April 2013

The Supreme Court of Canada rules on criteria to determine the territorial jurisdiction of courts

By Robert Faguy Lawyer

In a globalized world in which business relations increasingly involve several jurisdictions, the Supreme Court of Canada recently set out certain rules governing the jurisdiction of courts to determine the judicial district in which a party must file suit when a dispute involves several jurisdictions [Breeden v. Black, [2012] 1 S.C.R. 666; Club Resorts Ltd. v. Van Breda, [2012] 1 S.C.R. 572; Éditions Écosociété Inc. v. Banro Corp., [2012] 1 S.C.R. 636].

The Supreme Court reiterated the need to assess the connecting factors and real and substantial links in order to determine whether a court in a given judicial district is competent to hear a case. The following considerations constitute connecting factors that establish a presumption that, at first sight, authorizes a court to hear a case.

a) The defendant is domiciled or resides in the jurisdiction

b) The defendant carries on business in the jurisdiction

c) The tort was committed in the jurisdiction

d) A contract connected with the dispute was concluded in the jurisdiction e) The parties agreed on a contractual clause that expressly provides the jurisdiction in which a dispute is to be heard

The Supreme Court of Canada recognized that several jurisdictions may be connected with a dispute. However, if a Canadian court should decline jurisdiction on the grounds that a court in another jurisdiction constitutes a more appropriate forum to hear the case, the party that raised the issue must demonstrate that the other forum is clearly the most appropriate [Breeden v. Black, [2012] 1 S.C.R. 666, par. 22-36; Club Resorts Ltd. v. Van Breda, [2012] 1 S.C.R. 572, par. 102, 103].

If the dispute relates to a tort (defamation or any other tort), it is important to ensure that certain connecting factors justify a specific jurisdiction (e.g. the location where the events occurred) [Breeden c. Black, [2012] 1 S.C.R. 666, par. 20; Club Resorts Ltd. v. Van Breda, [2012] 1 S.C.R. 572, par. 30, 35, 52-65; Éditions Écosociété Inc. v. Banro Corp., [2012] 1 S.C.R. 636, par. 37-40].

With regards to business relations, in order to avoid being called before a foreign court, clear provisions must be set out in all contract documents, indicating the jurisdiction in which any dispute must be filed.