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.

Ontario Court of Appeal Reverses Stay of Proceeding to Enforce Giant Ecuadorian Judgment

A unanimous Court of Appeal recently allowed the plaintiffs’ appeal of the ruling of Brown J., which had stayed their action for recognition and enforcement of their judgment from Equador against Chevron Corp. relating to environmental damage that harmed villagers there: Yaiguaje et al v. Chevron et al.   

After the plaintiffs had brought their action, the defendants – Chevron Corporation and its two Canadian subsidiaries, Chevron Canada Limited and Chevron Canada Finance Limited -- brought a motion to stay the action, specifically and only on jurisdictional grounds.   The defendants had plainly and emphatically stated they were not attorning to the jurisdiction. 

The motion court held that it has jurisdiction over the case, but nonetheless stayed the action on its own motion, exercising its discretion under s. 106 of the Courts of Justice Act.  The motion court cited the fact that Chevron Corp. has no assets in Ontario and the view that there is no reasonable prospect that the corporate veil will be pierced in respect of Chevron’s Canadian subsidiaries, and concluded that allowing the action to proceed would be “a waste of judicial resources”. 

The appeal court ruled the case did not meet the test for such a stay, namely that continuance of the action would be oppressive or vexatious or an abuse of process, and the stay would not cause an injustice to the plaintiff.     Without commenting on the merits of the plaintiffs’ action the court said the plaintiffs ought to be allowed to present their case at trial.     The court also noted the motion court had not solicited submissions from either side on the discretionary stay.

 The Court also dismissed Chevron’s cross appeal. Chevron had argued that the Ontario court could not take jurisdiction over this judgment enforcement action unless there was a real and substantial connection between the defendant and Ontario, as well as between the defendant and the jurisdiction where the original judgment was issued.  The court pointed out that the recent Supreme Court of Canada decision in Beals v. Saldanha made clear that such a connection to the jurisdiction where the original judgment was issued is necessary, but not also such a connection to the jurisdiction where enforcement is sought, in this case, Ontario.  The Court also discussed the recent Club Resorts v Van Breda decision of the Supreme Court of Canada.

The appellate ruling raises a number of fascinating issues I hope to explore in future posts.  In the meanwhile, have a happy holiday!

Validity of Exclusive Forum Selection Clauses in Corporate Bylaws

            The Delaware Court of Chancery has recently upheld the statutory and contractual validity of corporate bylaws that designate one court, usually the Delaware court, as the exclusive forum for disputes relating to the corporation’s internal affairs.  These provisions are aimed at reducing multi-forum stockholder and derivative litigation, and gaining the benefit of the perceived pro-management perspective of the Delaware courts.     Such provisions, adopted by over 250 public companies in the United States over the past few years, have been controversial.  There have been legal challenges in different states, criticism from proxy advisory firms and widespread shareholder opposition.   Most of those over 250 firms subsequently repealed their provisions, but two did not: Chevron and Fed Ex. 

In Boilermakers Local 154 Retirement Fund v. Chevron Corp.  C.A. No. 7220-CS and in Iclub v FedEx Corp. C.A. No. 7238-CS, the Court of Chancery held that such clauses are statutorily and contractually valid.  The court said that to find them invalid, statutorily and contractually, the plaintiff would have had to show that the bylaws cannot operate in compliance with the statute under any circumstances; it would not be enough for the plaintiff to show a fact-specific instance where the bylaw is at odds with the statute.  However, the court also said this finding of statutory and contractual validity does not bar legal challenges from persons who are affected by the actual operation of the clause, if they have an unreasonable or unlawful effect in that situation. As well, the clauses remain subject to challenge as inconsistent with a board’s fiduciary duties.   

Such clauses, uncommon in Canada,  have not been tested in Canadian courts so far as this author is aware.

 

Finding a Real and Substantial Connection When a "Snow-bird" Common Law Couple Splits

The Ontario Superior Court of Justice recently tackled the issue of jurisdiction, specifically the issue of what constitutes a “real and substantial connection”, in a family case involving “snow birds”, i.e. a common law couple who in their ten years together had lived in Florida but regularly spent substantial time also in Ontario, after the common law wife moved to Ontario and sued the common law husband claiming support and a constructive trust over certain Ontario properties.   

Canadian courts may assume jurisdiction over defendants if a real and substantial connection exists between the forum and the transactions in issue, the subject matter of the action or the parties.    (There are two other alternative bases for jurisdiction:  that the defendant resides in forum, or that the defendant agrees that the court may take jurisdiction or attorns to the court’s jurisdiction.)  

