1.1 Jurisdiction of Canadian Courts

1.1.1 When will a court entertain an action brought by a foreign plaintiff?

A Canadian court will entertain an action brought by any legal person, provided they have an address for service in the province in which the action is brought. A foreign plaintiff, however, may be required to put up security for the defendant’s costs to defend the proceeding, the amount of which will vary from province to province, and upon the circumstances.

1.1.2 When will a court take jurisdiction over a foreign defendant?

A Canadian court will take jurisdiction over a foreign defendant if the defendant is resident or is served within the court’s jurisdiction, or if the defendant voluntarily submits to the court’s jurisdiction. A court will also have jurisdiction over a foreign defendant if the defendant is served outside the jurisdiction and there is a real and substantial connection between the subject matter of the litigation, the parties and the court’s jurisdiction.

Generally, a court does not have jurisdiction over proceedings involving any other jurisdiction’s public law, penal law or revenue law.

1.1.3 When will a court decline to exercise jurisdiction in favour of a more convenient forum?

In Canada, a court may decline to exercise jurisdiction if there is another forum that is more convenient and appropriate for the pursuit of the action and for securing the ends of justice.

Foreign defendants will often seek to have the Canadian court decline jurisdiction in favour of their home territory. The application of this doctrine is discretionary, and Canadian courts look to a number of factors to determine which jurisdiction has the closest and most substantial connection to the case. A court can control the parties’ choice of forum by issuing either a stay of proceedings, or an anti-suit injunction.

1.2 Choice of Law and Requirement to Prove Foreign Law

The choice of law for any given legal action will depend upon the type of action.

• An action in tort (a civil wrong not arising from a breach of contract) is governed by the law of the place where the tort occurred. Canadian courts, however, have suggested there is room for exceptions to this rule in certain circumstances. Accordingly, the determination of the choice of law for an action in tort may depend upon the particular facts of the situation and a consideration of competing doctrines.
• An action in contract is determined by the proper law of the contract. Within limits, the parties to the contract may choose the proper law of the contract by specifying that law expressly in their contract. If the parties have not expressly set out what law will govern the contract, the courts will determine the proper law of the contract based on the jurisdiction with which the transaction has its closest connection. To this end, the court will look at factors such as where the contract was made, where it was to be performed, the residence of the parties, the legal form of the contract, the language of the contract, and arbitration or exclusive jurisdiction clauses.
• Regarding property, the law to be applied for conflicts of law purposes will depend upon whether the property is movable or immovable. Generally, immovable property is real property, and movable property is personal property. Immovable property is subject to the law of the jurisdiction where it is located. The law applicable to movable property will depend upon the circumstances of the action.

Canadian courts treat foreign law as a matter of fact, not as a matter of law. Therefore, the party relying on it must plead and prove the foreign law. Foreign law is proven through the testimony of experts. If the foreign law is not proven to the satisfaction of the court, the court will apply the law of its own jurisdiction. As well, a court will not apply the law of a foreign jurisdiction if it offends the province’s morality or public policy.

1.3 Enforcement of Foreign Currency Obligations

There are two aspects to foreign currency obligations that must be determined – the money of account and the money of payment.

The money of account is the amount of money due under the contract. It can be expressly set out in a certain currency. For example, in a contract with a U.S. and Canadian element, the contract may say the debt is in U.S. dollars. If the money of account is not expressly set out, then it is determined by the laws of the proper law of the contract. For example, if the proper law of the contract is British Columbia, then B.C. law would be used to determine if the debt is in U.S. or Canadian dollars.

The money of payment is the system of discharging the foreign currency obligations. Debt may be discharged in the currency of the place of payment. If payment is in Canada, and the debt is in U.S. dollars, the question becomes how many Canadian dollars does the debtor need to pay to fulfil the U.S. dollar debt? The issue is which date in the history of the claim should be the date used to determine the rate of exchange. The common law on this issue is not entirely settled. Canadian courts have sometimes adopted the date on which the defendant breached (that is, the date on which the plaintiff should have been paid).

In the case of the enforcement of a foreign judgment, however, the courts have sometimes used the date of judgment as the appropriate date of exchange. This results in the plaintiff’s award being altered to reflect the exchange rate on the date of the judgment.

As well, certain provinces have legislation stating that where an order is made for a claim measured in a foreign currency, the conversion to Canadian dollars is determined by the exchange rate at the time of payment to the plaintiff. To determine the appropriate date of exchange in a jurisdiction, it is necessary to research that particular jurisdiction’s legislation, to determine whether the common law or legislation applies. (See Section III, 1.10.2 for more detail.)

1.4 Enforcement of Extra-provincial Orders and Foreign Judgments

A judgment given in one Canadian province is entitled to recognition and enforcement in another Canadian province as long as there is a real and substantial connection between the original province and the subject matter in question or the defendant. All common law provinces have reciprocating legislation that facilitates the recognition and enforcement of judgments from other provinces. There is similar reciprocating legislation between some provinces and certain American states.

To enforce a foreign judgment in Canada, a party must obtain an order from a Canadian court. The common law rule is that the court will recognize and enforce a foreign judgment if the foreign court that made the judgment has jurisdiction in the “international sense”.

Jurisdiction in the international sense is determined by considering if there was a real and substantial connection between the defendant and the foreign jurisdiction at the time that the action was commenced. A foreign court will also be recognized as having jurisdiction in the international sense if the defendant was present in the foreign jurisdiction when the action was started, or if the defendant voluntarily submitted or agreed to submit to the jurisdiction of the foreign court. As well, for a court to recognize and enforce a foreign judgment, the foreign judgment must be final and conclusive.

The rules for enforcing a foreign judgment under Quebec’s civil law regime are slightly different, and they are discussed separately in Section VIII of this Guide.

Even if a foreign judgment meets the requirements for recognition and enforcement in Canada, there are certain defences to enforcement the defendant can raise. A foreign judgment will not be enforced if the judgment was obtained by fraud on the part of the party seeking to enforce it, if the proceedings under which the foreign judgment was obtained were contrary to the principles of natural justice, or if the underlying cause of action on which the foreign judgment is based is contrary to the public policy of the province in question.

In addition to the common law, several of the provinces have reciprocal enforcement of judgments legislation. This legislation allows a judgment creditor in a province to apply to the court of that province for an order registering the foreign judgment. This can only be done if the foreign judgment is from a reciprocal jurisdiction, as set out in the reciprocal enforcement of judgments legislation.

The result of registering a foreign judgment in this manner is that it will be of the same force and effect as if it had been a judgment given in the registering court on the date of the registration.

As well, the registering court will have the same control and jurisdiction over the foreign judgment as it has over judgments it itself gives. The reciprocal enforcement of judgments legislation in the various provinces does not alter the rules of private international law.

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