Supreme Court of Canada Narrowly Rules Facebook’s Jurisdiction Clause Unenforceable

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Facebook, and most other large social media and internet companies, set out in their terms of use that users of their services must bring any litigation disputes in the jurisdiction of their choice. However, in Douez v. Facebook, the Supreme Court of Canada has recently held, in a 4-3 decision, that Facebook could not enforce that clause against the plaintiff, a British Columbia woman complaining that their use of her photo and name in advertising breached her rights under British Columbia’s Privacy Act.

Notably, the Privacy Act specifically requires that any action under that statute “must be heard” by the British Columbia Supreme Court.

The majority held that while a jurisdiction clause is ordinarily enforceable, it could not be enforced in this instance as doing so would violate public policy, since the quasi-constitutional rights the statute provides and the exclusive jurisdiction to BC courts it requires means that the statute ought to be interpreted and applied by a local court instead of a foreign one.

Justice Abella, in a concurring opinion, specifically found that this contract of adhesion was unconscionable for depriving the complainant of her right to redress quasi-constitutional rights in a local court and gave Facebook procedural and potentially substantive benefits by requiring litigation be heard in California.

The dissenting opinion, however, found no contractual, constitutional, or public policy issues with the jurisdiction clause. They noted that exclusive jurisdiction clauses are routinely enforced, and sufficient procedural requirements were taken to ensure that the plaintiff agreed to the terms (i.e. checking off the appropriate box at signup) prior to her use of their service. They further found that the clause does not offend public policy, but actually supports it, since public policy also requires certainty and predictability in contractual agreements, and there was no evidentiary basis for assuming that the California courts were incapable of applying British Columbia privacy law or that the plaintiff would not receive a fair trial before the California courts.

The decision will give many online and international businesses cause for concern, since it has effectively created an additional hurdle to enforcing jurisdiction clauses. That is, jurisdiction clauses may now be powerless to stay a claim that alleges a violation of some essential or quasi-constitutional right, such as privacy rights.

If you are involved in an international dispute, privacy dispute, online dispute, or e-commerce dispute, contact us for an initial consultation.

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