Monday, 7 December 2015

New Hague Conference Website

         The Hague Conference on Private International Law has a new website as of Dec. 3.    Check it out at   It has a more modern appearance and is designed for access on smart phones and tablets as well as on other computers.  Congratulations to the Conference and those who designed and built the new site!

       In other Hague Conference news, Kazakhstan has joined the Hague Service Convention.  That brings to sixty nine the total number of contracting states. Five others have joined in the past five years:  Malta, Montenegro, Armenia, Morocco and Serbia. 

Monday, 30 November 2015

Forum Non Conveniens and Corrupt Foreign Courts

             The recent B.C. Supreme Court decision in Garcia v. Tahoe Resources 2015 BCSC 2045 brings into question the adequacy of the forum non conveniens analysis where the foreign jurisdiction has a disreputable justice system.    Does the analysis give sufficient weight to this factor?   The plaintiffs in Garcia would go even further, saying if they cannot be assured of a fair and impartial trial in the foreign jurisdiction, that ought to be dispositive of the forum non conveniens analysis.

Forum non conveniens analysis is a comparison of the jurisdiction where the proceeding has been commenced with a certain foreign jurisdiction the defendant alleges is clearly a more appropriate one in which to litigate the case, based on a review of a range of factors.  However, the factors usually considered by Canadian courts do not even mention the need to avoid corrupt legal systems.  This concern, if it is included at all, is subsumed in the factor of “ juridical advantage/disadvantage”, which factor the Supreme Court of Canada has said is to be given little weight   (Breeden v. Black [2012] 1 S.C.R. 666) or under the catch-all factor, “interests of justice”.    It comes as no surprise then when a court doing a forum non conveniens analysis gives insufficient weight to concerns about corruption in foreign courts.

            In Garcia, seven Guatemalan residents sued Tahoe in B.C. for negligence and battery arising out of an incident occurring outside a mine in Guatemala, the operator of which is a wholly-owned subsidiary of Tahoe.  The plaintiffs had gathered in front of the mine, and were allegedly shot and injured by the operator’s security personnel.            Tahoe moved for a stay, arguing that based on forum non conveniens principles Guatemala was a more appropriate jurisdiction in which to litigate this case.*   Although Tahoe is incorporated in B.C. , several factors  pointed to Guatemala, and away from B.C., including the facts that the plaintiffs are all Guatemalan residents, the event that forms the subject matter of the case occurred in Guatemala, much of the evidence is located in Guatemala, and the fact that Tahoe’s offices and all employees are in Reno, Nevada, not B.C.  (The mine’s general manager reported to the Reno office, not to anyone in B.C.)   The main issue was whether the plaintiffs’ evidence of serious systemic barriers to justice in the Guatemalan justice system would outweigh those facts. 

            The plaintiffs led expert evidence that, among other things, powerful actors may enjoy impunity, judges lack independence, and corruption and influence peddling is a problem within the judiciary.  They claimed the Guatemalan justice system often does not provide a remedy, but they did not assert that all trials there are unfair or that all judges there are corrupt.   The motion court stated however, “the question is not whether Canada’s legal system is fairer and more efficient than Guatemala’s legal system.  It is whether the foreign legal system is capable of providing justice…. If the forum non conveniens analysis points to a clearly more appropriate forum, then the plaintiff must take the forum as he finds it even if it is in certain respects less advantageous to him unless he can establish that substantial justice cannot be done in the appropriate forum.”  (para. 64)    The Court found that Guatemala has a “functioning justice system” (para. 42), found Guatemala to be clearly the more appropriate forum (para. 106) and stayed the B.C. proceedings.      

With respect, this test sets the bar far too low.  A legal system that delivers justice in only five out of ten cases is clearly a seriously dysfunctional system.  Yet no one could say that such a system is not “capable of providing justice” or that “substantial justice cannot be done” because even in such a system at least some litigants do get justice.   The same can be said for a system providing justice in even just one out of ten cases.

