The Uncertainty Factor in Canadian
Private International Law
Jean-Gabriel Castel*
the
to certain
law applicable
The author criticizes the principle of proximity
that in Canadian private international law uses the test
of real and substantial connection to determine the
jurisdiction of Canadian and foreign courts, forum non
conveniens,
legal
relationships, and the recognition and enforcement of
foreign judgments. He calls this principle the factor of
uncertainty as it does not allow business people to
predict the outcome of any international litigation and
therefore does not always protect
their justified
expectations. Too much freedom is given to the courts.
In international business, it is imperative for the parties
to a transaction to be able to determine with some
certainty which court will hear any dispute that may
arise between them and which law is applicable to its
merits. The
real and substantial
connection
test is that it does not predict a single
definite result when taking into account the many
connecting factors that may be present in a particular
case.
flaw with
the
After reviewing some
relevant objectives of
private international law and the application of the real
and substantial connection test in Canada, the author
pleads in favour of a return to clear and predictable
rules of private international law that leave little room
for
recognizes,
however,
the
principle of proximity could perform a corrective
function to avoid a totally unjust end result. This he
calls
flexibility, which holds
predictability in check.
limited principled
interpretation by
the courts. He
circumstances
exceptional
that
in
L’auteur critique le principe de proximit6 qui en
droit international priv6 a recours au test du lien r6el et
substantiel pour 6tablir la comp6tence juridictionelle et
constitutionnelle des tribunaux canadiens et 6trangers,
leforum non conveniens, la loi qui s’applique au fond
d’un litige et la reconnaissance et I’application des
jugements 6trangers. II nomme le principe de proximit&
le facteur d’incertitude car celui-ci ne permet pas aux
personnes qui se livrent au commerce international de
pr6voir At l’avance ce qui pourrait se passer en cas de
litige. Les tribunaux b6n6ficient de trop de latitude. En
mati&re de commerce international, il est essentiel pour
les parties de savoir avec un certain degr6 de certitude
devant quel tribunal tout litige sera pr6sentu ainsi que le
droit applicable. La faiblesse du lien r6el et substantiel
r6side dans le fait qu’il n’aboutit pas n6cessairement A
un seul r6sultat pr6visible dans son interpretation des
multiples facteurs propres chaque cas.
Aprs avoir examin6 certains objectifs du droit
international priv6 et l’application au Canada du test du
lien r6el et substantiel, l’auteur conclut par un plaidoyer
en faveur de rgles claires et pr&ises afin d’&viter toute
surprise d6sagr6able. Cependant, il reconnait que dans
des cas exceptionnels le test du lien r6el et substantiel
peutjouer on rnle rectificatif pour &viter un r6sultat tout
A fait injuste. 11 s’agit alors d’un principe de flexibilit
restreinte qui fait 6chec At la pr6visibilit6.
.Jean-Gabriel Castel, O.C., Q.C., F.R.S.C., S.J.D., L.L.D, Distinguished Research Professor
Emeritus, Osgoode Hall Law School, York University, Toronto. This article is based on a lecture given
at the Faculty of Law, McGill University on 29 November 2006.
Jean-Gabriel Castel 2007
To be cited as: (2007) 52 McGill L.J. 555
Mode de r6f6rence : (2007) 52 R.D. McGill 555
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Introduction
I. Some Objectives of Private International Law
II. Legislation and Jurisprudential Applications
A. Jurisdiction simpliciter and forum non conveniens
B. Choice of Law
C. Foreign Judgments
Conclusion
557
558
559
559
563
566
569
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J.-G CASTEL – THE UNCER TAINTY FACTOR
557
Introduction
In the last forty years, in various areas of private international law, the legislatures
and the courts have abandoned clear and unambiguous rules for new rules that are
based on the principle of proximity as a general constitutional requirement of order
and fairness as well as a test for forum non conveniens.
This principle posits that:
1. An action must be brought before the court of the province, territory, state, or
country with which the parties, the action, or the matter have a real and
substantial connection.’
2. Once it has jurisdiction, the court must apply the law that has the most real
and substantial connection with the issue to be decided. 2
3. A foreign judgment will be recognized and enforced only if the original court
had jurisdiction based on a real and substantial connection with the parties
and/or the action.’
This reducing approach, which amounts to a nonrule, has at least the merit of
simplicity in its enunciation, if not in its application. It is opposed to the view that in
order to protect the justified expectations of the parties, the courts should apply
clearly formulated and unambiguous rules that allow individuals and their legal
counsel to assess the probable outcome of any potential litigation. In light of
globalization, this form of determinism has become most relevant in international
business transactions that usually involve complex issues in several legal systems.
In contrast, the real and substantial connection test adopts a non-determinist
approach for solving private international law cases. This is why it is suggested that
the principle of proximity should be called the uncertainty factor! 4
The application of the real and substantial connection test does not predict a
single definite result when taking into account the many connecting factors present in
a particular case. It can produce a variety of outcomes depending on their evaluation
by different courts and makes it difficult, if not impossible, to achieve predictability
and uniformity of result. Thus, a systematic application of the real and substantial
1 See Morguard Investments Ltd. v. De Savoye, [1990] 3 S.C.R. 1077, 76 D.L.R. (4th) 256, 52
B.C.L.R. (2d) 160 [Morguard]; Hunt v. T&N PLC, [1993] 4 S.C.R. 289, [1994] 1 W.W.R. 129, 85
B.C.L.R. (2d) I [Hunt].
