Category: Enforcement Of Foreign Judgments

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Enforcement Of Foreign Judgments Litigation

Service of Court Documents to Foreign Company Deemed Invalid

We have previously written about what courts consider when determining whether to enforce a foreign judgment in Canada. Another issue that arises in disputes with foreign entities is the service of court documents abroad.

In the recent case of Salguiero et al. v. Instant Brands et al., the plaintiff in a product liability action attempted to serve court documents on the defendant, a company in China. The question before the Ontario Superior Court of Justice was whether the plaintiff had effectively served the defendant according to the Ontario Rules of Civil Procedure and international law.

The plaintiff purchased a defective from Amazon.ca

The plaintiff purchased a product from Amazon.ca and received it in December 2016. It became defective in February 2017. The Statement of Claim was not issued until days before the limitation period would run up, in February 2019. The defendants to the plaintiff’s lawsuit were Amazon.com Inc., Instant Brands Inc., and GD Midea Consumer Electric Manufacturing Co. Ltd.

The third company, GD Midea, is headquartered in China, while Amazon and Instant Brands have head offices in Seattle, Washington and Ottawa, Ontario, respectively. Service of the Statement of Claim was successfully made on both Amazon and Instant Brands, but there was a problem with service to GD Midea.

Service in the foreign country was stalled by investigation

Canada and China are contracting states under the Hague Convention of 15 November 1965 on the Service Abroad of Judicial and Extrajudicial Documents in Civil or Commercial Matters. Under the Ontario Rules of Civil Procedure, there are specific rules on service to individuals outside of Ontario located in a contracting state:

Manner of Service in Convention States

(3) An originating process or other document to be served outside Ontario in a contracting state shall be served,

(a)  through the central authority in the contracting state; or

(b)  in a manner that is permitted by the Convention and that would be permitted by these rules if the document were being served in Ontario.

The plaintiff’s counsel knew about this rule and inquired about translating the documents for service to the central authority. However, the plaintiff’s lawyer did not follow through with this request. Despite this, in March 2019, GD Midea’s insurer contacted the plaintiff’s counsel to advise that an investigation into the matter was underway. It was also requested that no further steps be taken, such as noting the defendant in default. The plaintiff agreed to hold off until all defendants had the opportunity to investigate.

Foreign company raises issue with service of Statement of Claim after serving Statement of Defence

By April 2020, after GD Midea’s request to not be noted in default had been renewed multiple times, the plaintiff provided a 45-day time limit to receive statements from all defendants. GD Midea “served what purported to be a defence and crossclaim” in June 2020. Amazon and Instant Brands served their own statements of defence a month later.

After serving its statement of defence, counsel for GD Midea realized its client might not have been served in accordance with the Hague Convention or the Rules of Civil Procedure. Counsel notified the plaintiff mid-June 2020 and requested a copy of the affidavit of service. In July 2020, a day after Amazon and Instant Brands filed their statements of defence, counsel for the plaintiff relented that service had never been formally effected in China. In response, GD Midea said it would dispute the jurisdiction and forum for the claim. In other words, the company would dispute the authority of the Ontario court to hear the case. At trial, the company did not bring any arguments forward on this point because it was premature.

GD Midea could not have been noted in default if service had not been completed. However, the company’s conduct demonstrated its awareness of its involvement in the pending legal proceedings.

Did the service rules apply if the defendant was already aware of the case?

The question before the Ontario Superior Court of Justice was “whether the formalities of service under the [Hague Convention] are required when it is quite clear that the defendant knows the particulars of the claim, has insurance which would respond to the claim and where the insurer has instructed counsel in Ontario.” The Court also mentioned the related issue of counsel for GD Midea serving a statement of defence on behalf of the company after mistakenly assuming that service had been effected.

In the event that formal service was still required, the Court considered the plaintiff’s argument that the time for service should be extended as the limitation period expired in 2019.