            The test used in Garcia, and the low weight the Court gave to concerns about getting a fair trial, stands in sharp contrast to the approach taken in Norex Petroleum v. Ingosstrakh 2008 ABQB 442, which involved a motion for a stay brought by a Russian defendant.  The central issue of the forum non conveniens analysis there related to juridical advantage, specifically about the allegation that the Russian courts, specifically the Arbitrazh courts, were corrupt.  Justice C. S. Brooker (at para. 102-116) examined expert evidence in depth and concluded that although the corruption was not as pervasive as Norex contended, there was a real risk that Norex could be unable to obtain justice from the Russian courts. “It is unreasonable to expect that Norex should be obliged to court that risk. That risk does not exist in the Alberta court…” (para. 116).   This difference tipped the balance in favour of Alberta over Russia, and clearly carried considerable weight:    “In my view, it is of fundamental importance that litigants be assured that their dispute will be adjudicated in an honest, fair and unbiased tribunal. No litigant should have to run the risk that the court hearing the dispute might be corrupt.”  (para. 127). 

            In the United Kingdom, the Judicial Committee of the Privy Council, in AK Investment CJSC v. Kyrgyz Republic Tel Limited [2011] UKPC 7, took a similar approach in deciding whether that case ought to be moved to the Kyrgyz courts.  The plaintiff opposed this, relying on evidence of corruption in those courts.   The lower court had framed the question as whether litigants “would” not obtain justice in the foreign court, a test similar to the one used in Garcia.  The Judicial Committee ruled that this was an error, and that the correct question was “whether there was a risk that [the litigants] would not obtain justice”, which is similar to the test in Norex.   

            Garcia is reminiscent of the OCA decision in Oakwell v. Enernorth [2006] O.J. #2289, which made clear that a very strict standard of evidence would apply to claims of corruption in foreign courts. There, judgment debtors opposing a proceeding to enforce a Singapore judgment in Ontario led uncontroverted evidence of Singapore’s government’s interference in trials, but not in that particular case and, as the OCA pointed out,  only in political cases, not commercial ones (Oakwell was a commercial case).  This distinction ought not to have mattered in light of evidence that Oakwell had close ties to the government of Singapore.  Also, in a motion for leave to present fresh evidence at the appeal, Enernorth led evidence of a litigant in another case in Singapore who had been charged with criminal contempt after arguing that the Singapore judicial system lacked independence and fairness.   The Ontario Court of Appeal ruled that evidence of corruption in political cases would not suffice in commercial cases, there should be evidence of corruption in the very case before the court, and a party asserting bias must prove actual bias, not merely a reasonable apprehension of bias.   The Court allowed enforcement of the Singapore judgment.

Garcia’s facts are quite similar to those of Choc v Hudbay 2013 ONSC 1414, an Ontario case recently in the news.  There too, the plaintiffs are Guatemalan residents suing in Canada a company that wholly owns a mining operation in Guatemala, for damages arising out of injuries inflicted by security personnel at the mine.   In both Hudbay and Garcia the plaintiffs claim that the Canadian defendant owed them a duty of care to take certain steps to prevent the violence perpetrated by the security personnel.   In Hudbay the defendants moved not to stay the action but to strike out that claim, arguing it does not disclose a cause of action in Canadian law.  The Court declined to do so.   It seems likely that Hudbay will now consider moving for a stay in light of the ruling in Garcia. 

            In the end, on the particular facts of Garcia the decision to stay the B.C. proceeding and move the case to Guatemala was likely justified, insofar as the evidence of corruption was not very strong, and other factors pointed strongly to Guatemala while few pointed to B.C.   It is the test used in Garcia that needs to be revisited. 


