Thursday, 31 March 2016

Which prevails: Forum Selection Clause or Statute Confering Exclusive Jurisdiction? The Supreme Court of Canada may soon Decide

The Supreme Court of Canada will soon hear a case in which a forum selection clause in Facebook’s online, click-wrap terms of use collides with a statute mandating that certain actions must be heard in a certain court. The Supreme Court has granted leave to appeal the decision of the British Columbia Court of Appeal in Douez v Facebook, Inc. 2015 BCCA 279.  

Douez, alleging that Facebook shared her personal information with certain friends of hers on Facebook without her consent, sued under B.C.’s Privacy Act, R.S.B.C. 1996, ch. 373.  Section 4 says “Despite anything contained in another Act, an action under this Act must be heard and determined by the Supreme Court.”  Douez takes the position this meant her claim must be heard in that court, and nowhere else, including foreign courts.  
            However, the forum selection clause in the Facebook Terms of Use says:  “You will resolve any claim, cause of action or dispute (claim) you have with us arising out of or relating to this Statement or Facebook exclusively in a state or federal court located in Santa Clara County [California]”.  There was also a clause designating California law as the applicable law.*     A forum selection clause, if validly concluded, applicable to the cause of action, and otherwise binding on the parties, must be enforced unless the party opposing enforcement shows “strong cause” for the court to exercise its discretion to not enforce it:   Z.I. Pompey Industrie v. ECU-Line N.V.,2003SCC 27  (the “Pompey test”).

Facebook brought a motion to stay the action, based on the forum selection clause and on forum non conveniens. The plaintiff accepted that the forum selection clause was validly concluded and otherwise binding on her.  She argued that the Privacy Act overrides it, and that there is strong cause to not enforce it.  The motion court held that s. 4 of the Privacy Act means that only the B.C. Supreme Court -- not other B.C. courts nor foreign courts – can hear actions under the Privacy Act, and thus that Act overrides the forum selection clause.   The court then did its forum non conveniens analysis and held that California would not be an appropriate forum for a number of reasons, including that the “California court cannot determine that the Privacy Act does apply as those determinations are solely for [the B.C.] Court's jurisdiction.   The motion court dismissed the motion in a forty-nine page decision: 2014 BCSC 953.

The Court of Appeal, in a unanimous ruling written by the Chief Justice, reversed.   That Court held that s. 4 of the Privacy Act means that the B.C. Supreme Court “has jurisdiction to the exclusion only of other courts in B.C., not other courts worldwide” (para. 65).    Those other courts in B.C. are the Provincial Courts, which do not have the power to grant injunctive or other equitable relief that may be necessary to enforce a judgment.  It said the motion court’s interpretation fails to give effect to the principle of territoriality; in other words, British Columbia statutes apply only in British Columbia.  However, to interpret the Privacy Act this way is at odds with s. 12 of B.C.’s  Court Jurisdiction and Proceeding Transfer Act, (“CJPTA”)  S.B.C. ch. 28, which says “If there is a conflict or inconsistency between [the part of the CJPTA that confers power on a court to decline jurisdiction on forum non conveniens grounds] and another Act of British Columbia or of Canada that expressly (a) confers jurisdiction or territorial competence on a court, or (b) denies jurisdiction or territorial competence to a court, that other Act prevails.”   Section 12 would have no purpose if provisions that confer or deny jurisdiction apply only within the province.  The BCCA did not address the effect of Section 12.  

Ironically, in the same month that the B.C. Court of Appeal decided Douez, another panel of the same court, in Equustek Solutions v. Datalink, affirmed an injunction prohibiting Google from including certain things in results of searches done anywhere in the world.   The Supreme Court of Canada has granted leave to appeal that decision also; see my blogs dated July 9, 2015 and Feb. 18, 2016, and my piece in 2015 Year in Review, soon to be published by the International Section of the American Bar Association.  Possibly the two cases will be heard together.

The Court of Appeal did not need to consider the forum non conveniens issue because it determined that it must first determine whether the forum selection clause is enforceable, then (if necessary) do a separate forum non conveniens analysis. 

The most prominent issue in Douez for the Supreme Court would be when do statutes have extraterritorial effect (the principle of territoriality), at least in the context of conflicts with forum selection clauses.  If Equustek is heard at the same time, it will be interesting to see whether and how the power of courts to give orders with extraterritorial effect differs from the power of legislatures to legislate with extraterritorial effect. 

The case also raises a host of other issues of national interest including:
1.      If the effect of the forum selection clause would be that Douez could not pursue her claim, would that constitute “strong cause” for the purpose of the Pompey test?
2.      Should the Pompey test be applied to forum selection clauses that have not been negotiated, e.g. those in click-wrap agreements?
3.      In the Pompey test, must there be evidence of the law of the designated forum as to whether the courts of that forum would be able to take jurisdiction over the case?   The Court of Appeal says the party that seeks enforcement of the clause need not adduce such evidence, but the party that opposes enforcement may, to show strong cause, adduce evidence showing the courts of that forum lack jurisdiction.

Lawyers in provinces that have a CJPTA with a section similar to s. 12 quoted above will be interested to see what the Supreme Court says about the effect of such provisions.   

* It reads: “The laws of the State of California will govern this Statement, as well as any claim that might arise between you and us, without regard to conflict of law provisions.”


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