Court Stays Action in Favour of Mexico Arbitration

Andrew Ottaway, B.A. (Hons.), LL.B.Civil Litigation, Commercial Law, Commercial Litigation, Contract Disputes, Cross-Border Litigation, Employment & Wrongful Dismissal0 Comments

In Kavanagh v. Magna, the Plaintiff alleged that he was wrongfully dismissed by his Mexican employer.  The Plaintiff sued an Ontario affiliate company of his Mexican employer in the Ontario Courts.  The Plaintiff had also brought an arbitration proceeding against his Mexican employer in the Mexico.  The Defendants sought to have the Ontario action dismissed on the grounds that the Ontario Courts lacked jurisdiction of over the dispute.  The Ontario Court applied a two part test considering i) whether it had jurisdiction, and ii) whether it should assume jurisdiction.

i) The Ontario Court found that the dispute did not have a “real and substantial connection” to Ontario: the Plaintiff signed his employment contract in Mexico, worked in Mexico, and was terminated in Mexico.   There was also a clause in his employment contract agreeing to resolve disputes in accordance with the laws of Mexico.   Nevertheless, the Judge found that the Ontario Court did have jurisdiction over the dispute due to the Defendants’ conduct in Ontario; the Defendants had submitted (“attorned”) to the jurisdiction of Ontario’s Courts by filing a Statement of Defence and Counterclaim in the Ontario action.

ii) the Judge held that the Court should not assume its jurisdiction.  The employment contract specified that disputes would be resolved in accordance with the laws of Mexico.  The Judge applied the Supreme Court’s decision in Z.I. Pompey Industries v. ECU Line M.V., which stated that a choice of forum clause should be enforced unless there is a “strong cause” not to.  The Plaintiff conceded that the choice of forum clause should be enforced.

Although the Judge declined to assume jurisdiction over the dispute, he refused to outright dismiss the Plaintiff’s claim.  The Judge noted the Plaintiff’s argument that the Mexican proceeding dealt with a different time period of his employment than the Ontairo action.  The Judge chose to stay, rather than dismiss, the Ontario action pending the outcome of the Mexican proceeding.  The Judge stated that the party seeking to revive the Ontario action would have to prove that the Ontario Courts should exercise their jurisdiction.

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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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