* The test a defendant in British Columbia must meet is a little lower than in Ontario, although the factors are basically the same.  In B.C., the Court Jurisdiction and Proceedings Transfer Act   S.B.C. 2003, c. 28 (“CJPTA”) says defendant must show the foreign jurisdiction to be “more appropriate” than the domestic one the plaintiff has chosen.  By contrast, cases such as Breeden v. Black 2012 SCC 19  and Van Breda 2012 SCC 17 (para. 108) say the defendant must show the foreign jurisdiction is “clearly more appropriate”.    


Wednesday, 28 October 2015

Hague Conference Moves Forward on Enforcement of Foreign Judgments

           At the Fall Meeting of the International Law Section of the American Bar Association, last week in Montreal,  there was word that the Hague Conference on Private International Law  is resuming work on the recognition and enforcement of foreign judgments.  This work will be treated as a priority and a special commission may take on this work.    Apparently the United States has been pushing for more progress on judgments.   This is encouraging.  The world needs a treaty for judgments for all the same reasons that support the widely adopted New York Arbitration Convention on the Recognition and Enforcement of Foreign Arbitral Awards.  The existing judgments treaty, the 1971 Convention on the recognition and enforcement of foreign judgments in Civil and Commercial Matters, was never signed by more than five countries and was never signed by the United States, European Union, Russia, the People’s Republic of China or other major states.  There is to be a report on progress to the Conference Council in 2016. 

            A proposal for a convention for the recognition and enforcement of protection orders is less likely to move forward.   Protection orders include restraining orders issued in family cases.  Although the Council invites further “exploratory work”, such work is “subject to available resources”; in other words, this work does not have priority.


Tuesday, 15 September 2015

Yaiguaje v. Chevron -- Jurisdiction in Actions to Enforce Foreign Judgments

          A few days ago, the Supreme Court of Canada released its ruling in Chevron Corp. and Chevron Canada v. Yaiguaje et al.  The court dismissed Chevron’s appeal from the decision of the Ontario Court of Appeal that found the Ontario courts have jurisdiction to hear Yaiguahje’s action for recognition and enforcement of their Equadorian judgment for US$9.5 billion.     The two issues on appeal were:

a.)    In an action to recognize and enforce a foreign judgment, must there be a real and substantial connection between the defendant (judgment debtor) and Ontario for jurisdiction to be established?  (Chevron Corp. does not itself carry on business in Ontario and it claimed to have no connection to Ontario, by way of assets or otherwise).

b.)    Do the Ontario courts have jurisdiction over Chevron Canada, a third party to the judgment for which recognition and enforcement is sought?

Neither issue was unsettled in the law.  As to the first issue, as the S.C.C. pointed out, in proceedings to enforce a foreign judgment the law has never required a real and substantial connection between the defendant or the dispute and the province where the judgment is to be enforced.  In such proceedings, “it is the act of service on the basis of a foreign judgment that grants an Ontario court jurisdiction over the defendant.” (para. 27)  (That is, Rule 17.02 (m) of the Ontario Rules of Civil Procedure permit service ex juris for cases involving foreign judgments.)    In the words of the Ontario Court of Appeal, “Beals [v. Saldanha]  is crystal clear about how the real and substantial connection test is to be applied” (para. 29).  The requirement of a real and substantial connection to Ontario applies only to actions at first instance; for enforcement proceedings, the requirement is to show such connection only to the jurisdiction where the judgment was issued.    

On the second issue, it was uncontested that Chevron Canada carries on business in Ontario, and it was served in Ontario.  Why wouldn’t the Ontario court be able to hear the case based on presence-based jurisdiction?   After all, the Supreme Court very recently reaffirmed, in Club Resorts v. Van Breda this traditional basis for jurisdiction remains available; the court’s ruling on real and substantial connection did not change that.   Chevron Canada argued that the courts lacked jurisdiction because its business activities in Ontario are unrelated to the facts underlying the foreign judgment.   However, whether a company’s business activities relate to such facts is never relevant to the threshold question of jurisdiction.  Indeed the facts underlying the foreign judgment will not be relevant even to the merits of the issue as to whether the judgment is enforceable (except for facts relevant to certain defences to enforcement such as fraud). 

