"After the Storm: The Impact of the Financial Crisis on Private International Law": Jurisdiction

Article excerpt

In her 2010 Rand Lecture, Catherine Walsh drew attention to the impact of the world financial crisis on individual autonomy and choice of law in contract, particularly in relation to contracts of adhesion in the contexts of consumer and insurance law. (1) Choice of law is one of the three principal concerns of private international law or conflict of laws; the other two are jurisdiction simpliciter (2) and recognition and enforcement of foreign judgments. (3) In times of financial instability and a global economic downturn, greater certainty in jurisdictional matters promotes efficiencies in the legal system and significant cost-savings for litigants, particularly if enhanced by confidence that the eventual judgment will be recognized and enforced, if need be, elsewhere. Differently expressed, transaction costs for litigants are reduced by greater certainty on issues of jurisdiction. Litigation on issues of jurisdiction are essentially wasted judicial and litigant resources on the path to eventual adjudication on the substantive merits of the legal dispute, though litigation of jurisdictional issues may lead to settlement.

This modest contribution to the collection of opinion pieces on private international law focuses on the jurisdictional questions that have so occupied Canadian jurists since the Supreme Court of Canada's decision in Morguard Investments' Ltd. v. De Savoye. (4) Along the way, the Court of Appeal for Ontario took what it now acknowledges as a misstep in Muscutt v. Courcelles, (5) a widely referenced and influential decision in some Canadian courts but resisted by others. In 2010, the Court of Appeal for Ontario in Van Breda v. Village Resorts" Ltd. revisited its approach to jurisdiction simpliciter in Muscutt but has it achieved a satisfactory result? (6)

That is the subject of this contribution.

MORGUARD AND THE "REAL AND SUBSTANTIAL CONNECTION"

The Supreme Court of Canada's decision in Morguard, per La Forest J., established the "real and substantial connection" standard for the exercise of jurisdiction simpliciter by Canadian common law courts and linked that standard with the concept of "full faith and credit," which the Court found to be inherent in a federal state. Thus, jurisdiction simpliciter and international sense jurisdiction became mirrored, in that existence of a real and substantial connection justified the exercise of jurisdiction simpliciter to adjudicate a matter and grounded jurisdiction to support full faith and credit recognition and enforcement of the resulting judgment in another province or territory of Canada. The scope of jurisdiction simpliciter was limited by the "principles of order and fairness ... [which] must underlie a modem system of private international law." (7) La Forest J. addressed application of the fairness principle rather bluntly: "fairness to the defendant requires that the judgment be issued by a court acting through fair process and with properly restrained jurisdiction." As to the proper restraint, he identified the real and substantial connection standard supplemented by forum non conveniens (FNC). (8)

La Forest J. did not define "real and substantial connection" in Morguard, preferring that it develop on a case-by-case basis. He was also imprecise about the nature of the requisite connection was it between the forum and the parties, the forum and the cause of action, or both? La Forest J. variously referred to "a connection 'between the subject-matter of the action and the territory where the action is brought,' 'between the jurisdiction and the wrongdoing,' 'between the damages suffered and the jurisdiction,' 'between the defendant and the forum province,' 'with the transaction or the parties,' and 'with the action."' (9) Though inconsistent with phrases to describe the content of a real and substantial connection, La Forest J. was decidedly clear that the real and substantial connection standard was satisfied by the traditional bases of jurisdiction simpliciter grounded on territorial jurisdiction over a defendant present within the forum, or who submitted to the exercise of that jurisdiction by a contractual agreement, or who attorned to the jurisdiction by taking procedural steps to defend the action. …