PROCEDURAL ISSUES IN INTERNATIONAL RESOURCES LITIGATION
| Jurisdiction | United States |
(Apr 1999)
PROCEDURAL ISSUES IN INTERNATIONAL RESOURCES LITIGATION
Fasken Martineau
Toronto, Ontario, Canada
Introduction
In the last decade of the 20th Century the Supreme Court of Canada reconsidered the difficulties inherent in international and inter-provincial litigation and adopted a fresh approach to both the assumption of jurisdiction and the enforcement of foreign judgments. The reasoning behind this new approach is reflected in the reasons of Mr. Justice La Forest in Morguard Investments Ltd. v. DeSavoye, [1990] 3 S.C.R. 1077, (1990), 76 D.L.R. (4t) 256 at p. 270:
The world has changed since the above rules were developed in 19th century England. Modern means of travel and communications have made many of these 19th century concerns appear parochial. The business community operates in a world economy and we correctly speak of a world community even in the face of decentralized political and legal power. Accommodating the flow of wealth, skills and people across state lines has now become imperative. Under these circumstances, our approach to the recognition and enforcement of foreign judgments would appear ripe for reappraisal. Certainly, other countries, notably the United States and members of the European Economic Community, have adopted more generous rules for the recognition and enforcement of foreign judgments to the general advantage of litigants.
This paper will assess some of the practical implications of the choice of forum in international litigation from a Canadian perspective.
"Comity" lies at the heart of our courts approach to international litigation. In Morgard Mr. Justice La Forest defined that term as follows:
"Comity" in the legal sense is neither a matter of absolute obligation, on the one hand, nor of mere courtesy and good will, upon the other. But it is the recognition which one nation allows within its territory to the legislative, executive or judicial acts of another nation, having due regard both to international duty and convenience, and to the rights of its own citizens or of other persons who are under the protection of its laws...
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Overview of the Canadian Judicial System
With very few exceptions civil actions in Canada are a matter of provincial jurisdiction. Each province has its own rules of civil procedure and its own court structure. Rules of practice and procedure are similar from province to province; however, all references to practice and procedural matters in this paper are intended to reflect the situation in Ontario. If your clients are involved in a law suit in a province other than Ontario, you will of course be retaining a lawyer in that province who will provide the necessary guidance with respect to particular rules within their home jurisdiction.
The mere fact that one is contemplating litigation on an international scale dictates that the intended action is a matter of significant monetary consequence. In such circumstances the action will invariably be brought in a court of superior jurisdiction in the province of choice. As of April 19, 1999 the appropriate Ontario court is the Superior Court of Justice. Superior courts in Canada have unlimited monetary jurisdiction.
In addition to the provincial superior courts there is the Federal Court of Canada which also has a trial and appeal division. The Federal Court has a very limited jurisdiction involving actions by and against the Government of Canada (often referred to as Her Majesty The Queen in Right of Canada), relief against federal boards and tribunals by way of judicial review of federal administrative actions, industrial property disputes, admiralty actions, income tax disputes and citizenship matters. It is unlikely that an action arising out of the type of scenarion under discussion would ever be launched in The Federal Court.
With the exception of the Province of Quebec, Canada is a common law jurisdiction. Quebec is a civil law jurisdiction. The Canadian court system places great emphasis on precedent and the hierarchical structure of the courts as reflected in the rule of stare decisis. The importance of the hierarchical structure of the courts and the Supreme Court of Canada's supremacy in that hierarchy is well articulated by Chief Justice McEachern of the British Columbia Court of Appeal in his decision in Scarff v. Wilson, [1989] 3 W.W.R. 259 (C.A.) at p. 303:
The reasons for the principle of stare decisis have elegantly been described by the House of Lords in Broome v. Cassell & Co., [1972] A.C. 1027, [1972] 2 W.L.R. 645, [1972] 1
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All E.R. 801, being principally to bring certainty to the law and to make it unnecessary for courts to decide which authority they will follow. Lord Hailsham said at p. 1054:
"The fact is, and I hope it will never be necessary to say so again, that, in the hierarchical system of courts which exists in this country, it is necessary for each lower tier, including the Court of Appeal, to accept loyally the decisions of the higher tiers."