As the court acknowledged, “in many cases the defendant’s challenge to service ex juris is just another dilatory tactic…”  (para. 69).  Chevron’s challenge was such a tactic; the motion court, the Court of Appeal, and the Supreme Court of Canada all unanimously found no merit at all in Chevron’s arguments.   Chevron clearly is financially vastly stronger than the plaintiffs.   Yet the Court not only gave leave but did not even award substantial indemnity costs upon dismissing the appeal.

Regrettably, the Supreme Court declined to address one issue that calls out for their guidance.  The Ontario Court of Appeal had found that the Ontario courts have jurisdiction over Chevron Canada not merely because it carries on business in Ontario.  The court also pointed to the “economically significant relationship” between Chevron Canada and its corporate parent, Chevron Corp.  Chevron Corp. owns Chevron Canada [albeit not directly], Chevron’s income all comes from subsidiaries such as Chevron Canada, and Chevron Corp. guarantees debts and other obligations of Chevron Canada.    The Court of Appeal appears to be saying that, by piercing the corporate veil, it can take jurisdiction over Chevron Canada on the same basis as it takes jurisdiction over Chevron Corp.   By piercing the corporate veil the court can take jurisdiction over companies that are neither judgment debtors nor present in the jurisdiction.    There is no other basis for jurisdiction, now that Van Breda has eliminated necessary and proper party as a basis for jurisdiction.   That said, the Court of Appeal did add that “the usual concerns regarding piercing the corporate veil [liability of a shareholder] are not present at the state of this preliminary jurisdictional determination” and may be appropriately addressed when the defendant submits its statement of defence. (para. 39).   Given that the liability of Canadian companies for the obligations of their subsidiaries overseas is a very timely topic (think of Choc v. Hudbay Minerals, Presbyterian Church of Sudan v. Talisman Energy and Gize Yebeyo Araya v. Nevsun Resources), guidance from the Supreme Court on whether piercing the corporate veil can serve to bring a company within the jurisdiction of Canadian courts would have been most welcome. 

The Supreme Court did offer two comments about jurisdiction over companies which are strangers to the foreign judgment and which are not present in Canada. The first comment refers to dicta in Van Breda that jurisdiction may be rebutted by showing the subject matter of the litigation is unrelated to the defendant’s business activities in the province. The Court comment that  “in the recognition and enforcement context, it would hardly make sense to require that the carrying on of business in the province relate to the subject matter of the dispute.  The subject matter of recognition and enforcement proceedings is the collection of a debt.” (para 90). 

The other comment was that the fact Chevron Canada was not involved in the Equadorian events that led to the judgment, the judgment to which it is a third party, is irrelevant. The subject matter of the enforcement proceeding is the collection of a debt using assets alleged to be available (i.e. those of Chevron Canada).  Thus the third party is the direct object of this proceeding.   Unfortunately neither comment addresses piercing the corporate veil.

On a separate note, the Supreme Court said its ruling does not prevent Chevron from challenging enforcement based on forum non conveniens  (para 77).  This is odd:  how could some other jurisdiction be “clearly more appropriate” than Ontario to decide whether the judgment could be enforced in Ontario?

Friday, 17 July 2015

Choice of Court Convention to go into Effect October 1, 2015

              The European Union having recently approved the Hague Convention on Choice of Court Agreements, that Convention will go into effect in the European Union (except Denmark) and in Mexico on October 1, 2015. 
The convention facilitates international business by giving weight to choice of court clauses, also known as forum selection clauses, in the dispute resolution provisions in international contracts.    Among other things, the Convention compels courts to respect such clauses, e.g. to accept jurisdiction over a dispute where mandated by such clause, and to not exercise jurisdiction if parties to a contract have agreed not to litigate in that court.    For details of the Convention, see my April 27, 2015 post, “Some Progress for the Hague Choice of Court Convention”, or the Hague Conference on Private International Law website,
 The Convention applies presently in only the European Union and Mexico, the only two states to have ratified it.  There are just two other signatories: the United States and Singapore; there is no indication as to when they might ratify it.     It is unfortunate that Canada has not even signed, let alone ratified, the Convention.   There is much to be done before the full potential of this convention can be realized.  Choice of Court Convention to go into Effect October 1, 2015