The purpose of the Hague Convention for service in foreign jurisdictions

The purpose of the Hague Convention pertaining to service in foreign jurisdictions is to ensure uniform procedure across contracting states. Service must occur in accordance with the Hague Convention. If the situation were reversed, it is not likely that a foreign state would enforce judgment of claims served in breach of that state’s law. Those documents must also be translated for service to be validated.

There are remedies under the Hague Convention for those who cannot effectively service defendants to their claims, but this was not the case here. Counsel made no attempt to serve in accordance with the Hague Convention and the Rules of Civil Procedure.

The defendant can waive the formalities of service if they choose

Although the purpose of the law for contracting states was clear, the Court determined that the formalities of service are not always necessary. A foreign defendant can waive the requirement of service in compliance with those rules. However, the Court did not find this applied to the present case. There was an error in assuming service had been made but not an acceptance of service once the error was discovered. So while the formalities of service on contracting parties of the Hague Convention need not be followed every time, this case was not an exception.

Concerning the applicable notice period, the Court did not find it unjust that the plaintiff now had to service the defendant in accordance with the Hague Convention. It would have been a more significant prejudice to the defendant to have proceeded without service being effected. As service through the appropriate rules could take up to 18 months to complete, the Court agreed to extend the time for completing service to 24 months so long as the plaintiff commenced the process within six months of the Court’s decision.

Baker & Company Assists With Disputes With Foreign Entities

It is important to consult with legal counsel as soon as possible when a claim arises, especially when it involves entities headquartered in foreign jurisdictions. The skilled litigation lawyers at Baker & Company help clients in international disputes and assist with the enforcement of foreign judgments in Ontario or elsewhere in Canada. We also represent clients in various other matters, including corporate & commercial law, real estate law, employment law, estate law, and hotel law. We rely on more than 30 years of litigation experience to ensure that our clients’ rights are protected. Call us at 416-777-0100 or contact us online for a consultation.

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Enforcement Of Foreign Judgments

Understanding The Rules Behind Enforcing Foreign Judgments

One would think that, when a case is decided, the decision must carry forward no matter where the parties to that matter may reside. But not a lot of people know that there is a body of laws dedicated to determining whether a foreign judgment is enforced in Canada. In some instances, decisions made in foreign jurisdictions have no application or weight in Canada.

What is private international law?

The rules surrounding the enforcement of foreign judgements in Canada are called private international law. Private international law is a branch of public law that concerns the regulation of relations between private parties across national boundaries. It is distinct from public international law, which instead concerns relations between states and other entities. Because private international law regulates relations between individuals or organizations and not countries themselves, it is sometimes called a “conflict of laws.”

Private international law determines the application of decisions across family law, corporate and commercial law, real estate law, employment law, wills and estates law, and more. The purpose of this law is to ensure consistency in how foreign judgments are dealt with in Canada.

How to determine whether a foreign judgment should be enforced

As is common in any branch of law, a procedure exists to help courts determine whether a foreign judgment should be enforced in Canada. It is as follows:

  1. First, there must be a conflict between foreign judgment and Canadian law. For example, in Cariello v Perella, at issue was whether a retired priest could appoint a power of attorney to friends in Canada when an interim guardian had already been appointed by an Italian court.
  2. Second, the problem must be distinguished as one of the following:
    1. Conflict of Jurisdiction – The conflict concerns whether Canadian courts are competent to make a decision on the matter.
    2. Conflict of Laws – The conflict concerns which law should apply to an international situation.
    3. Conflict of Authority – The conflict concerns the recognition of laws or decisions made by foreign bodies.
  3. What are the factors that are connecting the matter to either Canada or the foreign decision, law, or authority? Connecting factors include each party’s domicile, the residence of the parties, the location of the property in issue, the location an offence or infraction was committed, the nationality of the parties, and what the parties chose themselves in the contract.

Key terminology in private international law

In private international law, two connecting factors can prove to be crucial. Those are the domicile of the parties and the residence of the parties. Although there are similarities between the two concepts, they are different in distinct ways.

