Cases on Jurisdiction and Forum Selection Clauses - Stewart McKelvey

ANNUAL PROFESSIONALDEVELOPMENT – CBA NSCASES ON JURISDICTION AND FORUMSELECTION CLAUSESJANUARY 27, 2012WRITTEN BY:DANIELA BASSAN(PARTNER)MICHELLE BLACK(ARTICLED CLERK)

CASES ON JURISDICTION AND FORUM SELECTION CLAUSES – JAN. 2012CONTRACTUAL CLAUSE JURISDICTIONS SUMMARY OF DECISIONBC Rail Partnership v. Standard Car Truck Co., 2003 CarswellBC 2743 (C.A.)“Section 19(g) This Agreement shall be governedin all respects, whether as to validity, construction,capacity, performance or otherwise, by and underthe laws of Nova Scotia, Canada (without givingeffect to principles of conflicts of laws). Lesseeirrevocably and unconditionally submits to thejurisdiction of and venue in, federal and provincialcourts located in Nova Scotia, Canada for anyproceeding arising under this Agreement, and TOTHE EXTENT PERMITTED BY APPLICABLELAW, LESSOR AND LESSEE EACH WAIVESALL RIGHTS TO TRIAL BY JURY IN ANYLITIGATION ARISING HEREFROM OR INRELATION HERETO.” (at para. 5)Plaintiff – British ColumbiaDefendant – Nova ScotiaCheck Group Canada Inc. v. Icer Canada Corp., 2010 NSSC 463“This agreement shall be governed by andconstrued in accordance with the laws prevailingin the Province of Québec.” (at para. 8)Plaintiff – Nova ScotiaDefendants – QuébecHeld: Forum selection clause upheld.It was decided on objective interpretation that thiswas an exclusive jurisdiction clause and not just anattornment clause. The phrase “any proceeding” inthe forum clause should be interpreted asproceedings that are commenced by any party.Looking at the lease as a whole, the Court decided itwas unlikely that parties intended to limit thejurisdiction clause only to proceedings commencedby the Defendant. Once it was determined that theclause was indeed a forum selection clause, the“strong cause” test was applied and could not bemet. There was no reason not to give effect to theclause.Held: Choice of law clause rejected.Court recognized Pompey as standing for theproposition that if there is a forum selection clause inthe agreement then the regular forum nonconveniens analysis will not apply. Instead, theburden falls to the Plaintiff to prove that it need notbe held to the contract (thus, the strong cause testshould be used). Before that can happen, there hasto be a “validly-concluded binding contract betweenthe parties, which includes a choice of jurisdictionclause.” (at para. 39) The Court found that therewas no binding choice of jurisdiction clause and nobinding contract in this case.2426503.v2Page 1

CASES ON JURISDICTION AND FORUM SELECTION CLAUSES – JAN. 2012CONTRACTUAL CLAUSE JURISDICTIONS SUMMARY OF DECISIONCKF Inc. v. Huhtamaki Americas et al, 2009 NSSC 21“This agreement shall be construed in accordancewith the laws of the State of Maine, U.S.A., andeach of the parties hereby submits itself to thejurisdiction of the Courts of Maine for theadjudication of all matters arising herefrom.”(at para. 11)Plaintiff – Nova ScotiaDefendants – Ontario andMaineHeld: Forum selection clause rejected.The factual matrix of the case involved trade-markand technology issues. Plaintiff started a proceedingin Nova Scotia regarding all disputed issues.Defendants started proceedings in Ontario (for trademarkissues) and in Maine (for technology issues).The contractual clause was not shown to beexclusive and also did not apply to all matters indispute.Curves International Inc. v. Archibald, 2011 NSSC 217“M. Governing Law and Jurisdiction.Franchisee agrees that the relationship, rights andobligations of the parties of this FranchiseAgreement shall be governed by the internal lawsof the state of Texas, except to the extentgoverned by the United States Trademark Act of1946 (Lanham Act, 15 U.S.C. Section 1051 etseq.) and The Canadian Trade-Marks Act, (R.S.C.Plaintiff – TexasDefendant – Nova ScotiaUnder section 12(2) of the Court Jurisdiction andProceedings Transfer Act, Nova Scotia was the moreappropriate forum and more convenient than Ontarioor Maine. The greatest chance of avoiding amultiplicity of proceedings was for the Nova ScotiaCourt to exercise jurisdiction over all issues betweenall parties. Nova Scotia was the forum with theclosest and most natural connection to all disputedmatters.Held: Forum selection clause rejected.Plaintiff could show “strong cause” to prevent thegranting of a stay of proceedings.Curves had the burden of showing why it should notbe bound by the forum selection clause. It wasdetermined that the Court had territorial competencebecause the Defendants lived in or were2426503.v2Page 2