Thursday, 9 July 2015

BCCA Affirms Order for Google to Censor its Search Results Worldwide

             Last month, the British Columbia Court of Appeal unanimously affirmed an injunction that prohibits Google, the internet search engine giant, from including specific websites in results delivered by its search engines – anywhere in the world.    Was this such a “disastrous” decision or the “most expansive decision in the common law world to date”, as some commentators claim?  First, for those who have not heard about the case, what was it about?

            The case – Equustek Solutions v. DatalinkTechnologies Gateways et al 2015 BCCA 265 --  arose out of a trademark dispute.  The plaintiff is a manufacturer of industrial network interface hardware, and the defendant Datalink, a B.C .company, was its distributor.   Datalink advertised the plaintiff’s products but began filling the orders with its own products, which were knockoffs of the plaintiff’s products.  The plaintiff sued Datalink for infringement of its trademarks and misappropriation of trade secrets.  Datalink initially contested the claim but later stopped defending the action and the court struck out their statement of defence.   Datalink moved out of British Columbia and apparently out of Canada, but continued to advertise online and fill orders from an unknown location.  Most of its sales are to customers outside Canada.  Efforts to locate Datalink proved fruitless.  Injunctions against Datalink were ignored.   The plaintiff then sought an injunction against Google, on the grounds that if Google search results did not include Datalink’s sites, Datalink’s sales – and thus the amount of business diverted from the plaintiff – would be significantly reduced.   70-75% of all searches are done through Google.    Google had voluntarily agreed to remove certain results from searches but only those done at, not other Google sites, e.g.  The plaintiff then obtained an order that “Google Inc. is to cease indexing or referencing in search results on its internet search engines [certain listed websites].”  This order extends to all Google searches worldwide. 

            The court found that it had territorial jurisdiction over Google based on the provisions of the Court  Jurisdiction and Proceedings Transfer Act, S.B.C. 2003,ch. 28  regarding territorial competence.  The court found in personam jurisdiction based on the business Google carries on in B.C.  – the sale of advertising – and its website.  The mere fact a company’s website is accessible in B.C. would not suffice for jurisdiction, but Google’s search engine is not passive:  its search results are based in part on the particular user’s previous searches.   

            What makes the decision controversial is the world-wide scope of the injunction, made against an innocent party that neither intentionally facilitates Datalink’s infringement of trademark, nor profits from it.    Moreover, the order imposes a limit on freedom of expression. Commentators have raised the concern that if this order is legitimate, what stops courts in other countries from applying their laws to conduct in Canada?   

In fact, the decision is not as alarming or expansive as it may first appear, for several reasons.  One,   injunctions with extra-territorial effect are nothing new.  World-wide Mareva injunctions freezing assets in foreign jurisdictions have been issued by Canadian courts since 1989*.   There is precedent also for orders requiring innocent non-parties to do things.  Mareva injunctions often include a provision requiring banks to freeze funds.  Consider also Norwich Pharmacal orders, whereby a plaintiff can obtain financial information about a defendant or potential defendant by way of an order requiring a third party  -- usually the defendant’s bank – to provide that information if it is not otherwise available. 