2 See e.g. art. 3113 C.C.Q.
3 See Motguard, supra note 1.
4 See Paul Lagarde, “Le principe de proximit6 dans le droit international priv6 contemporain”
(1986) 196 Rec. des Cours 13; Joost Bloom & Elizabeth Edinger, “The Chimera of the Real and
Substantial Connection Test” (2005) 38 U.B.C. L. Rev. 373; Jean-Gabriel Castel & Janet Walker,
Canadian Conflict of Laws, looseleaf, 6th ed. by Janet Walker (Markham: LexisNexis/Butterworths,
2005) vol. 1 at para. 1.15.
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into private
connection test introduces an unavoidable element of uncertainty
international law that is contrary to the objective of predictability of results so needed
in international business.
Furthermore, the principle of proximity encourages forum shopping and prolongs
litigation. Where there is an element of uncertainty, the door is open for a resourceful
lawyer to attempt to change the application of the law; a clear rule of law, by contrast,
promotes settlement.5
Although a certain amount of flexibility is necessary since private international
law rules cannot be completely deterministic, in recent years, the courts have gone
too far in relying on the real and substantial connection test to resolve private
international law cases. In some instances they have not reached the ultimate goal of
protecting the justified expectations of the parties. This is especially true in common
law Canada, which uses the real and substantial connection test more than Quebec.
When jurisdiction, contracts, and foreign judgments are at issue, the result of the
case will often depend on chance since, in the absence of prescribed connecting
factors, the courts are usually analyzing and weighing facts. This is particularly
evident in borderline cases. Their decisions can easily be biased. The principle of
proximity gives too much power to the courts, rendering them, in a sense,
omnipotent.
Consequently, private international law jurisprudence, in which courts apply the
real and substantial connection test, is in disarray because the courts are often at odds
with one another. It is difficult for appellate courts to make order out of chaos due to
the nature of review, which involves mixed questions of law and fact. How do the
courts determine the weight to be given to this or that factual element in order to
select a truly relevant real and substantial connection? Fortunately, in Quebec, the
Civil Code of Quebec (“Code”) lists the factors and the order in which they are to be
taken into consideration when it uses this test.6
A brief review of some of the objectives of private international law will be
followed by an examination of a number of legislative and jurisprudential
applications of the real and substantial connection test with respect to jurisdiction
simpliciter, forum non conveniens, choice of law, and foreign judgments. This
analysis will lead to the conclusion that the real and substantial connection test should
be applied sparingly.
I. Some Objectives of Private International Law
Protecting
particularly
the justified expectations of the parties is an objective that is
law cases involving international
important in private international
5 See Tolofson v. Jensen, [1994] 3 S.C.R. 1022, 120 D.L.R. (4th) 289 [Tolofson cited to S.C.R.] at
1061, LaForest J.
6 See arts. 3107, 3113 C.C.Q.
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J.-G CASTEL – THE UNCERTAINTY FACTOR
559
business transactions, as “it would be unfair and improper to hold a person liable
under the local law of one state when he had justifiably molded his conduct to
conform to the requirements of another state.”7 Unfortunately, this objective is often
compromised by the uncertainty factor. Decisions regarding choice of jurisdiction,
choice of law, and enforcement of foreign judgments should not rely on a court’s
arbitrary determination of whether, in its opinion, a particular connection with this or
that jurisdiction or law is more important than another.
Clearly formulated and unambiguous rules of private international law are more
likely to protect the justified expectations of the parties. Where the rules are vague,
they encourage litigation and forum shopping since “tout se plaide” and each party
hopes that the court will rely on the factors that favour his or her position.
It is not easy for a court to protect the justified expectations of the parties. This is
why “the parties are free within broad limits to choose the law to govern the validity
of their contract,”8 and to choose the court that will hear any disputes arising between
them. However, the uncertainty factor reappears if the parties have not addressed
these issues and the law does not contain clear rules applicable to them. Predictability,
certainty, and uniformity of results or of legal consequences are objectives that ensure
the protection of the justified expectations of the parties and discourage forum
shopping. A decision should not depend on the fortuitous place of trial or the dubious
selection of the applicable law by the courts.
1U. Legislation and Jurisprudential Applications
A. Jurisdiction simpliciter and forum non conveniens
On the national level, both in Quebec with respect to personal actions of a
patrimonial nature and in common law Canada with respect to actions in personam,
the exercise of jurisdiction by the provincial superior courts must conform to the
constitutional principles of comity, order, and fairness. These constitutional principles
require a real and substantial connection between the forum province and either the
parties or the subject matter of the action. 9
For instance, the exercise of jurisdiction in Ontario based on service injuris on a
person who happens to briefly pass through the province,”0 or in Quebec based on a
contract of which only a very minor obligation was to be performed in Quebec,” may
violate the principles of order and fairness if there
is no real and substantial
7 American Law Institute, Restatement of the Law Second, Conflict of Laws (St. Paul: American
Law Institute Press, 197 1) at para. 6.g.
