Thursday, 27 February 2014

Juridical Advantage as a Factor in Forum Non Conveniens: the Need to Give it Back the Weight it Deserves

When a defendant asks a court that has jurisdiction over a given case to decline to exercise that jurisdiction and let a foreign court take the case instead,  the first court embarks on a forum non conveniens analysis to determine whether the alternative forum the defendant proposes is  a clearly more appropriate forum.  Among the factors to be considered is “juridical advantage” (“JA”), which is the advantage (s) for a litigant provided by difference(s) between the laws of the home jurisdiction and the laws of the foreign, alternative forum.   Recently, the Supreme Court of Canada stated that juridical advantage “should not weigh too heavily in the forum non conveniens analysis”: Breeden v.Black  [2012] 1 S.C.R. 666;  Van Breda v. Club Resorts  [2012] 1 S.C.R. 572.   Citing that ruling, the Ontario Superior Court of Justice, in Sullivan v. Four Seasons Hotels [2013] O.J. No. 3335  effectively dismissed a sizable claim to damages for wrongful dismissal without regard for the merits.  The court ruled that, although it had jurisdiction simpliciter over the case, the case should be brought instead in New York, an “at will” jurisdiction where the law does not recognize claims for damages in lieu of notice of termination.     This blog post will argue, using Sullivan as an example, that juridical advantage warrants substantial weight.

Let us begin by recalling the principle that a plaintiff’s choice of jurisdiction ought not be lightly disturbed.   The defendant must show that the proposed other forum is “clearly more appropriate”.  As the Supreme Court itself states, this test reflects the fact that “the normal state of affairs is that jurisdiction should be exercised once it is properly assumed”:   Van Breda, para. 108-109 and Breeden, para 23.

It is because of that same principle that a court cannot even address forum non conveniens on its own initiative.  If the court chosen by the plaintiff has jurisdiction it must exercise its jurisdiction -- it cannot decline jurisdiction  -- unless  a defendant has asked that the case be moved to another court, and has met the test for same: Van Breda, supra, at para 102. 

            A similar approach is taken in legislation.  The Quebec Civil Code, article 3135, states that a court having jurisdiction “may, exceptionally and on application by a party, decline jurisdiction if the [courts] of another country are in a better position to decide”.    The Court Jurisdiction and Proceedings Transfer Act (“CJPTA”) which has been enacted in British Columbia, Saskatchewan, and Nova Scotia, section 11(1) provides that the court may (not must) decline to exercise jurisdiction if “[a]fter considering the interests of the parties to the proceeding and the ends of justice”, it finds “the court of another state is a more appropriate forum in which to hear the case”      In other words, under these laws the court may decline jurisdiction only if some other forum is more appropriate, and only if a party requests it. 

Let us remember also that merely commencing a proceeding in a jurisdiction with favourable laws, by itself, does not constitute unacceptable forum shopping:  Wenngatz v 371431 Alta Ltd. [2013] B.C.J. No. 1049 (B.C.C.A.). 

 Now let us review the two reasons the Supreme Court offered for de-emphasizing juridical advantage.     First, the Court says that:

“as a practical matter, juridical advantage may not add very much to the jurisdictional analysis.  As the Court emphasized in Amchem Products Inc. v. British Columbia (Workers' Compensation Board), [1993] 1 S.C.R. 897,  'Any loss of advantage to the foreign plaintiff must be weighed as against the loss of advantage, if any, to the defendant in the foreign jurisdiction if the action is tried there rather than in the domestic forum'  (p. 933). ": Breeden, at para. 27

However, consider that a plaintiff’s “choice” to proceed in a given jurisdiction is meaningful only in cases where more than one jurisdiction may conceivably be appropriate, and that the plaintiff will naturally choose the most advantageous jurisdiction.     To de-emphasize juridical advantage is in effect to weaken the principle that a plaintiff’s choice of jurisdiction ought not be lightly disturbed, and thus to lower the threshold for declining jurisdiction in favour of a foreign jurisdiction.    

The Court’s other reason for de-emphasizing juridical advantage is that an emphasis on juridical advantage

“may be inconsistent with the principles of comity. In particular, a focus on juridical advantage may put too strong an emphasis on issues that may reflect only differences in legal tradition which are deserving of respect, or courts may be drawn too instinctively to view disadvantage as a sign of inferiority and favour their home jurisdiction” (Van Breda, para. 112). 

            It is hard to see how the decision of a court that has jurisdiction simpliciter over a case to exercise that jurisdiction could constitute disrespect for another forum.    And as a practical matter, it is unlikely in cases involving only or mainly private disputes between private parties, that the foreign forum would be so concerned about the decision that there would be a risk of damage to relations between the two jurisdictions.    Apart from cases where such a risk is real (e.g. where foreign governments are named as defendants) comity ought not play a significant role in the forum non conveniens analysis. 