CASES ON JURISDICTION AND FORUM SELECTION CLAUSES – JAN. 2012CONTRACTUAL CLAUSE JURISDICTIONS SUMMARY OF DECISIONc. T-10) and any provincial or federal legislationgoverning franchising which now exists or whichmay become law. Franchisee agrees that anyaction arising out of or relating to the relationship,rights, or obligations of the parties herein shall bebrought in the Province or in any State or U.S.Federal court of general jurisdiction whereFranchisor’s principal business address is thenlocated and Franchisee irrevocably submits to thejurisdiction of such courts and waives anyobjection it may have to either the jurisdiction orvenue of such court.” (at para. 8)Expedition Helicopters Inc. v. Honeywell Inc., 2010 ONCA 351“CHOICE OF LAW. THIS AGREEMENT SHALLBE GOVERNED, CONTROLLED ANDINTERPRETED UNDER THE LAW OF THESTATE OF ARIZONA, EXCLUDING ITSCONFLICT OR CHOICE OF LAW PROVISIONS.The parties (i) agree that any state or federal courtlocated in Phoenix, Arizona shall have exclusivejurisdiction to hear any suit, action or proceedingarising out of or in connection with this Agreement,and consent and submit to the exclusivejurisdiction of any such court in any such suit,action or proceeding and (ii) hereby waive, andagree not to assert, by way of motion, as adefense, or otherwise, in any such suit, action orproceeding to the extent permitted by thePlaintiff – OntarioDefendant – Delawareincorporated under the laws of Nova Scotia and theagreement dealt with contractual obligations to beperformed in Nova Scotia. The proceeding had asubstantial connection to Nova Scotia. Strong causewas shown because all the Defendants wereresidents of Nova Scotia; none of them had a realand substantial connection to Texas. Furthermore,the witnesses were residents of Nova Scotia or otherCanadian provinces.Overall, it would be less costly to have the trial inNova Scotia rather than Texas. There was also aclaim in tort in this particular case and since theforum selection clause only dealt with claims arisingout of the agreement, the tort issue could and shouldbe dealt with in the place where the activity occurred(Nova Scotia).Held: Forum selection clause upheld.Full weight must be given to a forum selectionclause, particularly in the commercial context. ThePlaintiff had the burden of showing “strong cause”why the forum selection clause should not beenforced, but did not discharge this burden.There are minimal factors which may justifydeparture from a forum selection clause in acommercial agreement: (i) fraud or improperinducement; (ii) the Court in the designated forumrefuses to accept jurisdiction or is unable to deal withthe claim; (iii) the claim or the circumstances are2426503.v2Page 3

CASES ON JURISDICTION AND FORUM SELECTION CLAUSES – JAN. 2012CONTRACTUAL CLAUSE JURISDICTIONS SUMMARY OF DECISIONapplicable law, that the suit, action or proceedingis brought in an inconvenient forum, that thevenue of the suit, action or proceeding isimproper, or that this Agreement or any of thetransactions contemplated hereby may not beenforced in or by such courts.” (at para. 5)outside what was reasonably contemplated by theparties; (iv) a fair trial is no longer expected in theselected forum due to subsequent, unanticipatedevents; or (v) public policy considerations.(at para. 24)Fujitsu Consulting (Canada) Inc. v. Themis Program Management & Consulting Limited,2007 BCSC 1376“This Agreement shall be governed and construedin accordance with the laws of the Province ofBritish Columbia, without regard to choice of lawprinciples. The parties agree that the sole venuefor legal actions related to this Agreement shall bethe Supreme Court of British Columbia.”(at para. 19)Plaintiff – British ColumbiaDefendant – OntarioHeld: Forum selection clause upheld.The clause was a true forum selection clause (asopposed to a non-exclusive attornment clause).There was no reason to deny enforcement under theCourt Jurisdiction and Proceedings Transfer Act.There was no public interest issue because eitherparty could enforce a judgment in either province.The parties’ intentions were clear when they madethe contract.The Court set out factors to consider under the“strong cause” test as follows: “[1] where theevidence on the issues of fact is situated or morereadily available…; [2] to what jurisdiction either partyhas the greatest connection …; [3] whether … thereare any procedural or substantive issue[s] that theparties want to take advantage of …; and [4] whethereither party would be prejudiced by having to conductthe litigation in other than its preferred jurisdiction.”(at paras. 32-35)2426503.v2Page 4