Domicile. A domicile is a place where a person permanently lives or where a corporation was incorporated. In Quebec, a corporation’s domicile is wherever the corporation’s head office is located. In the case of a person, their domicile is wherever they intend to be permanently situated. In layman’s terms, a domicile is one’s “place of origin” or “home base.” Everyone starts with their place of birth as their domicile. This is retained until a person chooses to make another place their domicile by moving to another country with plans to remain there indefinitely. Even if a person leaves their domicile country or province for long periods of time, it cannot be lost.

Residence. Contrasted to the domicile, the residence is the place where a person habitually resides. There is no need to prove intention to reside in one place indefinitely. Indicia of residence include provincial health insurance, where someone declares taxes, and in which province a person works. If a person resides across multiple properties, such as a cottage, the residence is where they reside stably and constantly compared to the others.

Exceptions to the Application of Private International Law

Although there are many areas of law to which private international law applies, other areas of law involve different procedures. A reason for a lot of this conflict is the need to respect the decisions of other nations, which are best situated to determine what is in their own best interests when they are parties to the matter. For certain areas of law where the state is a party, it is not possible to enforce those decisions within Canada. Consider the following:

Criminal Law

These laws involve a sanction, for a violation of a duty to the state. Generally, private international law will not apply except in two circumstances: extradition treaties and specific provisions of the Criminal Code of Canada.

Fiscal Law

A fiscal law is any law that imposes a non-contractual pecuniary obligation in favour of the state. This includes federal or provincial income tax, provincial or federal inheritance tax, provincial retail sales taxes, municipal taxes, and indirect taxes (such as customs duties, stamp duties, etc.).

Public Law

Public law tends to be concerned with the nature of a transaction between the state and an individual.

Are there instances where Canada might not enforce a foreign judgment?

It is sometimes the case that there are other reasons, outside the aforementioned exceptions, for which a Canadian court may not want to enforce a foreign judgment. One of those reasons is public policy.

Public policy plays an important role in private international law. On the basis of public policy, a Canadian court is able to set aside a foreign decision that is manifestly incompatible with the fundamental concepts underpinning the Canadian legal system.

Contact the Litigation Lawyers at Baker & Company in Toronto For Assistance with Enforcing a Foreign Judgment in Ontario 

If you are involved in a cross-border or international dispute and have received a judgment in a foreign jurisdiction that you wish to have enforced in Ontario or elsewhere in Canada, contact the highly skilled litigation lawyers at Baker & Company. We rely on more than 30 years of litigation experience to ensure that our clients’ rights are protected. Call us at 416-777-0100 or contact us online for a consultation.

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Enforcement Of Foreign Judgments

Supreme Court of Canada Issues Ruling on the Reciprocal Enforcement of Foreign Judgments

Last week, the Supreme Court of Canada issued a decision on the reciprocal enforcement of foreign judgments in Canada, clarifying the meaning of “carrying on business” under the relevant legislation.

Company Obtains Enforcement of Foreign Judgment in British Columbia

In 2007, Antigua, a country comprised of several islands in the Caribbean, expropriated property owned by a private company incorporated in Antigua pursuant to the country’s Land Acquisition Act. Litigation ensued, and in May 2014, the Judicial Committee of the Privy Council ordered Antigua to compensate the company for the expropriation.

Over two years later, in October 2016, the company brought a common law action in British Columbia to enforce the Privy Council Judgment in that province. Antigua did not defend the action.

As a result, in April 2017, the company obtained a default judgment for the enforcement of the Privy Council Judgment against Antigua in the British Columbia Supreme Court.

Company Seeks Reciprocal Enforcement of Judgment in Ontario

One year later, in May 2018, the company commenced an application in Ontario to enforce the British Columbia Judgment by having it registered under Ontario’s Reciprocal Enforcement of Judgments Act (“REJA”).

Antigua opposed the application. It submitted that while it had contracts with four “Authorized Representatives” with businesses, premises and employees in British Columbia for the purposes of its Citizenship by Investment Program (“CIP”), it did not have a physical presence in the province and it was therefore not “carrying on business” for the purposes of REJA.