The injunction in Equustek imposes a limit on freedom of expression, in the sense that Datalink’s website is made effectively invisible around the world, and Google is forced to censor its search results.  However, the expression affected in this case is not political at all, it is only the advertising of a certain product, and that advertising is clearly an infringement of a trademark.    In Canada such a limit on expression is not controversial.  Insofar as the defendants have essentially admitted the infringement (in that they are no longer defending the action), presumably there are many jurisdictions in which this limit is not considered controversial.  However, courts in other countries may impose limits which are regarded there as uncontroversial but which would be regarded as highly intrusive and inappropriate in other countries, especially if imposed by a foreign court.     Thus there is an issue about the legitimacy of a Canadian court ordering that search results in other countries be limited.   To ensure that courts’ exercise of jurisdiction is legitimate, there is a constitutional real and substantial connection test, as distinct from the more familiar conflicts of law real and substantial connection test where practical considerations are key.  It is disappointing that the Court did not address the constitutional real and substantial connection test except in passing.

Although the order is worded as prohibitive, it is effectively mandatory in the sense that Google must take action to ensure its search results exclude the listed websites.  However, Google already has about 45 full time staff working on ensuring search results do not include child pornography or hate speech.  Google admitted it would be able to comply with the injunction in Equustek and did not allege that compliance would cause significant expense or inconvenience (para. 153 of the motion court’s reasons: 2014 BCSC 1063).

Generally courts are reluctant to issue orders that will be likely unenforceable.   Non-monetary foreign judgments are not enforceable in many – probably most -- foreign jurisdictions.  (Even Canada, which is relatively liberal about enforcing foreign judgments, did not enforce any foreign non-monetary judgments until quite recently, and even then only on a case-by-cases basis:  ProSwing v. Elta Golf 2006 SCC 52).    This order will likely not be enforced, or even be enforceable, in many jurisdictions abroad.    

Apparently for that reason, the motion court indicated that if Google did not abide by the order, Google might be barred from access to the Courts of B.C.   The Court of Appeal said barring access would be “draconian” but hinted that such a bar could be imposed if circumstances warrant:  “Given that Google does business in the Province, British Columbia courts are entitled to expect it will abide by its orders” (para. 98).   This is certainly a controversial aspect of the decision. While it is not uncommon to bar a party in default of a court order from taking steps in the same lawsuit, to bar a party from all access to the courts -- even for unrelated cases -- is unprecedented.   It is not clear whether the courts have that power under statute, or among their inherent powers.   Such a bar is contemplated in this case presumably only because there would be no other way to enforce the order. 

So all in all, Equustek is a controversial decision, but not an alarming or radical one.



* See Mooney v Orr (1994), 98 B.C.L.R. (2d) 318 and 100 B.C.L.R. (2d) 335.  The B.C.C.A. decision cites decisions giving orders in the context of the internet, from courts in Paris, Hamburg, Ireland, and Spain at paragraph 95. 



Monday, 15 June 2015

Highlights from the Advocates’ Society’s Cross Border Conference

             Several prominent lawyers and judges gathered June 12, 2015 for the Advocates’ Society’s Conference on “Cross Border Issues for Litigators” in Toronto.   A lawyer involved in the recent Nortel Networks dual (Ontario – Delaware) trial recounted the procedural and logistical challenges of conducting two trials in two jurisdictions simultaneously.     Another challenging aspect was the French blocking statute that would have exposed French witnesses to criminal sanctions if they had testified in either of those trials. 

Another lawyer explained the need for protective orders when evidence given in Canada might otherwise be used in American companion proceedings where witnesses may have reason to “invoke the fifth (amendment)”. 

A judge in the Sino-Forest proceedings discussed a world-wide Mareva injunction he issued. The order allowed defendants in Hong Kong to access certain funds for living expenses, but because the judge had no evidence as to the cost of living in Hong Kong, he left the amounts for a Hong Kong judge to decide.

Another presentation covered the Supreme Court of Canada’s decision in R. v. Hape, 2007 SCC 26 which addresses the applicability of the Charter of Rights and Freedoms to the extra-territorial collection of evidence.  In a nutshell, the Court held that the Charter generally does not apply extraterritorially, but would apply in specific circumstances, including where to not apply it would be to violate Canada’s international human rights obligations. 