” Ibid.
9 See Hunt, supra note 1; Spar Aerospace Ltd. v. American Mobile Satellite, 2002 SCC 78, [2002] 4
S.C.R. 205 at para. 23, 220 D.L.R. (4th) 54, LeBel J. [Spar].
10 See Rules of Civil Procedure, R.R.O. 1990, Reg. 194, Rule 16.01.
11 See art. 3148(3) C.C.Q.
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connection between the forum and either the parties or the subject matter of the
action. The assumption ofjurisdiction would be unconstitutional even though it might
be permissible under the laws of Ontario or Quebec. Constitutional jurisdiction based
on the two elements of order and fairness is called jurisdiction simpliciter.
Where there is a real and substantial connection between the parties or the subject
matter of the action and the forum, a provincial superior court may assert jurisdiction
on the defendant even if he or she does not consent to the jurisdiction of the court and
cannot be served in the jurisdiction.”2 The rules of procedure or rules of court create a
rebuttable presumption of a real and substantial connection that is subject to evidence
to the contrary.”3 Although the requirement of a real and substantial connection is an
absolute limit, it is neither strictly defined nor rigidly applied. Courts employ a
flexible approach. 4
The test for jurisdiction simpliciter, which was recently enunciated by the Ontario
Court of Appeal in Muscutt v. Courcelles”5 and four other companion decisions
dealing with jurisdiction based on damages sustained in the jurisdiction, involves the
assessment of eight factors encompassing much of the analysis once undertaken in
determinations offorum non conveniens.
These factors are as follows:
1. The connection between the forum and the plaintiff’s claim;
2. The connection between the forum and the defendant;
3. Unfairness to the defendant in assuming jurisdiction;
4. Unfairness to the plaintiff in not assuming jurisdiction;
5. The involvement of other parties to the suit;
6. The court’s willingness
to recognize and enforce an extra-provincial
judgment rendered on the same jurisdictional basis;
7. Whether the case is interprovincial or international in nature; and
8. Comity and the standards of jurisdiction, recognition and enforcement
prevailing elsewhere.’ 6
The application of these factors to the five cases was essentially subjective and the
decisions could have gone either way. Already in 1987, in England, Lord Templeman,
in the context of forum non conveniens, had acknowledged that “[t]he factors which
12 See Castel & Walker, supra note 4 vol. 1 at para. 11.5.
“3 See ibid.
14 See Morguard, supra note 1; Hunt, supra note 1; Tolofson, supra note 5; Spar, supra note 9 at
para. 52, Le Bel J.
16 Muscutt, ibid. at paras. 77-110.
15 (2002), 60 O.R. (3d) 20, 213 D.L.R. (4th) 577 (C.A.) [Muscutt cited to O.R.]; Janet Walker,
“Beyond Real and Substantial Connection: The Muscutt Quintet” [2002] Ann. Rev. Civil Litg. 61.
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J.-G CAsTEL – THE UNCERTAINTY FACTOR
561
the court is entitled to take into account in considering whether one forum is more
appropriate are legion. The authorities do not, perhaps cannot, give any clear
guidance as to how these factors are to be weighed in any particular case.”‘ 7
However, the determination of whether a provincial superior court has
jurisdiction simpliciter is a question of law. The standard of review is correctness.”‘
Therefore, although the court is required to address a list of factors in order to
determine whether there exists a real and substantial connection between the court
and either the parties or the subject matter of the action, the decision is not an
exercise of judicial discretion as in the case of forum non conveniens, where the court
focuses on the particular facts of the parties and the case.”9
Today, the jurisdiction simpliciter test conflates the question of jurisdiction and
forum non conveniens. These should be kept separate, since only the latter involves
discretion and because different consequences for the litigation flow from a dismissal
in the case of lack of jurisdiction simpliciter and from a stay in the case offorum non
conveniens.”
There
is no mechanical method for determining
the scope of jurisdiction
simpliciter under the principles of order and fairness or for the exercise of jurisdiction
based on the doctrine of forum non conveniens. In both cases, the real and substantial
connection test is used, but for different purposes. Also in both cases, it is assumed
that there are competing forums. However, the constitutional requirement is not very
exacting because of its generality and the flexible way in which it is applied at this
stage of the proceedings. In most cases, a real and substantial connection will be
found easily. Conversely, when determining whether or not the forum is a convenient
one, the test is more rigorous and it is difficult to predict the outcome of the inquiry,
which depends on a more specific analysis of the facts of the case.
The blending of the analysis for jurisdiction simpliciter and for forum non
that is quite
conveniens has created an integrated jurisdictional determination
confusing and unhelpful.2’
In Quebec, with respect to jurisdiction simpliciter, the Supreme Court of Canada
in Spar”2 observed that the principles of comity, order, and fairness are not binding
rules in and of themselves. They only inspire the interpretation of the various private
‘7 Spiliada Maritime v. Cansulex Ltd., [ 1987] A.C. 460 at 465, [1986] 3 All E.R. 843 (H.C.).
18 See Muscutt, supra note 15 at para. 43; Khan Resources v. WMMining LLC (2006), 79 O.R. (3d)
411 at para. 7, 208 O.A.C. 204 (C.A.) [Khan].
