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If you are defending a
civil claim with ties to Asia, getting the court to decline jurisdiction in
favour of a court in Asia will often seem like a great way to dispose of a case
at an early stage. It must have seemed
that way, initially, for the defendant in the recent B.C. case of Wang v. Sun.
Wang sued Sun for commission on a sale of land located in the People’s
Republic of China (“PRC”). Both Wang and Sun are residents of the PRC. Sun, the
vendor, had already begun a law suit in the PRC against the purchaser, Coastal,
for failure to close. The purchaser
alleged the contract had been frustrated, thereby putting in issue its enforceability. The
governing law for both the sale contract and commission contract is Chinese
law. As one might expect, Sun asked the
B.C. court to decline jurisdiction in favour of the PRC court, based on forum non conveniens (he did not deny
the court has jurisdiction, because he is a resident of B.C. as well as of the PRC). B.C.’s
Court Jurisdiction and Proceedings
Transfer Act (“CJPTA”) codifies the criteria for forum non conveniens, but many are the same as the common law
criteria, e.g. the convenience and expense for the parties and witnesses, the
applicable law, avoiding a multiplicity of proceedings and avoiding conflicting
decisions. The CJPTA adds another factor: the
enforcement of an eventual judgment, which factor weighed in favour of the
PRC. One might think Sun’s motion is
pretty close to a “slam dunk”. In fact,
the B.C. court dismissed it and retained jurisdiction. How could this happen?
The court began by
stressing that the plaintiff has a prima
facie right to proceed in his or her chosen forum. The
onus is on the one who raises forum non
conveniens to show that a.) there is another suitable forum, b.) that forum
has a real and substantial connection to the case, and c.) that forum is “clearly
more appropriate”, that is, the forum is in a better position to dispose fairly
and efficiently of the litigation. This,
despite the fact the CJPTA test for declining jurisdiction – “[that the foreign
court be] “a more appropriate forum” – is lower than the test in the common
law: “[that the foreign court be] clearly
more appropriate”.
The court dismissed Sun’s
argument that if the commission claim was tried in B.C., i.e. was tried separately
from the contract claim, there would be a risk of conflicting court
decisions. The court ruled that based
on the commission contract’s terms, actually
the commission claim would not turn on whether the sale contract was valid, or
whether the sale closed. Accordingly the
outcome of the Chinese proceeding would not actually affect the commission claim.
If the parties and
witnesses in the two proceedings closely overlap, as one might expect, that
would be itself a factor supporting a decision to decline jurisdiction. But Wang’s
case for having the action tried in B.C. was strengthened by the fact that he
had, perhaps partly in anticipation of Sun’s motion, pleaded that Sun had used
a partial payment of the purchase money to buy property in B.C. (allegedly a breach
of trust and a fraudulent conveyance both occurring in B.C.) thereby tying his case closer to
B.C.
As for the matter of
foreign law, although the court accepted that Chinese law is the governing law
for the commission contract, this factor did not weigh in favour of the PRC because
there was no evidence that the law of China is different from the law of B.C. Although the court did not say so, it was
presumably relying on the principle of the presumption of similarity, that is, a
court will presume the foreign law is the same as the local law unless there is
evidence to the contrary. It may be
that Sun assumed that the B.C. court would surmise the Chinese law is
different, because its origins and the culture in which that law developed are so
self-evidently different from that of B.C. law. Apparently Sun neglected to prove that the
applicable Chinese law is different, which reminds us that the presumption of
similarity can be a pitfall for the unwary.
As well, if he had shown a
difference advantageous to him, that would have been another factor in favour
of choosing the PRC.
The court also stated there
was no evidence the B.C. Court would have difficulty interpreting or applying
Chinese law. This statement is hard to
fathom. As Sun pointed out, interpreters and experts on Chinese law would be
needed, and the experts would likely have to travel from the PRC.
In the end, the unlikely
facts that the commission claim would not depend on the enforceability of the
purchase contract, and that Sun and Wang are residents of both B.C. and the PRC,
doomed Sun’s motion to failure. Not a
slam dunk after all.