There is also persuasive authority in Canada. In Ottawa v. Nepean, [1943] 3 D.L.R. 802, Robertson C.J.O. said at p. 804:
"This would seem to be covered by what is said in the judgment of the Supreme Court of Canada, already referred to, at p. 74 D.L.R., p. 203 C.R.T.C., p. 459 S.C.R. What was there said may be obiter, but it was the considered opinion of the Supreme Court of Canada, and we should respect it and follow it, even if we are not strictly bound by it."
This was quoted with approval by the Supreme Court of Canada in Sellars v. R., [1980] 1 S.C.R. 527, 20 C.R. (3d) 381, 52 C.C.C. (2d) 345, 110 D.L.R. (3d) 629, 32 N.R. 70, where it is made clear that even obiter dicta of the Supreme Court of Canada should be followed.
From the foregoing I conclude that the obligation of a lower court, including courts of appeal, to follow judgments of the Supreme Court of Canada is not limited to the strict ratio decidendi of the highest court but extends also to any considered decision of that court on a question of law or principle. We should not be astute in seeking to limit the authority of such a decision.
As a consequence of this approach to decisions of the Supreme Court of Canada and to the rule of stare decisis; the observations of Mr. Justice La Forest in Morguard have had a significant effect on broadening the law of personal and subject matter jurisdiction as applied to Canadian and international litigants. This more liberal approach has significantly effected the law relating to the recognition and enforcement of foreign judgments.
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It may not be widely known beyond Canadian legal circles that actions commenced in one Canadian province against a resident of another Canadian province raise the same type of issues that an against a foreign national would raise. The hypothetical situation we are discussing today could just as easily involved a series of events occurring the in the Province of Quebec with plaintiffs in Nova Scotia and Ontario with discovery and enforcement issues in British Columbia and Alberta.
As an introductory note of caution, prospective litigants should be aware that damage awards in Canadian courts tend to be more modest than those in the United States. Canadian punitive damages appear almost niggardly by comparison. Some of the provinces have very wide discovery rules, similar in scope and nature to those available in the U.S. Federal Courts, however, Ontario has quite limited discovery rules. One final threshold note of caution is that, with the exception of class actions, contingency fees are prohibited in Ontario.
Jurisdiction
The scenario under discussion anticipates the commencement of proceedings in a Canadian court by either a Canadian or foreign plaintiff against a Canadian and/or foreign defendants with respect to a cause of action arising in a foreign jurisdiction. In those situations it is necessary to determine whether the Canadian court will assume jurisdiction over the parties and the subject matter to the litigation.
In personam jurisdiction
An action in personam is one in which judgment is sought against a defendant with respect to personal obligations (generally arising either in tort or contract).
It is an accepted principle of international law that a plaintiff may select the jurisdiction in which proceedings are commenced. The choice of forum will be motivated by the plaintiff's perception of personal or juridical advantage. Within certain limitations our courts recognize the right of any plaintiff to commence proceedings in Ontario regardless of the plaintiff's nationality, residence or domicile.
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In order to commence proceeding against a party outside of Ontario, one must ensure that the proposed action is one that can be served outside of the province. Service of an action outside Ontario against a foreign defendant must be made in accordance with Rule 17 of the Rules of Civil Procedure. Rule 17 enumerates those claims for which a party may serve an originating process outside Ontario without leave of the Court; the Rule also permits service outside Ontario with leave of the court. In contract actions, where the contract was made in Ontario, or where the contract is expressed to be governed or interpreted by the law of Ontario, or the parties to the contract have agreed that the courts of Ontario are to have jurisdiction, or the breach of contract was committed within Ontario, service outside Ontario may be made without leave of the court. In tort actions service may be made without leave of the court if the tort was committed in Ontario. Service outside of Ontario without leave is also permitted where damage has been sustained in Ontario as a result of a tort or breach of contract committed elsewhere.
Manner of Service outside of the Jurisdiction and The Hague Convention on the Service Abroad
Generally, in...
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