19 See Muscutt, supra note 15; Khan, ibid. A discretionary decision on the convenient forum is
entitled to deference on appeal and will be set aside only if the judge erred in principle. See Towne
Meadow Development v. Israel Discount Bank Ltd. (2005), 77 O.R. (3d) 761 at para. 14, 10 B.L.R.
(4th) 185 (C.A.) [Towne Meadow].
20 See Castel & Walker, supra note 4 vol. I at paras. 11.5, 13.8.c.
21 See Oakley v. Barry (1998), 166 N.S.R. (2d) 282, 158 D.L.R. (4th) 679 at 699 (C.A.). See also
Castel & Walker, supra note 4 vol. 1 at para. 13.8.c.
22 Supra note 9.
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international law rules in force in Canada. The Quebec rules of private international
law found in the Civil Code of Quebec and the Code of Civil Procedure are designed
to ensure that there is a real and substantial connection between the action and the
province of Quebec; these rules guard against improper seizing of jurisdiction.
Therefore, in Spar, the real and substantial connection requirement was not held to be
an additional criterion that had to be satisfied in determining the jurisdiction of the
Quebec court.
On the basis of the wording of article 3148(3) C.C.Q., the Court opined that “[it
is] doubtful that a plaintiff who succeeds in proving one of the four grounds for
jurisdiction would not be considered to have satisfied the
‘real and substantial
connection’ criterion, at least for the purposes of jurisdiction simpliciter.”23 Thus, in
both common law Canada and Quebec, it is assumed that the relevant rules as to the
international jurisdiction of the court meet the constitutional test of a real and
substantial connection until proof of the contrary. This precedes the possible reliance
on the doctrine offorum non conveniens.
Let us briefly examine some specific Quebec rules of jurisdiction
in cases
containing foreign elements, assuming that all of them meet the constitutional
requirement. In the part of the Civil Code of Quebec that covers the international
jurisdiction of Quebec authorities (i.e., the courts), article 3148(4) allows the parties
to agree to submit all existing or future disputes between themselves to Quebec or
foreign authorities. Although no mention is made of the principle of proximity, article
3135 dealing with forum non conveniens and article 3136, which provides for the
jurisdiction of Quebec courts
in exceptional circumstances, seem to admit by
necessary implication that in some instances Quebec courts may decline or acquire
jurisdiction depending on the connection with Quebec.24 The danger is that in
borderline cases “where there is no one forum that is the most appropriate, the
domestic forum wins out by default … provided it is an appropriate forum.”’25
It is to be regretted that in personal actions of a patrimonial nature, in the
presence of an express choice-of-jurisdiction clause recognized by the Code,26 the
courts have allowed the parties to argue that the selected forum is forum non
conveniens.” The same is true in common law Canada.28
23 ibid. at para. 56, LeBel J. See also ibid. at paras. 23, 50, 51, 55.
24 See ibid. See also Lexus Maritime c. Oppenheim Forfait GmbH, J.E. 98-1592, [1998] A.Q. No.
2059 at para. 18 (C.A.) (QL) (listing ten requirements, none of which are individually determinant).
25 Amchem Products v. British Columbia (Workers’Compensation Board), [1993] 1 S.C.R. 897 at
931, 77 B.C.L.R. (2d) 62.
26 Art. 3148(4), 3148, para. 2 C.C.Q.
27 See Transat Tours Canada c. Impulsora Turistica de Occidente, 2006 QCCA 413, [2006] J.Q. no.
2519 (QL), aff’d 2007 SCC 20, 281 D.L.R. (4th) 385 [Transat Tours]. See also G&ald Goldstein &
Ethel Groffier, Droit international priv (Cowansville, Qc.: Yvon Blais, 1998) vol. 1 at paras. 147,
149.
28 See Castel & Walker, supra note 4 vol. 1 at para. 13.7.
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There seems to be no difference between Quebec and common law Canada with
respect to the factors to be taken into account in determining the appropriate forum
for whatever purpose. The real and substantial connection test reigns supreme.
However, in GreCon Dimter v. JR. Normand Inc.,29 the Supreme Court of Canada
acknowledged that, in Quebec as in the rest of Canada, the doctrine of forum non
conveniens” only has a suppletive function, and is distinct from jurisdiction
simpliciter.
Since many of the elements taken into consideration for determining jurisdiction
simpliciter and forum non conveniens overlap, it will be interesting to see if the test
for jurisdiction simpliciter based on the flexible application of the eight factors in
Muscutt will also be applied to forum non conveniens to determine whether there is a
clearly more appropriate forum elsewhere with a stronger connection between the
action and the present forum. While the forum non conveniens analysis explicitly
considers the suitability of alternative forums, the increasing recognition of the
importance of ensuring that there is some forum available to the plaintiff to pursue a
meritorious claim suggests that there is an underlying connection between it and
jurisdiction simpliciter.31
B. Choice of Law
Contrary to the situation with respect to choice of jurisdiction, with choice of law
the search is for the law that is the most really and substantially connected with the
issue before the court. 2 This makes intuitive sense, because to subject the validity of
an international contract to any law that may have a real and substantial connection
with it would clearly defeat the reasonable and justified expectations of the parties.
Only one law can apply to a particular aspect of an international contract.
