Academic journal article Defense Counsel Journal

International Class Actions in the Canadian Context: Standing, Funding, Enforceability and Trial

Academic journal article Defense Counsel Journal

International Class Actions in the Canadian Context: Standing, Funding, Enforceability and Trial

Article excerpt

CANADIAN CLASS proceedings are commonly brought simultaneously with parallel actions in other jurisdictions. Due to the legal and factual overlap between these actions and the ongoing litigation in other countries, the conduct and conclusion of the Canadian cases must be carefully managed in the process of achieving coordinated resolutions of global claims. Naturally, the most pressing questions legal advisors of multinational defendants have when their clients are facing ancillary actions in Canada are those that have the most significant impact on their global defense strategy: How are Canadian class actions different from class actions in other countries? Who may bring an action, and how large a class can be defined? What resources does that class have available? Will a successful judgment or satisfactory settlement be enforceable in Canada, and will it conclusively resolve all future Canadian claims in the matter?

The most pressing question, however, invariably is whether or not it will be necessary of desirable to take a Canadian class proceeding to trial. In order to come to a considered conclusion on this point, it is necessary to establish an understanding of the other critical concerns in managing an ancillary class action in Canada. This understanding will prove exceptionally important to defence counsel internationally in the increasing number of cases in which Canadian courts assume jurisdiction over global class actions, particularly in the securities and product liability contexts, it may not be long before concerns about ancillary actions in Canada evolve into concerns about bet-the-company, ostensibly conclusive global actions that happen to be tried in a Canadian court.

I. Policy and Structure of the Canadian Class Action

Class actions are actively promoted in Canada by both the judiciary and the various levels of government. The frequently expressed concern in many civil law jurisdictions that class actions do not facilitate recovery for class members and merely represent a form of "entrepreneurial lawyering" for the benefit of class counsel, who claim a percentage of class recovery or a multiple of their costs in the action, has been explicitly rejected by Canadian courts. Canadian courts consider class counsel to be taking on the role of "private attorneys general", fulfilling a necessary regulatory function by collecting individually non-viable actions into a single, efficient proceeding and requiring wrongdoers to internalize the costs associated with their wrongdoing.

While class actions are universally encouraged by Canadian lawmakers, the structure of Canada's constitution and the interpretation of its class proceedings statutes have prevented Canadian class actions from operating as seamlessly as all interested parties would wish. The uniformity of Canadian class proceedings leaves something to be desired, and fundamental constitutional issues continue to plague the class actions bar with the persistent threat that a seminal case may challenge the very capacity of Canadian courts to determine class actions on a nationwide scale.

A. Constitutional Considerations

The conduct and structure of Canadian class proceedings are largely dictated by Canada's unique constitutional arrangement. The Canadian constitution divides powers between a federal government and ten provincial governments. Canada also has three sparsely populated northern territories that are in large part governed as though they were provinces. The Constitution assigns exclusive jurisdiction over property and civil rights, as well as power over the administration of justice, to the ten provincial governments. (1)

As a result of this separation of powers, provincial courts of general competence have jurisdiction to hear class proceedings concerning most civil actions, and provincial governments have jurisdiction to legislate with regard to the conduct of class proceedings that concern property and civil rights. …

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