The Supreme Court of Canada held in Club Resorts v Van Breda  2012 SCC 17 [2012] 1 S.C.R. 572  that a real and substantial connection exists only if one or more “presumptive connecting factors” (that is, “objective factors that connect the legal situation or the subject matter of the litigation with the forum”) can be shown.  The court identified some “presumptive connecting factors”, but left the door open to others to be added later.   In family cases the presumptive connecting factors are necessarily different from those in tort cases such as Van Breda, and include the location of the parties’ “real home” or ordinary residence: see the Ontario Court of Appeal decision is Wang v. Lin 2013 ONCA 33 

In Knowlesv. Lindstrom 2013 ONSC 2818 the Ontario Superior Court of Justice grappled with applying this presumptive connecting factor in a case where, out of the 122 months that the parties were a couple, the common law husband, an American, spent only about thirty in Ontario. However, in the latter five years of their relationship he spent almost half his time (25 out of 62 months) in Ontario.  As soon as the relationship ended, the applicant returned to Ontario (she was from Ontario originally) and remained there, severing her ties to Florida.  The applicant sued for spousal support and claimed a constructive trust in respect of certain Ontario properties.  The respondent moved to stay the proceeding, on the ground that they had been residents of Florida, not Ontario, or in the alternative for a ruling that Ontario was forum non conveniens.   In the end after a lengthy discussion, the court found it had jurisdiction because the parties had two real homes: Ontario as well as Florida.

Neither the Family Law Act nor the Family Law Rules in Ontario address jurisdiction over respondents outside the province.  The Inter-jurisdictional Support Orders Act (“ISOA”) does set a jurisdictional test for support claims, namely the "ordinary residence" of the parties.  However, the applicant did not proceed under the ISOA because Florida does not recognize claims for support between unmarried couples.  Thus the court had to look to the case law. 

 The question of jurisdiction was complex with respect to the support claim, but relatively straightforward for the property claim.  After all, the properties over which the claims were made were in Ontario, and it is well established in private international law that jurisdiction to determine ownership of land rests with the court where the land is located.    

For the support claim the main issue was: what presumptive connecting factor would support a finding of real and substantial connection to Ontario? A number of sub-issues presented themselves.  One, in assessing the parties’ ties to Florida and to Ontario, ought the court consider whole ten years or just the last five?  The court chose the latter, noting that the properties over which the constructive trust claim was asserted were acquired only in those later years.  With respect, this fact ought not have mattered to the question of jurisdiction over the spousal support claim, as opposed to the constructive trust claim. 

Two, would the fact that as of the day the applicant commenced the proceeding, she was residing only in Ontario constitute a presumptive connecting factor if the respondent was not also resident there?    The Court reviewed the ISOA and the Divorce Act, neither of which actually apply to this case, but both of which say a court may take jurisdiction if at least the applicant resides in the forum.  The court took this to mean that “in family law, a real and substantial connection with a jurisdiction can be found on the basis of not just the respondent’s relationship with a place.  This is particularly so where an allegedly dependent party resides in one jurisdiction and the other party lives somewhere else”.     The Supreme Court in Van Breda, while discussing presumptive connecting factors for tort cases, pointed out that “Absent other considerations, the presence of the plaintiff in the jurisdiction will not create a presumptive relationship between the forum and either the subject matter of the litigation or the defendant.” (paragraph 86).   The Supreme Court also acknowledged that other presumptive connecting factors will be developed for cases in other areas of law, but that they must be factual connections to the forum, not merely considerations of justice, efficiency, or comity.   To have found a real and substantial connection based mainly on the residence of just the applicant would have been a controversial if ground-breaking development. 

Instead the court continued on to consider whether both parties could be considered to be ordinarily resident in Ontario.  The court, while acknowledging that the primary home of both parties was in Florida,  stated  that a person can be ordinarily resident in more than one place, and found that the parties were ordinarily resident in Ontario, as well as Florida, having spent several months in Ontario every year for the most recent five years.  The court cited tax cases that say a person may be resident in more than one place, but without considering whether the considerations relevant to those tax cases are the same as for this case.   

In the result, the court found a real and substantial connection in respect of both the property and support claims, rejected the respondent’s forum non conveniens arguments, and took jurisdiction over the case.  

A simpler approach to jurisdiction over the support claim would have been to say that the court, which quite clearly had jurisdiction over the property claim, ought to hear the support claim as well so as to avoid a multiplicity of proceedings, as per s. 138 of the Courts of Justice Act.  

Recent Developments in International Human Rights Litigation - Part 2

            This post, part two in a series on international human rights litigation, discusses developments in the United States.