Letters Rogatory were discussed too.  They are a timely topic:  they played a role in recent litigation involving Nestles, and Sedona Canada has issued a Commentary on Enforcing Letters Rogatory Issued by an American Court in Canada.

Changes may be coming to the enforcement of foreign judgments, specifically in cross-border insolvency cases.  The United Nations Commission on International Trade Law (UNCITRAL) is working on a model law for the enforcement of insolvency-derived judgments.  However, a completed model law is likely still three or more years away.


Monday, 1 June 2015

“Judgment Arbitrage” – Can You Enforce a Foreign Judgment in a State that does not Recognize Foreign Judgments by First Obtaining a Recognition Judgment in Another State?

Judgment arbitrage refers to the practice of getting a foreign judgment that would normally be unenforceable in a given jurisdiction (say a particular Canadian province or U.S. state) enforced there by first obtaining recognition of that judgment in another, more liberal province or U.S. state.  The idea is that the recognition judgment, because it is not a foreign judgment, might get around the first state’s restrictions on recognition of foreign judgments.  Some would say this is just a form of forum shopping, i.e. litigating in a particular jurisdiction for its juridical advantages and not because of any connection between the case and that jurisdiction.   Might there be circumstances in which the recognition judgment could properly be enforced?  

Consider the case of the Alberta Securities Commission (“ASC”) and the judgment it obtained in Alberta against one Lawrence Ryckman for $500,000 in costs following an ASC proceeding in which Ryckman had been found to have misled investors.    After Ryckman moved to Arizona the ASC sued in Arizona and obtained a judgment there recognizing the Albertan judgment.    The ASC then sought to enforce the Arizona judgment in Delaware.  (It is not clear whether Ryckman had subsequently moved to Delaware or whether the ASC discovered assets of Ryckman in Delaware.) 

Had the ASC attempted to enforce the Albertan judgment directly in Delaware, the ASC would have failed:  that state does not recognize foreign judgments for fines or penalties.  As well, the claim would have been statute-barred in Delaware.     Ryckman therefore argued that the ASC was trying to gain enforcement through the back door, i.e. by trying to circumvent the Uniform Foreign Country Money Judgments Recognition Act (“UFCMJRA”), which bars enforcement of foreign judgments for fines or penalties.    That statute, which is a relatively recent updating of the Uniform Foreign Money Judgment Recognition Act and which has been enacted in a number of states, shifts the onus to the defendant opposing recognition, thus liberalizing somewhat the enforcement of foreign money judgments in those U.S. states that enacted the UFCMJRA.  

But would the Delaware court allow the ASC to enforce “through the back door”?  The Delaware court observed that Ryckman voluntarily moved to Arizona.  Thus it was Ryckman who chose that forum, not the ASC.  The court concluded that there is no evidence that the ASC engaged in any improper forum shopping.   Leave to enforce was granted.   

This is a reasonable outcome.  There is no indication that the ASC’s decision to sue in Arizona was driven by anything other than the fact Ryckman lived there.  There is no indication that the ASC somehow knew at the time it sued in Arizona that it would need to be able to enforce in Delaware (such that suing in Arizona was chosen as a means by which the ASC could later enforce in Delaware).  If following a judgment debtor as he moves around, perhaps in order to avoid a judgment, constitutes forum shopping then as blogger Ted Folkman of Letters Blogatory says, the cure is worse than the disease!

Amongst Canadian provinces the law regarding enforcement of foreign judgments is fairly uniform, but there are differences that could be significant in some cases.  For example, common law provinces will not enforce foreign penal judgments, whereas the Quebec Civil Code does not mention such judgments in its Article 3155 list of exceptions to the default rule that foreign judgments are enforceable.  There may also be differences between common law provinces that have enacted the Court Jurisdiction and Proceedings Transfer Act, which among other things codifies the grounds for territorial competence, and those provinces that have not. 