On the constitutional level, it would seem that the application of the law of the
forum solely because it is the law of the forum could violate the constitutional
principles of order and fairness, as there must be a real and substantial connection
29 2005 SCC 46, [2005] 2 S.C.R. 401, 255 D.L.R. (4th) 257.
3′) See art. 3135 C.C.Q.
31 In Newton v. Larco Hospitality Management (2004), 70 O.R. (3d) 427 (Sup. Ct.), aff’d (2005), 75
O.R. (3d) 42 (C.A.), Brennan J. distinguished between jurisdiction simpliciter and forum non
conveniens, though some of the factors he used for forum non conveniens could easily be part of the
factors used for jurisdiction simpliciter. For instance, the loss of a substantial juridical advantage could
be part of unfairness to the plaintiff, a factor used for jurisdiction simpliciter. In Towne Meadow, supra
note 19, the motion judge relied on Muscutt, supra note 15 to decide whether Ontario was the
convenient forum. See also Coutu v. Gauthier Estate, 2006 NBCA 16, 296 N.B.R. (2d) 35, 264 D.L.R.
(4th) 319 at para. 52ff [Gauthier]; Insurance Corporation of British Columbia v. Unifund Assurance,
2002 SCC 40, [2003] 2 S.C.R. 63, 227 D.L.R. (4th) 402. In Quebec, see Transat Tours, supra note 27
at para. 43. The ten criteria used forforum non conveniens to a great extent overlap with jurisdiction
simpliciter. For possible reform, see Castel & Walker, supra note 4 vol. 1 at para. 11.19.
32 See Castel & Walker, ibid. vol. 2 at para. 31.2.c.
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between the subject matter of the action and the law of the forum.33 More generally,
from a constitutional point of view, it has not yet been decided whether the courts
must ascertain the proper law of a contract, tort, or extracontractual obligation, or any
other legal relationship, by applying the test of the most real and substantial
connection.
The Civil Code of Quebec leaves little room for the application of the principle of
proximity by the courts. It is more deterministic. Only on occasion does it provide for
the application of the law “most closely connected” (“loi … qui … pr6sente … les liens
les plus 6troits”), and then only as a subsidiary rule with respect to trusts:
3107. Where no law is expressly designated by, or may be inferred with
certainty from, the terms of the act creating a trust, or where the law designated
does not recognize the institution, the applicable law is that with which the trust
is most closely connected.34
The order in which the inquiry must proceed indicates which factual elements are
most important and therefore determinative. Little is left for the courts to do except
find where the relevant places are located. The second paragraph of article 3107 is
quite clear and unambiguous:
To determine the applicable law, account is taken in particular of the place
of administration of the trust, the place where the trust property is situated, the
residence or the establishment of the trustee, the objects of the trust and the
places where they are to be fulfilled.
Of course, difficulty arises where two or more of these factual elements point to
different legal systems.
In common law Canada, the validity of a trust inter vivos of interests in movables
is governed by the internal law of the place expressly or impliedly designated by the
settlor. In the absence of designation, the validity of the trust depends upon the
internal law of the place with which, as to the matter at issue, the trust has its most
significant relationship or its closest and most real connection.35
With respect
to obligations and
the content of juridical acts,
including
conventional matrimonial or civil union regimes,36 the Civil Code of Quebec in article
3111 allows the parties to designate the law that governs such acts. However, a
juridical act containing no foreign element remains subject to the mandatory
provisions of the law of the country that would apply if none were designated. As in
the case of trusts, article 3112 states:
If no law is designated in the act or if the law designated invalidates the
juridical act, the courts apply the law of the country with which the act is most
closely connected, in view of its nature and the attendant circumstances.
33 See Tolofson, supra note 5 at 1065-66,
34Art. 3107, para. 1 C.C.Q.
35 See Castel & Walker, supra note 4 vol. 2 at para. 28.2.b.
36 See art. 3122 C.C.Q.
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J.-G CAsTEL – THE UNCERTAINTY FACTOR
565
The Code adds in article 3113:
Ajuridical act is presumed to be most closely connected with the law of the
country where the party who is to perform the prestation which is characteristic
of the act has his residence or, if the act is made in the ordinary course of
business of an enterprise, his establishment.
The clear indications of which connecting factors the courts must consider in
selecting the applicable law does not completely eliminate uncertainty, as the article
creates only a presumption.
In article 3082, the Civil Code of Quebec has adopted what has been described as
an “escape clause”37 that allows the courts, in exceptional circumstances, to set aside
the normally applicable law. It reads as follows:
Exceptionally, the law designated by this Book is not applicable if, in the
light of all attendant circumstances, it is clear that the situation is only remotely
connected with that law and is much more closely connected with the law of
another country. This provision does not apply where the law is designated in a
juridical act.
This article introduces a measure of uncertainty into legal relationships. Fortunately,
it cannot be used to avoid the mandatory rules of Quebec or a law designated by the
parties in a juridical act, for instance a contract, will, or trust.38 Also, it does not apply
where there is built-in flexibility, as in articles 3079 and 3112 C.C.Q., or where there
in articles 3126 and 3128 C.C.Q.3 9
exist alternative choice-of-law rules, as
Uncertainty could also result from the application of article 3076, dealing with
Quebec laws of necessary application that trump normal private international law
rules, and article 3079, which covers foreign laws of necessary application and
provides:
Where legitimate and manifestly preponderant interests so require, effect
may be given to a mandatory provision of the law of another country with
which the situation is closely connected.
