PRIVATE INTERNATIONAL LAW SUMMARY 2011
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1 PRIVATE INTERNATIONAL LAW SUMMARY 2011 LAWSKOOL CANADA
2 CONTENTS 1. INTRODUCTION TO PRIVATE INTERNATIONAL LAW WHAT IS PRIVATE INTERNATIONAL LAW? TERRITORIAL DIMENSIONS OF PRIVATE INTERNATIONAL LAW PRIVATE INTERNATIONAL LAW RULES IN CANADA SOURCE OF PRIVATE INTERNATIONAL LAW RULES CANADA THE EUROPEAN UNION INTERNATIONAL INITIATIONS ON PRIVATE INTERNATIONAL LAW JURISDICTIONAL CONFLICTS THEORIES OF JURISDICTION OTHER JUSTIFICATIONS ON THE EXERCISE OF JURISDICTION Presence-based Jurisdictions Assumption-based Jurisdictions Consent-based Jurisdictions & Forum Selection Agreements ESTABLISHMENT OF JURISDICTION IN THE CASE OF NON-AGREEMENT Non-ULCC common law provinces Real and substantial connection test Order and fairness principle as a constitutional obligation Eight Muscutt factors for the real and substantial connection test ULCC common law provinces Quebec CHALLENGE AGAINST THE SEIZED JURISDICTION Forum non conveniens Non-ULCC common law provinces ULCC common law provinces Quebec rule on forum non conveniens Lis pendens ANTI-SUIT INJUNCTIONS EFFECTS OF FOREIGN DECISIONS CHOICE OF LAW CHOICE OF LAW IN CONTRACT Common law jurisdictions... 33
3 6.1.2 Quebec CHOICE OF LAW IN TORTS Common law jurisdictions Quebec CHOICE OF LAW: SUBSTANCE AND PROCEDURE Limitation period Quantum of damages DOCTRINE OF RENVOI PROOF OF FOREIGN LAW... 45
4 CASES Alberta v. Thomas Equipment Ltd. [1979] S.C.R Amchem Products Inc. v. British Columbia Worker s Compensation Board, [1993] 1 S.C.R , , 4 Beals v. Saldanha, [2003] 3 S.C.R Bouch v. Penny, 2009 NSCA , Canada Post Corp. v. Lépine, [2009] 1 S.C.R. 549 at para Castillo v. Castillo, [2005] 3 S.C.R Gajraj v. DeBernado (2002), 60 O.R. (3d) GreCon Dimter inc. v. J.R. Normand inc., [2005] 2 S.C.R Harding v. Wealands, [2006] UKHL Hunt v. T&N plc, [1993] 4 S.C.R Imperial Life Assurance Co. of Canada v. Segundo Casteleiro Y Colmenares, [1967] S.C.R Impulsora Turistica de Occidente, S.A. de C.V. v.transat Tours Canada Inc., [2007] 1 S.C.R Interinvest (Bermuda) Ltd. c. Herzog (2009), QCCA , Matrix Integrated Solutions Limited v. Radiant Hospitality Systems Ltd. (2009), ONCA Moran v. Pyle National (Canada) Ltd., [1975] 1 S.C.R Morguard Investment Ltd. V. De savoye, [1990] 3 S.C.R , 3.1, Muscutt v. Courcelles (2002), 60 O.R. (3d) , 3.2.2, , Poultry Farm Héva inc. c. Boreal Assurances agricoles inc., [2003] J.Q. No Regenair inc. c. Quebecor Printing Memphis Inc. [2001] JQ No (CA) R. v. Hape, 2007 SCC Spar Aerospace Ltd. v. American Mobile Satellite Corp., [2002] 4 S.C.R , 5 Spiliada Maritime Corp v Cansulex Ltd., [1986] 3 W.L.R. 972, 3 All E.R. 843, [1987] A.C , 4 Teck Cominco Metals Ltd. v. Lloyd s Underwriters, 2009 S.C.C Tolofson v. Jensen, [1994] 3 S.C.R , Z.I. Pompey Industrie v. ECU-Line N.V. (2003), S.C.C
5 1. Introduction to Private International Law 1.1 What is private international law? Private international law is a legal framework which regulates relationships between private individuals in an international (or interprovincial) context. The character of private international law is twofold. First, it balances international consensus with domestic recognition. Second, it balances sovereign actions with those of the private sector. Disputes that require private international law solutions are not disputes that involve the merits of the case. In other words, issues involving private international law do not address the substantive outcome of the entire proceeding. While the merits of the case might involve questions such as whether there was causation between the injurious act and damage, whether a contractual clause should be struck down due to undue influence, or whether there was a breach of an agreement, private international law questions include: Whether the court has appropriate (territorial) jurisdiction to hear the case Whether the court should decline jurisdiction because there is another court that is more appropriate to hear the case Whether judgment rendered by a court in another state is recognizable and enforceable Whether the court may stay a lawsuit brought before another court Which law should apply to resolve the dispute Although private international law disputes do not address the ultimate outcome of the case, they are considered important forms of disputes. Some cases are appealed to the highest court of the country simply on a private international law issue that cannot be resolved by the court of first instance or the court of appeal. It is after the private international law issue has been resolved that an issue attacking the merits will be considered. A lawsuit could become more expensive and subject to time delay due to the need to resolve private international law questions. Occasionally, the parties decide to discontinue the lawsuit on the merits after the private international law issues have been resolved. There have been attempts to harmonize private international law rules in order to create certainty and predictability in litigation. It is believed that the harmonized rules will reduce private international problems, resulting in greater efficiency. The European Union, for example, has successfully implemented several private international law rules which apply to all Member States. The common or
