Supreme Court Clarifies Jurisdiction Requirements for Enforcement of Foreign Judgments

Gilbertson Davis LLPAppeals, Commercial Law, Cross-Border Litigation, Enforcement of Foreign Judgments, Jurisdictional Challenges, Of Interest to US Counsel0 Comments

In Chevron Corp. v. Yaiguaje, the Supreme Court of Canada clarified the jurisdictional requirements for an Ontario court to consider a proceeding to enforce a foreign judgment. In this case, the plaintiffs obtained judgment against Chevron Corp. in Ecuador for some $9.5 billion USD, and they sought to enforce that judgment in Canada, against both Chevron Corp. and the Canadian subsidiary, Chevron Canada.

In a unanimous decision, the Supreme Court confirmed that the plaintiff does not have to show a real and substantial connection between Ontario and the foreign judgment debtor. The court need only be satisfied that there is a real and substantial connection between the foreign court and the defendant when the foreign court issued its judgment. Ontario courts will have jurisdiction over a foreign defendant in an enforcement proceeding as long as the defendant was properly served. It is not even a requirement that the defendant have assets in Ontario prior to the commencement of the enforcement proceeding.

The court noted that granting the Ontario courts jurisdiction does not preclude the defendant from all its usual defences to an enforcement proceeding, such as fraud or a denial of natural justice, nor does it preclude the court from declining jurisdiction on the basis of forum non conveniens. This decision simply confirms that the Ontario courts have the jurisdiction to hear the enforcement proceeding, even if the defendant has no real and substantial connection to Ontario.

The court also went on to hold that the real and substantial connection test, recently clarified by the Supreme Court of Canada in Club Resorts Ltd. v. Van Breda, is not a consideration in determining jurisdiction if the traditional methods of finding jurisdiction are present – that is, if the defendant was served in Ontario or consented to the Ontario courts having jurisdiction. In those situations, no further analysis is required to determine if the court has jurisdiction. In this case, the subsidiary Chevron Canada was served at its registered head office in Ontario, and therefore the court has jurisdiction to consider the plaintiffs’ claims against the Canadian subsidiary, even though it had no invovlement in the foreign proceeding or the judgment that was issued against Chevron Corp.

This decision clarifies two of the lingering questions from Van Breda, namely whether enforcement proceedings were subject to the same real and substantial connection test, and whether the traditional means of establishing jurisdiction were replaced or limited by the real and substantial connection requirement. By answering these questions in the negative, the Supreme Court hopes to have settled the law on this question, to provide certainty and consistency when it comes to enforcing judgments in today’s global economy.

If you have a matter involving a jurisdictional challenge, or the recognition and enforcement of foreign judgments, please contact us for an initial consultation.

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