In common law Canada, in the absence of express or implied choice that must be
bona fide, legal, and not intended to evade the mandatory provisions of the system of
law with which the transaction objectively is most closely and really connected, the
courts have applied
its essential validity,
interpretation, effect, and performance. The proper law is the system of law with
which the transaction has the closest and most real connection.4”
the proper law of the contract
to
37 Goldstein & Groffier, supra note 27 vol. 1 at para. 46.
“8 See ibid.
39 See J.A. Talpis & J.-G Castel, “Le Code civil du Qu6bec: Interpretation des rgles du droit
international priv6″ in La Reforme du Code civil, vol. 3 (Sainte Foy, Qc.: Presse de M’UniversitM Laval,
1993) 807 at paras. 82-87.
40 See Castel & Walker, supra note 4 vol. 2 at paras. 31.2.a, d. It includes domestic contracts. See
ibid. at para. 25.3.f.
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to a nonrule,
In light of the potential number of connecting factors, the proper law approach
amounts
in the
ascertainment of the applicable law. Because it involves a complex analysis of
multiple factors of varying significance, the determination of the proper law is too
fact-specific and discretionary for effective appellate review despite the fact that it is
a question of mixed fact and law subject to appeal.
too much discretion
leaving
the courts with
With respect to torts, it would seem that in Tolofson, Justice LaForest left the door
open to the application of a law other than the lex loci delicti in the case of
international torts.4” Accordingly, it might sometimes be appropriate to apply another
law to a wrongful act committed outside Canada when the lex loci delicti has little or
no connection with the parties or the issue in question and its application would give
rise to serious injustice. However, the Ontario Court of Appeal in 2002 expressed
doubts as to the existence of an exception to the lex loci delicti rule to avoid a
possible
to
emphasize the importance of certainty, ease of application, and predictability of the
choice-of-law rule in order to achieve fairness and meet the reasonable expectations
of the parties, it is reasonable to expect that in some international torts situations
Canadian courts would refrain from applying the principle of proximity: “While, no
doubt, … the underlying principles of private international law are order and fairness,
order comes first. Order is a precondition to justice.”43
injustice in exceptional cases. 2 As the policy behind Tolofson is
In Quebec, it is doubtful whether the escape clause in article 3082 C.C.Q. could
be used to avoid the application of the rules found in article 3126 C.C.Q. dealing with
civil liability arising from injurious acts, which already contains several exceptions to
the lex loci delicti rule.
C. Foreign Judgments
In Morguard, the Supreme Court of Canada held that the courts of British
Columbia were required by the principles of order and fairness implicit in the
Canadian constitution to enforce a default judgment from Alberta on a matter that had
a real and substantial connection to Alberta.44 Thus, the relevant test in determining
whether the original court was the appropriate forum based on the principles of order
and fairness is whether there was a real and substantial connection between the
province whose court gave the judgment and the defendant or matter.
The Supreme Court did not elaborate on the specific requirements of the real and
substantial connection test. However, in a subsequent decision, it acknowledged that
41 Supra note 5 at 1062-63.
42 Wong v. Lee (2002), 58 O.R. (3d) 398, 211 D.L.R. (4th) 69.
43 Tolofson, supra note 5 at 1058. LaForest J. also writes, “One of the main goals of any conflicts
rule is to create certainty in the law” (ibid. at 1061).
“44 Supra note 1. See also Currie v. McDonalds Restaurants of Canada Ltd. (2005), 74 O.R. (3d)
321, 250 D.L.R. (4th) 224 (C.A.).
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it is not possible to define the exact limits of what constitutes a real and substantial
connection and that no test can perhaps ever be rigidly applied: “Whatever approach
is used, the assumption of and the discretion not to exercise jurisdiction must
ultimately be guided by the requirements of order and fairness, not a mechanical
counting of contacts or connections.”’45
The real and substantial connection test is so broad that, as already mentioned,
there are very few situations in which it would not be met. All that is needed is the
existence of a significant connection between the cause of action and the foreign
court.46 This shows how artificial the requirement is in reality. Furthermore, what is
order or fairness, other than what a judge believes full faith and credit, and properly
restrained jurisdiction, to mean in the circumstances of a particular case?
Eventually, in Beals v. Saldanha,47 the principles that underpin the constitutional
requirement of a real and substantial connection were extended to cover judgments
rendered outside Canada when the original court had reasonable grounds for
exercising jurisdiction. These reasonable grounds are determined in accordance with
the principles of order and fairness not as a matter of constitutional law but as a
matter of comity. As a result, this requirement, which should be called jurisdiction
qua simpliciter, has become the only test used to ascertain whether the foreign court
had jurisdiction to render the judgment sought to be recognized and enforced in
Canada. It is too general and too easy to pass.
Applying this test, the Supreme Court of Canada in Beals recognized and
enforced a foreign default judgment against persons served ex juris who had not
consented to the jurisdiction of the issuing court. This is one of the most unjust
decisions that has resulted from the application of the real and substantial connection
test because the court did not revise the defences to enforcement in order to safeguard
the defendants from the particular kinds of unfairness that arise in cross-border
litigation.