6 universal rules ease business transactions and the process of dispute resolution within the European Community. However, the attempts to harmonize private international law rules across continents are more difficult because private international law rules are largely attached to domestic rules. Unlike public international law which gains strength from states consensus, there is no strong international consensus among countries to follow universal rules in private matters. 1.2 Territorial dimensions of private international law Private international law problems do not only arise internationally, but also domestically. Federal states such as Canada and the United States are likely to face private international law problems domestically because each province or each state is constitutionally entitled to enact laws and allows the courts within the province or state to exercise their judicial power without interference from other province or state. It is clear that the diverse legal systems in Canada can potentially create conflicts in litigation when a party to the dispute raises a challenge that another court or another law should apply in lieu of the current court or the current law. If a court accepts the exercise of jurisdiction of another court, another question is to what extent it will also agree to recognize and enforce a judgment rendered by another court. 1.3 Private international law rules in Canada Private international law rules in Canada are not unified. They vary across the country, depending on the legal tradition of each province. Some provinces such as British Columbia, Nova Scotia and Manitoba have adopted certain model rules under the Uniform Law Conference of Canada (ULCC). For these provinces, subject matters that are not addressed under the ULCC are subject to common law rules. Some provinces such as Ontario, Alberta, and Saskatchewan follow common law rules which have been modified over time through case law. Since 1990, the Supreme Court of Canada has changed several common law rules that were initially introduced by the House of Lord in England. Most rulings of the Supreme Court of Canada adhere to the principle of order and fairness. The principle aims to prevent abuse of justice and supports the rules that are fair to the litigating parties. Morguard is the
7 leading case that emphasized the importance of order and fairness in applying the rules of private international law. 1 Quebec is the only province that has completely codified private international law rules, which are found under Book Ten of the Civil Code of Quebec (Article ). Nevertheless, any rule specified by the Supreme Court of Canada as a constitutional obligation or constitutional imperative has superior force over Quebec rules; thus, overrides any conflicting rules under the Civil Code of Quebec Source of Private International Law Rules The rules of private international law are found under conventions, model laws, national laws, and other instruments that regulate private relationships across national borders. 2.1 Canada The rules on private international law in Canada are not uniform. Quebec has codified a comprehensive set of rules within Book Ten of the Civil Code of Quebec. The common law provinces can be divided into two groups in terms of implementation and application of private international law rules. The first group enacts legislation that contains certain private international law rules following the model rules created by the Uniform Law Conference of Canada (ULCC). Provinces that have followed the ULCC model rules are British Columbia, Saskatchewan and Nova Scotia. The ULCC model rules do not cover all areas of private international law. The model rules that have been adopted by British Columbia, Saskatchewan and Nova Scotia are rules on allocation of jurisdictions (See the ULCC Court Jurisdictions and Proceedings Transfer Act). For private international law matters that are not covered by the enacted legislation, the court in these provinces resort to common law principles found in case law. 1 Morguard Investment Ltd. V. De savoye, [1990] 3 S.C.R See Muscutt v. Courcelles (2002), 60 O.R. (3d); Hunt v. T&N plc, [1993] 4 S.C.R. 289.
