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 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.
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.