Alien Tort Statute Narrowed - Kiobel v Royal Dutch Shell

A recent decision of the Supreme Court of the United States significantly narrows the application of the Alien Tort Statute (“ATS”). The ATS has in recent years been an important tool of human rights lawyers seeking relief in U.S. courts for violations of international law, usually human rights abuses, committed abroad, often by government officials in developing countries.  This law, enacted in 1789, provides that “federal courts shall have original jurisdiction of any civil action by an alien for a tort only, committed in violation of the law of nations or a treaty of the United States”.   Its usefulness is illustrated by Filartiga v.  Pena-Irala, in which the relatives of a man tortured to death by government officials in Paraguay won a judgment for over $10,000,000 in the Second Circuit Court of Appeals.  In another case, the Second Circuit Court of Appeals held Radovan Karadzic could be held liable for his complicity in genocide, war crimes and crimes against humanity committed in Bosnia -Herzegovina.  In effect the ATS was akin to forum of necessity.  

 However, this spring in Kiobel v. Royal Dutch Shell, a 5-4 majority of the Supreme Court, in a decision called “inconsistent with the last 30 years of precedent”, held that the ATS cannot be applied extra-territorily, and thus one cannot sue under the ATS for conduct occurring within the territory of a foreign sovereign.  Kiobel and other Nigerian nationals had sued Royal Dutch Shell alleging its complicity in the killing of protesters in Nigeria.   The majority held that the plaintiff had not overcome the presumption against extraterritorial applicability of the statute.  The court’s reasoning was curious.   Why would the law not create jurisdiction over torts against aliens occurring abroad, but only for torts committed against aliens in the United States?   What would be the need for such a law, given that the courts already had jurisdiction over torts committed against aliens in the United States?  All four other justices concurred in the dismissal of the action but on a different basis.  Royal Dutch Shell did not have sufficiently close connection to the United States, despite the fact it operates refineries and gas stations there.    

The ATS had been somewhat analogous to forum of necessity, if only for torts in violation of international law.  Thus the United States has moved in the opposite direction from Canada, where forum of necessity has taken root, as noted in the previous post of this blog.

Despite Kiobel, a few angles are arguably left open.  Because piracy was prohibited by international law in 1789, piracy that occurs outside any nation’s territorial waters might still be within the reach of the ATS.   By analogy, torts occurring in a failed state might also be considered to be outside the territory of a foreign sovereign.   As well, a case that engages American interests, unlike Kiobel the facts of which had nothing to do with the United States, might fall within the ATS still.  As well, statutes that clearly state they are to apply extraterritorially overcome the presumption against extraterritorial applicability.   An in-depth discussion of post-Kiobel angles can be found in Professor Michael Dorf’s blog.

Possible Widening of Jurisdiction over Corporations for Wrongdoing by their Subsidiaries Outside the U.S. -- DaimlerChrysler v Bauman

Daimler-Chrysler is another American case in which plaintiffs attempt to obtain a remedy in the U.S. against a multi-national for human rights abuses elsewhere, albeit not under the ATS.  The Ninth Circuit Court of Appeals in California recently ruled that a court may exercise general personal jurisdiction over a foreign corporation based primarily on the fact a subsidiary performs services on its behalf in the forum state.   The plaintiffs, residents of Argentina, sued DaimlerChrysler A.G. in California on the basis that court could take jurisdiction over the German defendant based on the contacts that its subsidiary -- Mercedes Benz USA LLC, incorporated in Delaware – has in California, where it distributes cars.  If the German parent could be sued in California, it may also be forced to defend itself there against certain human rights violations alleged against its Argentine subsidiary.   The Ninth Circuit Court of Appeals’ decision in favour of jurisdiction was based on an “agency test”, which has two elements.  One, the tasks performed by the subsidiary for its parent (here, the distribution of cars) must be “sufficiently important to the foreign entity (parent) that it would itself perform equivalent services if no agent was available”. Two, the parent must have either actual control or the right of control over the subsidiary.   These tests were met by the significant level of sales of Mercedes Benz cars in California, and the powers the parent has over its subsidiary’s operations.  The court also noted the fact the parent company does marketing, research and development in California, has litigated in California courts, and its shares are traded on the Pacific Stock Exchange. 

Several other American appellate courts have ruled that a court may assert jurisdiction over a parent for the actions of its subsidiary only if the subsidiary is an alter ego of the parent, i.e. that the parent dominates the subsidiary to such an extent that the corporate separateness may be disregarded.  The plaintiff did not assert this theory of jurisdiction, nor did the Ninth Circuit base its ruling on it.

