario courts. Once the parties move past the jurisdictional phase, it may still be open to the defendant to argue any or all of the following, whether by way of preliminary motions or at trial: that the proper use of Ontario judicial resources justifies a stay under the circumstances; that the Ontario courts should decline to exercise jurisdiction on the basis of forum non conveniens; that any one of the available defences to recognition and enforcement (i.e. fraud, denial of natural justice, or public policy) should be accepted in the circumstances; or that a motion under either Rule 20 (summary judgment) or Rule 21 (determination of an issue before trial) of the Rules should be granted.” And in respect of Chevron Canada (para 95), the “conclusion that the Ontario courts have jurisdiction in this case should not be understood to prejudice future arguments with respect to the distinct corporate personalities of Chevron and Chevron Canada. [We] take no position on whether Chevron Canada can properly be considered a judgment-debtor to the Ecuadorian judgment. Similarly, should the judgment be recognized and enforced against Chevron, it does not automatically follow that Chevron Canada’s shares or assets will be available to satisfy Chevron’s debt.”
A Court’s Inherent Jurisdiction to Sit Outside its Home Territory
/1 Comment/in /by Stephen PitelAnother step in the evolution of the common law on this issue has been taken by the Court of Appeal for Ontario in Parsons v Ontario, 2015 ONCA 158 (available here). The court disagrees in some respects with the earlier decision, on the same issue, of the British Columbia Court of Appeal in Endean v British Columbia, 2014 BCCA 61 (available here) (discussed by me over a year ago here). It may be that in light of this conflict the Supreme Court of Canada will end up hearing appeals of either or both decisions.
People infected with the Hepatitis C virus by the Canadian blood supply between 1986 and 1990 initiated class actions in each of Ontario, Quebec and British Columbia. These actions were settled under an agreement which provided for ongoing administration of the compensation process by a designated judge in each of the three provinces. In 2012 the issue arose as to whether the period for advancing a claim to compensation could be extended. Rather than having three separate motions in each of the provinces before each judge to address that issue, counsel for the class proposed a single hearing before the three judges, to take place in Alberta where all of them would happen to be on other judicial business. In the face of objections to that process, motions were brought in each province to determine whether such an approach was possible. The initial decision in each province was that a court could sit outside its home province. The Quebec decision was not appealed but the other two were.
The Court of Appeal for Ontario has now released its decision on the appeal, and the three judges are quite divided. They divide even over a preliminary issue, namely whether the order made below is “final” or “interlocutory” for purposes of the appeal route. If it is the former, the appeal is properly brought to the Court of Appeal, but not if it is the latter (in which case the appeal would be to the Divisional Court). The judges split 2-1 in deciding the order is final.
Turning to the merits, the judges remain divided. Justice LaForme upholds the order below. He concludes the court has the inherent jurisdiction to sit outside Ontario and that it can do so without violating the open court principle, even in the absence of a video link to an Ontario courtroom (for spectators and perhaps some lawyers). Justice Lauwers agrees that the court has the inherent jurisdiction to sit outside Ontario, but that doing so without a video link back to Ontario would be a violation of the open court principle. He reverses the order below, but only to the extent that he insists on such a link. Justice Juriansz agrees with the result reached by Justice Lauwers but his reasoning is quite different. He relies on Ontario’s Rules of Civil Procedure which allow for a motion to be heard by video-conference. In his view, the proposed hearing outside of Ontario falls within these rules if there is a video link back to an Ontario courtroom. No resort to inherent jurisdiction is required and the open court principle is not impaired.
I remain somewhat skeptical that the court has the jurisdiction to sit outside the province. I would rather see such a process addressed by statute rather than through invocation of the court’s inherent powers. I am also concerned that Justice Juriansz’s approach is something of a fiction, using the video-conference rules to in essence pretend that the hearing is actually being held in the courtroom to which the video feed is transmitted. I consider such a video link essential, but for me it goes to the question of the open court principle and not to jurisdiction.
A side note: this is my first post in many months. My sense, and that of many of my colleagues in Canada, is that we have had a dearth of interesting developments in private international law over the past year.
Can a Court Sit Outside its Territorial Jurisdiction?
/2 Comments/in /by Stephen PitelIn Parsons v The Canadian Red Cross Society, 2013 ONSC 3053 (available here), Winkler CJ (of the Court of Appeal, here sitting down in the Superior Court of Justice) has held that a judge of the SCJ can sit as such outside Ontario. No authority, it seems, requires the SCJ to sit only in Ontario.
The decision seems to me, at least on an initial reading, largely based on pragmatism. It seems efficient to so allow and so the court does. But I have some preliminary sense that there are some larger concerns here that are not being fully thought through. The place where a court sits seems awfully fundamental to its existence and authority as a court. In addition, the brushing aside of concerns about the open court principle (see paras 48-50) seems too minimal.
Part of the decision is based on Morguard and the federal nature of Canada (see para 25), so maybe the judge could not so sit outside Canada?
For news coverage of the decision, see this story.
Could this idea get pushed beyond the fairly narrow bounds of this case? Say a case is started in Ontario and the defendant seeks a stay in favour of Alberta because of all the factual connections to that province. Could the plaintiff, if otherwise likely to see the proceedings in Ontario get stayed, ask the court to have one of its judges hear the case in Alberta, sitting as a judge of the Ontario court? That way the plaintiff gets an Ontario judgment and the defendant gets the case heard in Alberta…
Recent Canadian Conflicts Scholarship
/in /by Stephen PitelThe following articles about conflict of laws in Canada were published over the past year or so:
Brandon Kain, “Solicitor-Client Privilege and the Conflict of Laws” (2012) 90 Can Bar Rev 243-99
Christina Porretta, “Assessing Tort Damages in the Conflict of Laws: Loci, Fori, Illogical” (2012) 91 Can Bar Rev 97-134
Matthew E Castel, “Anti-Foreign Suit Injunctions in Common Law Canada and Quebec Revisited” (2012) 40 Adv Q 195-212
Nicholas Pengelley, “‘We all have too much Invested to Stop’: Enforcing Chevron in Canada” (2012) 40 Adv Q 213-32
These are in addition to the several articles, mentioned in an earlier post, about the Supreme Court of Canada’s decision in Club Resorts.
Electronic access to these articles depends on the nature of the subscriptions. Some journals are available immediately through aggregate providers like HeinOnline while others delay access for a period of months or years.
Ontario Court Refuses to Hear Chevron/Ecuador Enforcement Action
/in /by Stephen PitelAs many of you know, in 2011 several residents of Ecuador won a judgment in the courts of that country against Chevron Corporation for some $18 billion. In 2012 the successful plaintiffs sued Chevron Corporation and Chevron Canada Ltd. in Ontario, seeking to have the Ecuadorian judgment enforced there. The defendants brought a motion challenging the Ontario court’s jurisdiction to hear the action. The Ontario Superior Court of Justice has now released its decision, siding with the defendants. The decision has not yet been posted on CanLII but is available here. The plaintiffs’ lawyer has publicly indicated that his clients will appeal.
Key aspects of the decision have been summarized by Roger Alford on the Opinio Juris website (here).