8 The second group of the common law provinces apply common law rules. They do not have codified rules or enacted legislation that compiles the rules governing private international law disputes. These jurisdictions include Alberta, Manitoba, Ontario, New Brunswick, Prince Edward Island, Newfoundland and the Territories. This summary will use Ontario as an example of this group of provinces. 2.2 The European Union The private international law system is Canada resembles that of the Europe continent before the European Union was established. In Europe, national rules on private international law disputes were very diverse, comprised of the common law system of the United Kingdom to civil law system of countries in the continental Europe. Canada also has both common law and Quebec civil law system that operate within the same country. However, when the European Union emerged, certain areas of private international law has been uniform and applied to all Member States. Some rules co-exist with national rules such as rules regarding jurisdiction allocation (Brussels II Regulation). Some rules such as rules concerning choice of law in contractual and non-contractual obligations (Rome I and II) replace national law. The main objective of the European Union uniform rules is to create certainty and predictability in the dispute resolution of private matters. 2.3 International initiations on private international law Due to the desire to have certain and predictable rules of private international law, the international community has attempted to create common rules that apply universally in the international sphere. The main organization that deals with unification of private international law rules is the Hague Conference on Private International Law. The rules that have been developed include the 1971 Hague Convention on Foreign Judgments in Civil and Commercial Matters, the 1973 Hague Convention on the Law Applicable to Products Liability and the 2005 Hague Convention on Choice of Court Agreements. These rules only apply to states that signed on to the Conventions. 3. Jurisdictional Conflicts A sovereign state has three main jurisdictions. It has prescriptive jurisdiction to make rules, issue commands, and grant authorization within the state. It also has enforcement jurisdiction to give effect to the law and ensure that rules are followed. The norm in the international community is that a
9 state can prescribe rules which may have an effect internationally; however, it may not enforce its own rules upon a foreign jurisdiction unless another jurisdiction consents to the enforcement. Finally, a state has adjudicative jurisdiction which is power to resolve disputes and interpret law. 3 This section deals with problems relating to adjudicative jurisdiction. Note also that this summary deals exclusively with private international law conflicts that are brought before courts, not arbitral tribunals. Jurisdiction of arbitral institutions should be dealt with under the course involving arbitration. 3.1 Theories of jurisdiction States are self-interested. 4 They have no obligation to recognize or comply with rules of law and the exercise of jurisdiction of other states. Upon this basis, states are entitled to assert power on their subjects. Allegiance theory supports this view. Consider the landlord-tenant relationship under feudalism. A landlord had jurisdiction over his land and the tenants who lived on that land. Tenants were usually allegiant to their landlord. Feudalism is no longer a popular practice and the allegiance theory has become a weak justification for an exercise of jurisdiction. The only example of the exercise of jurisdiction based on the allegiance theory that still exists today is the assertion of jurisdiction based on nationality. France, for instance, imposes its jurisdiction on any French national, whether or not that French national engages in a dispute outside or inside France, and whether or not that French national is a plaintiff or defendant. A criticism against the allegiance theory is that it encourages excessive exercise of jurisdiction. Most countries have moved away from the allegiance theory. After the allegiance theory loses its force as a justification for the exercise of jurisdiction, the power theory gains ground. Power theory holds that a state where the defendant is located has power to exercise jurisdiction over the defendant, regardless of the defendant s nationality. The rationale behind this theory is that the defendant usually has assets and property which could be seized to compensate the plaintiff; therefore, it is practical to sue the defendant where he resides. The power theory, thus, promotes effectiveness by ensuring that the plaintiff will be compensated in the case that he wins. Nevertheless, power theory does not take into account the fact that the plaintiff is 3 See R. v. Hape, 2007 SCC Pierre Mayer, Droit international privé (Private International Law), 4th ed. (Paris : Montchrestien, 1991).
10 require to travel to place of residence of the defendant and sue him there. This would create difficulty and unfairness to the plaintiff especially in a situation that the plaintiff sustains serious personal injury. Due to the desire to create a fair litigation system to both parties to the dispute, fairness theory becomes a famous justification for exercises of jurisdiction. According to this theory, an exercise of jurisdiction is justified if it does not create undue disadvantages to a litigating party. The theory suggests that all circumstances relevant to the dispute must be taken into account in order for the court to determine whether the exercise of jurisdiction is fair to both the plaintiff and the defendant. The fairness theory is a limitation on the power theory. It imposed a limit on the state power over the defendant. The focus of fairness theory is not on the parties, but on the subject-matter of the dispute. The theory holds that it is fairer to both litigating parties if the case is heard by an appropriate forum. In order to determine appropriateness of a forum, the court is required to consider significant links or connections between the subject-matter and the forum. The fairness theory explains various rulings by the Supreme Court of Canada that had an effect of allocating court jurisdiction. In Morguard Investment Ltd. v. De Savoye, the court has emphasized that the judicial exercise of jurisdiction must comply with the order and fairness principle. 5 This includes a decline of jurisdiction when a court is not an appropriate forum to hear the case (forum non conveniens). Recall that states have sovereignty and it has no obligation to accept the exercise of jurisdictional power of another state. However, states that comply with the principle of comity will reciprocally extend courtesies to one another through recognizing the validity and effect of executive, legislative and judicial acts of another state. As part of globalization, states see cooperation as a mechanism that helps facilitates business flow and economic growth. 6 To order the complete version of the lawskool Private International Law Summary please visit 5 Supra note 1. 6 Robert Keohane, Reciprocity in International Relations (1986) 40 Journal of International Organization 1.
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