The U.S. Supreme Court will hear an appeal from the Ninth Circuit Court of Appeals’ decision, and address the question of whether a court may exercise general personal jurisdiction over a foreign corporation based primarily on the fact a subsidiary performs services on its behalf in the forum state. The hearing will be in the fall, with a decision expected in the spring.  Several amicus briefs have been filed in favour of DaimlerChrysler, including one from the U.S. Dept. of Justice (which also filed in favour of the defendants in Kiobel). 

Recent Developments in International Human Rights Litigation - Part 1

Here are some recent important developments regarding the ability to sue in Canada or the United States for incidents such as human rights abuses occurring abroad. Part One will cover Canadian developments, and Part Two will cover American developments.

Negligence for Failure to Prevent Harm by a Subsidiary as a Cause of Action -  Choc et al v. Hudbay Minerals

The Ontario Superior Court of Justice has recently ruled, in Choc et al v. Hudbay Minerals Inc. [2013] O.J. No.3375, 2013 ONSC 1414,  to allow a group of indigenous Guatemalans to sue a Canadian parent company for the  murder and gang rapes allegedly committed by the security personnel of its subsidiary in Guatemala. The plaintiffs were local residents claiming ownership of certain land on which that subsidiary was operating.   The plaintiffs brought a novel claim, that the parent, Hudbay, was negligent in failing to properly manage the security personnel so as to prevent those crimes being committed, and thus Hudbay was liable for the crimes.  This claim was separate and distinct from another claim for piercing the corporate veil.  A 2010 decision of the Supreme Court of Canada had paved the way for the negligence claim.  In Fullowka v. Pinkerton's [2010] 1 S.C.R. 132 the Court allowed a claim that Pinkerton's, a security company, was negligent for having failed to prevent a third party, a striking employee, setting off a bomb.  Hudbay moved to strike the negligence claim, saying it is not a cause of action because there is no duty of care. 

C.J. Brown J. allowed the claim to proceed to trial.   As per the decision of the British House of Lords in Anns v. Merton [1978] A.C. 728   and the decision of the Supreme Court of Canada in OdhavjiEstate v Woodhouse, [2003] 3 S.C.R. 263 there are three requirements to establish a duty of care:  a.) that the harm be a reasonably foreseeable consequence of the alleged negligence; b.) that there is a sufficient proximity between the parties so as to justify imposition of a duty of care, and c.) that there be no policy reasons to negative or limit that duty of care.  The court found the harm foreseeable in that Hudbay knew violence had been used in earlier forced evictions of people from other lands in Guatemala, that the risk of violence is larger for evictions in remote areas, that the security personnel were neither licensed nor trained but had possession of guns, and that the vast majority of violent crime goes unpunished in Guatemala.  The court found the necessary proximity based on the many public statements asserting that Hudbay worked closely with the indigenous people and other local stakeholders, that it did everything possible to avoid violations of human rights in the course of evictions, and evidence that in fact Hudbay (which owned 98% of the subsidiary)  held control over community relations and over security personnel, including standards of conduct for those personnel.    The Court ruled it was not plain and obvious that policy considerations would negate or restrict a duty of care.   It appears this ruling will stand, as no appeal has been brought and the time for doing so has passed.  Cory Wanless, one of the counsel for the moving parties, commented that he welcomed this advance in human rights jurisprudence.

This ruling provides a means by which plaintiffs with claims arising out of incidents occurring abroad may have more potential targets/defendants to choose from, e.g. deep-pocketed defendants and/or defendants that are resident here and thus not able to raise a jurisdictional defence to a proceeding in Ontario.

Forum of Necessity – Van Breda v Village Resorts, and the Court Jurisdiction and Proceedings Transfer Act

             

             The Ontario Court of Appeal has confirmed in Van Breda v Village Resorts 2010 ONCA 84, at para. 109, that “where there is no other forum in which the plaintiff can reasonably seek relief, there is a residual discretion to assume jurisdiction”.  This concept, called forum of necessity, opens the doors of Ontario and other courts to human rights cases (or other types of cases) brought by plaintiffs who cannot be reasonably expected to seek justice from the courts in their home country because of the nature and/or cause of the alleged human rights abuse. An example of such cases would be abuse perpetrated by the government of a country lacking an independent judiciary.  The Supreme Court of Canada heard an appeal of Van Breda but did not address this part of the Court of Appeal’s decision.  