Monday, 27 April 2015

Some Progress for the Hague Choice of Court Convention

             The Convention of Choice of Court Agreements, which the Hague Conference on Private International Law finished in 2005, received a much needed and deserved boost recently when Singapore signed it.  To date, only three other states have signed: the United States, Mexico, and the European Union.    Only Mexico has ratified it so far, although the European Union is expected to do so soon.  At least two  states must ratify it before it enters into force. 

            The Convention aims to ensure the effectiveness of choice of court clauses, also known as forum selection clauses, in international, cross-border contracts.  The Convention obligates the courts of the jurisdiction specified in the contract to accept jurisdiction, and obligates courts of jurisdictions not chosen by the contracting parties to decline jurisdiction.  As well, courts in contracting states must recognize and enforce judgments issued by the court chosen by the contracting parties.    The Convention applies in international cases to civil and commercial contracts, but exempts employment, consumer, and certain other types of contracts. It applies to contracts with exclusive choice of court clauses, i.e. clauses that require, not merely permit, disputes to be litigated in the courts of a specific jurisdiction. 

            This Convention would benefit Canadians and Canadian businesses as much as anyone else, and thus it is to be hoped that Canada will sign and ratify the Convention soon too.

Monday, 6 April 2015

Recognition of a Chinese Judgment

             Despite the volume of trade between Canada and the People’s Republic of China (“PRC”) cases involving the recognition or enforcement of PRC judgments are rare.   It is only a matter of time before courts will need to address this.    A recent case in California alerts us to aspects of PRC law relevant to proceedings in Canada.  In California, as in Canada, courts will recognize foreign judgments if the foreign court had jurisdiction over the defendant, and as in Canada, failure to properly serve process in the foreign proceeding is generally a full defence to enforcement. 

            In Folex Golf v. O-TA Precision,  Folex Golf (“F”) and the Luoyang Ship Material Research Institute (“L”) had an agency agreement, F introduced O-TA Precision (“O”) to L, and O became L’s customer.  L later sued F in the PRC.  A default judgment there dissolved the agency agreement.   F then sued O in California.   O, arguing that the default judgment bars F’s action,  won summary judgment dismissing F’s action.  

            The U.S Court of Appeals for the 9th Circuit reversed in a ruling last month, giving two reasons why the PRC default judgment was not enforceable.  One was that the PRC claim had not been properly served, even under PRC law.   According to expert evidence on PRC law in that case, PRC law permits service by way of publication, if personal service is shown to be impossible.  Such publication must be done both in the PRC and abroad in cases where the defendant is based outside the PRC.    In other words, the PRC judgment was arguably invalid even in the PRC.    As such, the PRC judgment would likely not be enforceable in Canada, where one prerequisite to enforcement is that the judgment be final and conclusive.  If the judgment is vulnerable to be being set aside due to shortcomings in service, it is not conclusive.     Incidentally, the fact the PRC plaintiff did not comply with PRC law regarding service does not by itself constitute a reason in Canada to not recognize the judgment.  In Canada, failure to provide the defendant a fair process is a defence to enforcement of foreign judgments, but fairness is based on Canadian standards, not the foreign country’s legal requirements. 

            The second reason the California court reversed was that according to expert evidence in that case, PRC law does not recognize third party collateral estoppel.  In other words, under PRC law, the PRC would not enforce its judgment against L, which was not a party to that proceeding.   Therefore the PRC would not enforce the California summary judgment ruling.    Under California law, courts will not recognize a judgment from another U.S. state unless that state recognizes California judgments; presumably the same applies to judgments from the PRC.   Accordingly, the appeal court ruled that it would not recognize the PRC judgment in this case.   Canadian courts, in determining whether to enforce a foreign judgment, generally do not consider whether courts in the foreign jurisdiction would enforce Canadian judgments.   However, Canadian courts will consider, when asked to issue an order to be enforced abroad, whether such order could in fact be enforced.  Thus if F had sued L in Canada to obtain an order to be used against O in the PRC,  the PRC law described in Folex would be a reason for the Canadian court not to issue the order.