Judge Rules Registration of Judgment Precluded Because Antigua was not Carrying on Business in British Columbia

When the company sought to enforce the British Columbia Judgment in Ontario pursuant to the REJA, Antigua resisted the application on the basis of both ss. 3(b) and 3(g) of the legislation. Those sections read:

Conditions of registration

3.  No judgment shall be ordered to be registered under this Act if it is shown to the registering court that…

(b) the judgment debtor, being a person who was neither carrying on business nor ordinarily resident within the jurisdiction of the original court, did not voluntarily appear or otherwise submit during the proceedings to the jurisdiction of that court; or…

(g) the judgment debtor would have a good defence if an action were brought on the original judgment. 

The application judge accepted Antigua’s arguments and dismissed the company’s application, finding that s. 3(b) of the REJA precluded the registration of the British Columbia judgment because Antigua was not “carrying on business” in British Columbia, which requires a physical presence in the jurisdiction and the CIP did not qualify did not constitute a business activity.

The application judge also held that the registration of the British Columbia judgment was precluded by s. 3(g) of the REJA, which bars registration if “the judgment debtor would have a good defence if an action were brought on the original judgment”. The application judge concluded that “original judgment” referred to the first-instance Privy Council Judgment on the merits, not the British Columbia Judgment, which was a derivative of a judgment of a non-reciprocating jurisdiction.

The company appealed to the Ontario Court of Appeal.

Court of Appeal affirms Analysis of the Application Judge, Appeal Dismissed

On appeal, the company challenged the application judge’s approach to both ss. 3(b) and 3(g).

However, a majority of the Court of Appeal for Ontario affirmed the application judge’s analysis of “carrying on business” under s. 3(b) of the REJA and dismissed the appeal on that basis. It found that the application judge had not erred in summarizing or applying the legal test for what constitutes carrying on a business and that his factual finding that Antigua was not carrying on business in British Columbia was entitled to deference. Because the court had disposed of the appeal under s. 3(b), it did not address the issue of s. 3(g).

The company appealed to the Supreme Court of Canada.

Supreme Court of Canada Finds Application Judge Correctly Applied the Reciprocal Enforcement of Judgments Act

The majority of the Supreme Court of Canada dismissed the appeal, finding that the application judge had correctly interpreted and applied the relevant provisions of the REJA. It explained that the “carrying on business” set out in s. 3(b) has been given a generous and liberal interpretation by the courts below consistent with the Court’s jurisprudence. It, therefore, held that there had been no error in the conclusion that Antigua was not carrying on business in British Columbia.

Carrying on Business in a Jurisdiction Requires Direct or Indirect Presence in the Jurisdiction, Supreme Court States

While the court noted that the REJA does not define “carrying on business” for the purposes of s. 3(b), it explained that the concept has a long history in common law. The court stated that to determine whether a defendant is carrying on business in a jurisdiction, the court must inquire into whether it has some direct or indirect presence in the jurisdiction, accompanied by a degree of business activity that is sustained for a period of time. Whether or not a corporation is carrying on business is a question of fact assessed in reference to a number of indicia. Some kind of actual presence, whether direct or indirect, is required. The court found that physical presence in the form of maintenance of physical premises will be compelling, but a virtual presence that falls short of an actual presence will not suffice.

In the result, the court, therefore, dismissed the appeal.

For Assistance Enforcing Foreign Judgments, Contact Baker & Company in Toronto

Where legal disputes cross borders, individuals or businesses may need to enforce a foreign judgment in an Ontario court or a court in another Canadian province or territory. This can occur across a wide range of legal disputes including those involving corporate & commercial law, expropriation law,  real estate law, employment law, wills & estates law, and hotel law. If you are involved in a cross-border or international dispute and have received a judgment in a foreign jurisdiction that you wish to have enforced in Ontario or elsewhere in Canada, contact the highly skilled corporate commercial lawyers at Baker & Company. We rely on more than 30 years of business law experience to ensure our clients’ rights are protected. Call us at 416-777-0100 or contact us online for a consultation.