Forum of necessity already exists in the law of British Columbia, Saskatchewan, Nova Scotia and the Yukon Territory, each of which have in recent years enacted the Court Jurisdiction and Proceedings Transfer Act (CJPTA) which provides that:

“a court that … lacks territorial competence in a proceeding may hear the proceeding despite that section if it considers that

(a) there is no court outside [the province] in which the plaintiff can commence the proceeding, or

(b) the commencement of the proceeding in a court outside [the province] cannot reasonably be required.

Forum of necessity is provided for in the Quebec Civil Code   S.Q. 1991, c. 64,  s 3136, and in the European Convention on Human Rights. 

Immunity of Governments – Steen v Iran, and the Justice for Victims of Terrorism Act

           

            The State Immunity Act  R.S.C. 1985 c. S-18 (“SIA”) provides that “except as provided by this Act, a foreign state is immune from the jurisdiction of any court in Canada”; there is an exception for “commercial activity”.  One might expect that such a law would be construed narrowly, insofar as it is a departure from fundamental principles and goals of our legal system, namely the rule of law and the goal of ensuring accountability for one’s actions.  However, in Steen v Iran [2013] O.J. No. 228 the Ontario Court of Appeal re-affirmed, implicitly, that the immunity that the SIA confers on foreign states is not to be narrowly construed.    Between 1982 and 1988 Iran directed the kidnapping and detention of several American citizens, including Steen, who was  held for an extended period, and in inhumane conditions.  Iran demanded a ransom of money and weapons before releasing Steen.   Steen sued in the United States and obtained a judgment for $342,750,000, which he sought to enforce in Ontario.  The Court dismissed Steen’s argument that Iran’s demand for a ransom payment brings the case within the exception for commercial activity, ruling that “a mere nexus to commercial activity is insufficient”, and that the payment “does not alter the true nature of hostage taking as a brutal act”. (para 22)   With respect, a hostage taking can be considered both a brutal act and a commercial one, and ought to be, so as to allow a remedy.   

             

             The Court also refused to recognize any common law exceptions to immunity, just as it had refused ten years earlier in Bouzari v Iran (2004), 71 O.R. (3d) 675, despite the 2010 decision of the Supreme Court of Canada in Kuwait Airways v Iraq [2010] 2 S.C.R. 571 (para 24)  that, in obiter dicta, recognized the evolution of international law toward exceptions to sovereign immunity, and hinted at the possibility that such evolution has led to the development of new exceptions to immunity.   The Steen decision is consistent with a recent decision of the Quebec Court of Appeal on the SIA in Iran v Hashemi, 2012 QCCA 1449. 

            The Ontario Court of Appeal also rejected an argument that a government might lose its right to immunity if its acts were in violation of peremptory norms of international law “(jus cogens”).  Such norms include the prohibitions against genocide, slavery, apartheid, and torture.  Steen’s argument was that a state that violates such norms loses its immunity because in committing such acts the state is not acting in a sovereign capacity.     The Court’s analysis of this issue was disappointing.   Citing Bouzari, the Court said that absent “a widespread state practice [of creating such an exception from immunity] that does not exist today”, the SIA  is not to be interpreted to admit of such an exception.  One wonders how international law could evolve if every court adopted such a conservative philosophy.  Also, the court cited a decision of the International Court of Justice in Jurisdictional Immunities of the State(Germany v Italy: Greece Intervening), judgment 3 Feb. 2012, IC.J. General List No. 143 to the effect that the rules of jus cogen and the rule of customary international law that requires one state to accord immunity to another are not in conflict.  The court failed to address the point that the rights jus cogen confers are illusory if there is no remedy.  Genocide is generally committed by states, not persons, because of the scale of violence involved in genocide; apartheid too is generally committed by states, not persons.

             

            Fortunately for human rights advocates, new legislation -- the Justice for Victims of Terrorism Act  S.C. 2012, c 1 S. 2 – reduces state immunity somewhat. That act provides that “a court … must recognize a judgment of a foreign court that, in addition to meeting the criteria under Canadian law for being recognized in in Canada, is in favour of a person that has suffered loss or damage [as a result of certain terrorist acts].”  Recognition is mandated even for judgments against foreign states if the state is on a certain list issued by the Governor General in Council in 2012. The listed states are the Islamic Republic of Iran and the Syrian Arab Republic. 

           The act also creates a cause of action for Canadian citizens and permanent residents for damages for harm incurred in or outside Canada by certain types of terrorist acts,  even against states on the list. The act also creates presumptions in favour of liability, and suspends limitation periods for plaintiffs who were unable to sue due to their physical, mental or psychological condition or who were unable to identify the perpetrator/defendant.

My next post will cover American developments.