Justice LeBel is right when in his dissenting opinion he states that the real and
substantial connection test applied to judgments rendered outside Canada must be fair
to defendants, which was not the case in this instance.4”
45 Hunt, supra note I at 326.
46 See Beals v. Saldanha, 2003 SCC 72, [2003] 3 S.C.R. 416 at para. 32, 234 D.L.R. (4th) 1 [Beals];
Oakwell Engineering Ltd. v. Enernorth Industries (2005), 76 O.R. (3d) 528, 7 B.L.R. (4th) 256 (Sup.
Ct.) [Oakwell (Sup. Ct.)], aff’d (2006), 81 O.R. (3d) 288, 19 B.L.R. (4th) II [Oakwell (C.A.) cited to
O.R.].
47 Ibid. See also J. Walker, “Beals v. Saldanha: Striking the Comity Balance Anew”, Case Comment,
(2005) 5 Can. Int’l. Law. 28; Joy Goodman & Jeffrey A. Talpis, “Beals v. Saldanha and the
Enforcement of Foreign Judgments in Canada” (2004) 40 Can. Bus. L.J. 240; Worthington c. Atlas
Turner, [2004] R.J.Q. 2376 (C.A.) [Worthington].
48 Beals, ibid. at paras. 174, 187, 195, 196, 199, 217, 218, 265. See also the discussion of Beals in
Pro Swing v. Elta Golf 2006 SCC 52, [2006] 2 S.C.R. 612, 273 D.L.R. (4th) 663. But see Oakwell
(C.A.), supra note 46 at para. 15
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Will the courts apply the eight factors elaborated in Muscutt for determining
jurisdiction simpliciter to the recognition and enforcement of foreign judgments? If
that were the case, this approach would be very close to that found in article 3164 of
the Civil Code of Quebec, which provides:
The jurisdiction of foreign authorities is established in accordance with the
rules on jurisdiction applicable to Qu6bec authorities under Title Three of this
Book, to the extent that the dispute is substantially connected with the country
whose authority is seised of the case.
This article provides for jurisdictional reciprocity, also called the mirror principle,49
which includes forum non conveniens and lis alibi pendens.5″ The mirror principle is
subject to the further general requirement that the dispute between the parties is
substantially connected with the country where the judgment was rendered. The word
“country” seems to indicate that it applies only to judgments rendered in foreign
countries.
Article 3164 C.C.Q. is too wide. It creates uncertainty and does not permit
predictability. It does not answer how a Quebec court is to determine whether or not
the dispute was substantially connected with the original country before it applies to
the decision the Quebec jurisdiction rules by analogy. Nevertheless, this test, where
applicable, is consistent with the constitutional requirement of a real and substantial
connection. 1
It should be noted that article 3168 C.C.Q. lists the only six grounds that are
relevant for assessing the jurisdiction of foreign courts in personal actions of a
patrimonial nature. Professor Goldstein
is right to maintain that the restrictive
language of article 3168 prevents the broadening of the list of jurisdictional criteria
by having recourse to article 3164.52 The use of the word “only” makes it clear that
article 3168 cannot be supplemented by the mirror principle, including theforum non
conveniens and lis alibi pendens.53 Yet, in some instances, it might be advisable to
apply article 3164 in the context of article 3168 minus the forum non conveniens and
lis alibi pendens.
49 See Patrick Glenn, “Droit international privO” in La RNforme du Code civil, supra note 25 vol, 3,
671 at paras. 116-18.
50 The latter is also called the “little mirror” (Castel & Walker, supra note 4 vol. 1 at para. 14.13).
51 See Cortas Canning & Refrigerating v. Suidan Bros., [1999] R.J.Q. 1227 (Sup. Ct. (Civ. Div.));
Fellen c. Barnett Bank of South Florida, N.A., [1994] R.J.Q. 932 (C.A.).
52 See Goldstein & Groffier, supra note 27 vol. 1 at para. 178; Genevieve Saumier, “The
Recognition of Foreign Judgments in Quebec: The Mirror Crack’d” (2002) 81 Can. Bar Rev. 677.
Contra Glenn, supra note 49 at para. 127; Talpis & Castel, supra note 39 at para. 487; Jeffrey Talpis,
If I am from Grand-M6re, Why Am I Being Sued in Texas? Responding to Inappropriate Foreign
Jurisdiction in Quebec-United States Crossborder Litigation (Montr6al: Th6mis, 2001).
53 See Worthington, supra note 47. Contra HSBC Bank Canada c. Hocking, 2006 QCCS 330,
[2006] R.J.Q. 804 at paras. 83-86.
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Conclusion
The courts, especially the Supreme Court of Canada, have gone too far in their
application of the principle of proximity. In so doing, they have led the way to
uncertainty. There must be a return to the clear and predictable rules of the past.54
The search for the real and substantial connection leaves too much freedom to the
courts, which can easily manipulate the facts to suit their views. For instance,
especially in borderline cases, they may be tempted to choose what they believe to be
the “better” forum or law by taking jurisdiction or applying the lexfori and justifying
their choice after the fact by selecting the appropriate connecting factors leading to
this solution. That said, it would be difficult for the courts to do this where the
majority of important connecting factors point to another jurisdiction or law or where
such factors are set in the forum law, as it is the case in Quebec in some choice-of-law
situations.
