Jurisdiction of Canadian Courts over Foreign Subject Matters

In two separate cases that were heard together at the Supreme Court of Canada in 2012, the court ruled that the courts of Ontario had jurisdiction to hear two lawsuits that were brought against tour companies offering vacations in Cuba where Ontario tourists were injured or killed while vacationing in Cuba.

In the first case, Morgan Van Breda suffered catastrophic injuries on a beach in Cuba. In the second case, Claude Charron died while scuba diving in Cuba. The plaintiffs brought actions in Ontario against a number of parties including Club Resorts Ltd., a company incorporated in the Cayman Islands that managed the two hotels where the accidents had occurred. Club Hotels sought to have the Ontario actions stayed on the basis that the courts of Ontario lacked jurisdiction and, alternatively, that Cuban courts would be the more appropriate forum for lawsuits based on the legal principal of forum conveniens.

In both cases, motions judges found that the Ontario courts had jurisdiction to hear the actions against Club Resorts. They also found that the Ontario court was clearly the more appropriate forum. Appeals of the ttwo cases were heard together in the Ontario Court of Appeal which dismissed the appeal of Club Resorts. The Supreme Court of Canada dismissed Club Resorts further appeal for the following reasons.

The court held that the cases concern the elaboration of the "real and substantial connection test (jurisdiction simpliciter)" and whether that test is an appropriate common law rule for the assumption of jurisdiction by a Canadian court. Under the jurisdiction simpliciter test, the Supreme Court held that a court can assume jurisdiction over a certain claim where, relying on a set of specific factors, those factors are given presumptive effect. The court held that it was preferable to have a system that had order and would permit the development of a just and fair approach to resolving conflicts.

To meet the real and substantial connection test, the party arguing that the court should assume jurisdiction over the case has the burden of identifying a presumptive connecting factor that links the subject matter of the case to the forum (Ontario in these appeals). Jurisdiction must be established primarily on the basis of objective factors that connect the legal situation or the subject matter of the litigation with the forum.

In a case concerning a tort, the following factors are presumptive connecting factors that prima facie entitle a court to assume jurisdiction over a dispute:

1. the defendant is domiciled or resident in the province;

2. the defendant carries on business in the province;

3. the tort was committed in the province; and

4. a contract connected with the dispute was made in the province.

Although these factors are considered presumptive, it does not mean that the list of factors is complete and a court can consider when and whether a new connecting factor should be given presumptive effect.

The burden of rebutting the presumption of jurisdiction rests with the party challenging the court's assumption of jurisdiction. That party must negate the presumptive effect of the listed factors or any new factor that the court uses in assuming jurisdiction and convince the court that the proposed assumption of jurisdiction would be inappropriate. The party may accomplish this by establishing facts that demonstrate that the presumptive connective factor does not point to any real relationship between the subject matter of the litigation and the forum or points only to a weak relationship.

If jurisdiction is established, the claim may proceed subject to the courts discretion to stay the proceedings on the basis of forum conveniens.

In Van Breda, the presumptive factor was that a contract had been entered into in Ontario. The Supreme Court held that the existence of a contract made in Ontario entitled the courts of Ontario to assume jurisdiction and Club Resorts had failed to rebut the presumption of jurisdiction.

In respect of whether Cuban courts would be clearly the more appropriate forum, the court held that a trial in Cuba would present serious challenges to the parties and that all things considered, the burden on the plaintiffs would be far heavier if they were required to bring their action in Cuba.

In the Charron case, the presumptive factor was that Club Resorts carried on business in Ontario. It had a fiscal presence in Ontario and had offices in Ontario. Club Resorts did not rebut that presumption of jurisdiction.

It also failed to discharge the burden of showing that a Cuban court would be clearly the more appropriate forum in the circumstances of the case.

Regards,

Blair