CASES ON JURISDICTION AND FORUM SELECTION CLAUSES – JAN. 2012CONTRACTUAL CLAUSE JURISDICTIONS SUMMARY OF DECISIONMaritime Telegraph & Telephone Co. v. Pre Print Inc., 1996 CarswellNS 12 (C.A.)“19. Governing Law:This License Agreement shall be interpreted inaccordance with the local domestic law of theprovince of Alberta, Canada. If any part of thisLicense Agreement is invalidated by Court orlegislated action of competent jurisdiction, theremainder of this License Agreement shall remainin binding effect.19.1 Attornment:Pre Print and the licensee agree to attorn to thejurisdiction of the Courts of the Province of Albertawith respect to any claim or dispute arising out ofthis License Agreement.” (at para. 8)Plaintiffs – Nova ScotiaDefendant – AlbertaSimEx Inc. v. IMAX Corp., 2005 CarswellOnt 7297 (C.A.)“6. Choice of Law (Section 8.01):The agreement was to be governed by the laws ofOntario and any legal action was to [be] brought inthe courts of Ontario.” (at para. 7)Applicant – OntarioRespondent – CaliforniaHeld: Attornment clause rejected.The question was whether the contract contained anattornment clause (non-exclusive jurisdiction) or aforum selection clause (exclusive jurisdiction). It wasfound to be an attornment clause.The Plaintiff had to show “strong cause” to preventthe granting of the stay. The Plaintiff was able toadduce sufficient evidence to show that overall, therewas a more substantial connection with Nova Scotiathan with Alberta. A stay of proceedings was notgranted.The balance in the case was between the right of thePlaintiff to choose its forum and the ability of theDefendant to enforce the agreement entered into bythe parties.Held: Forum selection clause upheld.The defendant was bound by the forum selectionclause in the governing agreement because thedefendant failed to show “strong cause” or “goodreason” why it should not be bound by the provision.The contractual language agreed to by the partieswas not ambiguous.2426503.v2Page 5

CASES ON JURISDICTION AND FORUM SELECTION CLAUSES – JAN. 2012CONTRACTUAL CLAUSE JURISDICTIONS SUMMARY OF DECISIONZ.I. Pompey Industrie v. ECU-Line N.V., 2003 CarswellNat 1031 (S.C.C.)“The contract evidenced by or contained in this billof Lading [sic] is governed by the law of Belgium,and any claim or dispute arising hereunder or inconnection herewith shall be determined by thecourts in Antwerp and no other Courts.”(at para. 4)Appellant – Antwerp,BelgiumRespondents – France(However, Respondentstook position that the Bill ofLading had come to an endin Montreal so thatproceedings could takeplace in Canada.)Held: Forum selection clause upheld.The Appellants brought a motion seeking a stay ofproceedings in Canada because the Bill of Ladingrequired that disputes be determined exclusively bythe Courts of Antwerp.Forum selection clauses are often found in Bills ofLading and Courts encourage these provisions.There is no reason to suggest that the “strong cause”test is no longer relevant and effective. The “strongcause” test puts the burden on the Plaintiff toestablish why it should not be bound by a forumselection clause, and Courts must give full weight tothe desirability of holding contracting parties to theiragreements. Leeway is built into the “strong cause”test so as to prevent Defendants from improperly orunfairly relying on forum selection clauses.The “strong cause” test should be upheld for publicpolicy reasons. Here the parties were bothexperienced corporations with the ability to negotiatea forum selection clause. Overall the “strong cause”test is, absent applicable legislation such as theMarine Liability Act, the proper test for a stay ofproceedings to enforce a forum selection clause in aBill of Lading.2426503.v2Page 6