            As well, frankly in some cases one might very reasonably regard the applicable laws of the foreign jurisdiction as less protective than the legal rights and protections a plaintiff enjoys in a given jurisdiction, often his/her own country.   This is not a jingoistic statement and does not mean one regards most or all of the laws of that foreign jurisdiction as inferior.   This is merely to recognize that a given jurisdiction’s laws, in respect of a specific subject matter, may be more modern than the corresponding laws of a particular other jurisdiction proposed as an alternative forum.    There are many different subject matters to which a cross border dispute may pertain, such as matters of contract, tort or human rights, and many different jurisdictions in the world.  In most if not all jurisdictions, including Canada, people will consider at least some of their own jurisdiction’s laws to be modern and just, while also believing that other laws of their own jurisdiction on other subject matter to be antiquated or worse, even compared to the laws of another jurisdiction.   Depriving a plaintiff of rights and protections bestowed by the laws of his country can hardly be justified by fears or speculation that a foreign country with laws less modern on a particular subject matter will find the court’s decision disrespectful.

The factors typically considered in the forum non conveniens analysis include the links between the case and the alternate forum, such as, in tort cases, where the tort was committed or, in contract cases, where the contract was made.  Other factors pertain to practical considerations such as the location of witnesses (whether requiring them to travel for the trial would be unduly burdensome), and whether trial in a given forum would entail proof of foreign law, and whether that might be difficult.  If a related proceeding has already been commenced in another forum, then avoidance of a multiplicity of proceedings is an important factor too.

Factors that are links to the alternative forum are relevant mainly to whether the proposed alternative forum would have jurisdiction simpliciter, i.e. whether it would be appropriate at all, and less relevant to whether it would be a more appropriate forum.    Only if that alternative forum does have jurisdiction does it make sense to begin comparing the relative merits of the original forum and the proposed alternative.  That comparison should focus on practical considerations, and juridical advantage, not on the closeness of ties to the case.  After all, the forum non conveniens analysis is done only if the initial court has determined it has a real and substantial connection to the case.    

In Sullivan, the juridical advantage of suing in Ontario, as opposed to New York, was that Ontario employment law entitles employees to reasonable notice of termination, and to compensation if reasonable notice is not given, whereas New York law does not.  The plaintiff’s claim was sizable: she had worked for the defendant hotel for ten years as director of sales.    In New York, only her claims for discrimination and certain “tortious claims” would survive.

The court in Sullivan addressed seven factors in its forum non conveniens analysis.  The court found that the first factor, being the location where the contract of employment was made, favoured Ontario.  The second factor, the law of the contract, did not favour either fora because the contract (drafted by the defendant) did not state the applicable law.  The court did not carry out a choice of law analysis to determine the applicable law.   

The third factor, being the location where the witnesses are located, favoured New York.   The court made this finding despite the fact that the cost of having those New York witnesses travel to Toronto (where the trial would be held) would likely be minor compared to the size of the wrongful dismissal claim.  The fourth factor, being the location where the bulk of the evidence would come from, also favoured New York.  However, there was no indication that there was significant physical evidence to transport, nor any other indication as to why in this case the fourth factor should be a factor separate from and in addition to, the third factor.   

The fifth factor, where the factual matters arose, also favoured New York.  The sixth factor, the residence or place of business of the parties, split evenly between the two fora.

The court gave little or weight at all to the seventh factor, juridical advantage.  The court cited the above quoted dicta from Breeden v. Black.    The court did not say it assigned any weight to this factor.  

Because there was only the Ontario proceeding, avoidance of a multiplicity of proceedings was not applicable.

In the result, the court found New York to be the clearly more appropriate forum, and stayed the Ontario action.  The claim was settled shortly thereafter.  The plaintiff lost her claim for damages for wrongful dismissal because the court gave her ability to “have her day in court” on that claim either no weight or little weight, while giving more weight to the factors of the location of the witnesses and other evidence. 

            It is true that the Supreme Court’s dicta about de-emphasizing JA did not make the outcome in Sullivan inevitable, for two reasons.   One is the Sullivan court arguably made an error in that New York was not “more clearly appropriate”.  Of the seven factors the court considered, only three favoured New York, while two favoured Ontario and the other two were inconclusive.   Two of the factors in favour of New York (location of witnesses and evidence) had only a limited impact in practical terms.   Also, the Supreme Court only de-emphasized juridical advantage; the Court did not eliminate it as a factor. 

            The other reason is that even if the case is moved to New York, the applicable substantive law is not necessarily the law of New York.   As the Supreme Court said in Van Breda, “In considering the question of juridical advantage, a court may be too quick to assume that the proper law naturally flows from the assumption of jurisdiction….Even if the jurisdictional analysis leads to the conclusion that courts in different states may properly entertain the action, the same substantive law may apply, at least in theory, wherever the case is heard.”  (Para. 111)   As a practical matter, however, if a case is moved to a foreign forum, the substantive law applied to the case will often be that of the foreign forum.

            Nonetheless, Sullivan illustrates how reducing the weight given to JA can result in a Canadian plaintiff being denied substantive legal rights she would otherwise enjoy as a resident of Canada.