Court of Appeal Analyzes Exclusive Jurisdiction Clause

Andrew Ottaway, B.A. (Hons.), LL.B.Commercial0 Comments

In Forbes Energy Group Inc. v. Parsian Energy Rad Gas, 2019 ONCA 372 (CanLII), the plaintiff commenced an action seeking a declaration that it was not obligated to make payments to the defendants under a contract.

The contract contained a clause stating that it was “governed by and construed in accordance with the laws of England and the Parties agree to attorn to the courts of England”.  The defendants sought to stay the action on the basis of that clause in favour of the courts of England.

The motion judge granted a stay, finding that the plaintiff had failed to meet the test to displace a forum selection clause: to demonstrate “strong cause” that the clause should not be enforced.

On appeal, the Court of Appeal stated the “strong cause” test only applies to forum selection clauses that grant exclusive jurisdiction to a foreign jurisdiction.  The motion judge did not find that the clause was an exclusive jurisdiction clause, and so the “strong cause” test did not apply.

The Court of Appeal conducted a fresh analysis of whether Ontario was the most convenient forum.  The Court stated that the subject clause was a factor in the forum non conveniens analysis but not determinative. Ultimately, the Court of Appeal found that England was not the more appropriate forum, and allowed the action to proceed in Ontario.

The lawyers at Gilbertson Davis LLP have experience with cross-border litigation, including bringing and responding to motions to stay proceedings for lack of jurisdiction or on the basis of forum non conveniens.  Please contact us for an initial consultation.

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About the Author
Andrew Ottaway, B.A. (Hons.), LL.B.

Andrew Ottaway, B.A. (Hons.), LL.B.

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