Forum Selection for Enforcement of Judgments

In Chevron Corp. v. Yaiguaje, 2015 SCC 42, the Supreme Court of Canada has allowed litigants who obtained a multi-billion dollar judgment against Chevron Corp in Ecuador to execute that judgment in Canada, even when the relevant corporate entity had no connection to Canada.  This decision may have profound implications for solicitors' practice.

The important legal principle from the ruling is that the Supreme Court of Canada stated that when deciding whether there a court has jurisdiction to adjudicate in a dispute involving parties outside of the jurisdiction (in this case, Canada), the courts will apply a different test as to when it the court is asked to adjudicate over the primary dispute versus when the court is asked to enforce a decision already made by a foreign court.

The Supreme Court of Canada held that to enforce a judgment that has already been issued by a foreign court, the person seeking to enforce that judgment in Canada need only prove that the foreign court had a real and substantial connection with the litigants or with the subject matter of the dispute, or among other issues.  The Plaintiff does not have to prove that the Canadian jurisdiction has a real and substantial connection with the dispute or the defendant.

The Court advised that this was fair for two reasons. First, in an action to enforce a judgment, in contrast to the main action, the enforcing court is not creating a new substantive obligation. The only important element is the foreign judgment and the legal obligation it has created. Second, enforcement is limited to measures that can be taken only within the confines of the jurisdiction and in accordance with its rules, and the enforcing court’s judgment has no coercive force outside its jurisdiction. Similarly, enforcement is limited to seizable assets found within its territory. As a result, any potential constitutional concerns relating to conflict of laws simply do not arise in recognition and enforcement cases: since the obligation created by a foreign judgment is universal, each jurisdiction has an equal interest in the obligation resulting from the foreign judgment, and no concern about territorial overreach could emerge.

This case will also apply when addressing applications to enforce judgments within Provinces.  For example, an Ontario plaintiff that has successfully obtained judgment in Ontario can apply this case in British Columbia. It does not matter if the dispute has no connection to British Columbia.  Further, as this case establishes, if the Defendant was successfully served in British Columbia (say for example the company was extra-provincially registered in British Columbia), it would not matter if the Defendant had no assets or operations in British Columbia.  The Plaintiff is entitled to ask the British Columbia courts to take jurisdiction over the enforcement of the Ontario judgment.  It may be that the Plaintiff has very strategic reasons to try and enforce a judgment in which a company may not have assets.  The courts do not focus on these practical concerns.  Rather, the courts will recognize the legal entitlement to commence the action and for the domestic court to take jurisdiction.

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