Friday, 26 September 2014

Wang v Sun – Slam Dunk Forum non Conveniens Motion Fails

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.     



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