As already mentioned, predictability is a significant objective in international
business transactions. The parties want to know in advance what is likely to happen
should a dispute arise between them.55 True, in a contract they may be able to select in
advance the applicable law and, to some extent, the court that would have jurisdiction
over them; but that is not always the case. What if the court selected by the parties has
no jurisdiction simpliciter?
Only where the application of the relevant private international law rule results in
the designation of a jurisdiction or law that has no or very little connection with the
issues before the court should the principle of proximity be invoked in order to
perform a corrective function so as to avoid a totally unjust end result. Such an
approach could be called limited principled flexibility, and would hold predictability
in check.56
Clearly formulated rules leaving little room for interpretation or analysis by the
courts should be encouraged. In the international business field, the traditional
method based on determinism adopted in most cases by the Civil Code of Quebec,
rather than the uncertainty factor inherent in the principle of proximity illustrated by
the constitutionally mandated real and substantial connection test, is more likely to
give effect to the justified expectations of the parties.
54 See e.g. American Law Institute, Restatement of the Law of Conflict of Laws (St. Paul: American
Law Institute, 1934); Joseph H. Beale, A Treatise on the Conflict of Laws (New York: Baker, Voorhis
& Co., 1935). For a historical background of conflict of laws, see Castel & Walker, supra note 4 vol. 1
at paras. 1.12-1.15.
55 For instance, in Gauthier, Drapeau C.J. of the New Brunswick Court of Appeal pointed out that
the difficulty in some instances for counsel to know where to begin an action would make the solution
to do so in several connected jurisdictions, a solution beyond the financial means of most plaintiffs
(supra note 31 at paras. 77-78).
“56 Cf art. 3082 C.C.Q. (escape clause).
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The Court Jurisdiction and Proceedings Transfer Act, prepared by the Uniform
Law Conference of Canada”7 and now adopted by British Columbia,58
Saskatchewan,59 and the Yukon,6″ introduces some certainty and predictability into
common law Canada. When
it deals with proceedings in personam, the new
legislation provides for jurisdiction where there is a real and substantial connection
between the forum province or territory and the facts on which the proceeding against
the person is based.6” It then gives guidance to the meaning of “real and substantial
connection” by listing the connections that will be presumed to meet the real and
substantial connection test.62 The legislation also codifies the doctrine of forum non
conveniens by listing the factors that are relevant to the court’s discretion after
considering the interest of the parties to the proceeding and the ends of justice.63
Jurisdiction simpliciter and forum non conveniens are kept separate.
Yet even in this legislation, the move toward certainty and predictability remains
incomplete. The list of connections presumed to meet the real and substantial
connection test is not exhaustive in that the plaintiff has the right to prove other
circumstances that constitute a real and substantial connection. Also, the defendant
has the right to prove that connections are not real and substantial.64 The result is that
courts still have considerable discretion in applying
the real and substantial
connection test.
Comity, order, and fairness, which are supposed to guide the determination of the
private international law issues of jurisdiction simpliciter, forum non conveniens,
choice of law, and the recognition of foreign judgments,” are not always well served
by the principle of proximity.66 In Quebec, and more so in common law Canada,
private international law rules should be clear and only in exceptional circumstances
should the court apply the principle of proximity67 as the uncertainty factor inherent
in this principle renders illusive the objectives of certainty and predictability that are
57 Proceedings of the Seventy-Sixth Annual Meeting, 1994, Appendix C, 140 as am. by Proceedings
of the Seventy-Seventh Annual Meeting, 1995, Appendix D, 155. See also Castel & Walker, supra note
4 vol. 1 at para. 11.19.
59 Court Jurisdiction and Proceedings Transfer Act, S.B.C. 2003, c. 28.
59 An Act respecting Court Jurisdiction and the Transfer of Court Proceedings, S.S. 1997, c. C-41.1
[Court Jurisdiction, Sask.].
60 Court Jurisdiction and Proceedings Transfer Act, S.Y 2000, c.7.
61 Court Jurisdiction, Sask., supra note 59, ss. 4(e), 9.
62 Ibid., s. 9.
63 Ibid., ss. 10(1),(2).
64 Ibid.
65 See Spar, supra note 9 at para. 21, LeBel J.
66 See Jean-Gabriel Castel, Canadian Conflict of Laws, 4th ed. (Toronto: Butterworths, 1997) at
para. 17; Bloom & Edinger, supra note 4 (“the test, as it is presently structured, serves none of its
purposes especially well” at 373); ibid. (“Predictable answers are what the ‘real and substantial
connection’ test is least good at” at 416); ibid. at 418-19. See also Tolofson, supra note 5 at 1046-47,
1055-58, La Forest J.
67 Cf art. 3108 C.C.Q.
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J.-G CASTEL- THE UNCERTAINTY FACTOR
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so important in international trade transactions. Judicial discretion must not form the
core of Canadian private international law rules if justice to the parties is to be
achieved. What is needed is workable certainty consistent with some flexibility.
