Monday, 29 August 2016

OCA Reverses Itself, Lifting a Forum Non Conveniens Stay

An order staying an action based on forum non conveniens can be lifted if subsequent developments warrant.  Such an order is not final like an order dismissing the action.  Where the governing law is a key factor on the motion for a stay, a plaintiff should have that issue fully adjudicated as part of the motion, rather than let the court rely on the position taken by the defendant, which may change after the motion, as it suits the defendant.

In Kaynes v. B.P. 2016 ONCA 601, a group of Canadian shareholders of British Petroleum (“B.P.”) sued B.P. in Ontario, alleging B.P. had misled them about its operational safety programs in its public disclosure prior to the Deep Horizons oil spill in the Gulf of Mexico in 2010, and about clean up activities afterward.    These shareholders had bought their shares on the New York Stock Exchange.    B.P.  moved for, and obtained on appeal, an order staying the action on the grounds that Ontario was forum non conveniens.  (The Ontario court found it did have jurisdiction).  The court’s grounds for the stay were the facts that there was another class action seeking similar relief in the U.S., and that a U.S. statute asserted exclusive jurisdiction over claims such as those brought by the plaintiff.    

 Kaynes then brought a class action in the U.S. based on the Ontario Securities Act.  Later,  the U.S. court dismissed Kaynes’  class action, partly because it could not be included in a U.S. class action because it was based on Ontario law.   (Kaynes was not barred from bringing an individual action in the U.S.)    Kaynes then moved to have the stay of the Ontario proceedings lifted.   In deciding whether the plaintiff had sufficient grounds, the Ontario Court of Appeal considered not just the fact that his U.S. class action proceeding had been dismissed.  The Court also gave weight to the fact that B.P. now accepted that the plaintiff’s claim is governed by Ontario law, namely the Ontario Securities Act.   If Kaynes’ claim was governed by U.S. law (as B.P. had previously asserted) then under U.S. law the U.S. court would have exclusive jurisdiction over the claim.     

There are two comment-worthy features of this ruling.   One is that we now have an appellate ruling from Ontario confirming that a stay granted on grounds of  forum non conveniens is not necessarily permanent and the court has inherent jurisdiction to lift the stay “where circumstances later develop that make it unjust to continue the stay” (para. 11). 

The other feature relates to the fact that the ruling turned in part on the question of whether Kaynes’ claim would be governed by U.S. law in the U.S. proceeding.   The law to be applied is certainly one of the factors in a forum non conveniens analysis.  This factor carried extra importance here because the U.S. court would have, under American law, exclusive jurisdiction over the claim if it was governed by U.S. law.  However, when granting the stay, the court accepted as fact U.S. law applied without analysis and without any court having ruled on this issue.   Kaynes maintained throughout that Ontario law governed.  B.P. said, at the time of its motion to stay the Ontario proceeding, that U.S. law governs, and subsequently obtained the stay of proceedings.  Later, B.P. flip-flopped, which led to Kaynes’ claim (as a class action) being dismissed in the U.S.  A court hearing a forum non conveniens motion needs to carefully determine the applicable law. 

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