Connections Matter: BCCA Affirms Jurisdiction Over Foreign Entities Operating Virtually in the Province

The British Columbia Court of Appeal (BCCA) recently confirmed the British Columbia courts’ jurisdictional competence over foreign litigants that conduct business virtually with British Columbians. In Airbnb, Inc. v. Ware, the BCCA partially allowed Airbnb’s appeal of certification, finding that the real and substantial connection analysis cannot be based solely on a foreign entity’s relationship to other defendants or ancillary activities. In Clearview AI Inc. v. British Columbia (Information and Privacy Commissioner), the BCCA held that provincial privacy law applies to foreign businesses that operate online.

Airbnb, Inc. v. Ware

In Airbnb, Inc. v. Ware, the plaintiff sought certification of a class proceeding against multiple Airbnb group entities, alleging that they were statutorily prohibited from offering short-term accommodation rentals. Two of the defendants — Airbnb, Inc. and Airbnb Canada Inc. — brought jurisdictional challenges, which the chambers judge dismissed and certified the action as a class proceeding.

The two defendants appealed. The BCCA held that the chambers judge had erred by treating them together for the purposes of determining whether a real and substantial connection existed. It held that jurisdiction must be assessed separately against each defendant, and a presumptive connecting factor must be established for each defendant under section 10 of the Court Jurisdiction and Proceedings Transfer Act.

The BCCA affirmed the chambers judge’s finding of territorial competence over Airbnb, Inc., relying on contracts it had entered with British Columbian guests prior to June 30, 2014. Regarding Airbnb Canada Inc., the BCCA held that the chambers judge had failed to consider whether there was a presumptive connecting factor that applied to it as distinct entity. While Airbnb Canada Inc. had engaged in advertising and marketing activities in British Columbia on behalf of other defendants, there was no pleading or evidence that it was a party to any of the relevant contracts, carried on business in British Columbia or engaged in any activity that was relevant to the claims beyond its marketing services. Accordingly, Airbnb Canada Inc.’s appeal was allowed, and the claims against it were dismissed.

Clearview AI Inc. v. British Columbia (Information and Privacy Commissioner)

In Clearview AI Inc. v. Information and Privacy Commissioner for British Columbia, the BCCA considered whether the Personal Information Protection Act (PIPA) could constitutionally apply to Clearview AI Inc., a U.S.-based company.

Clearview had collected publicly available images of individuals, some of whom were located in British Columbia, for use in its facial recognition software. Following a joint investigation, the British Columbia Information and Privacy Commissioner (Commissioner) determined that Clearview had contravened PIPA. The Commissioner ordered Clearview to suspend its facial recognition services within the province and to delete and cease its collection of facial data from British Columbians. Clearview’s petition for judicial review of the Commissioner’s decision was dismissed.

On appeal, the BCCA upheld the Commissioner’s order, emphasizing that, given how the internet has evolved, traditional factors such as the physical location of a company or its consumers carry less weight when determining whether a real and substantial connection exists. Because Clearview’s business depended on collecting facial data on a global scale, including from individuals in British Columbia, and because privacy protection is a quasi-constitutional interest, the BCCA held that there was a real and substantial connection between Clearview’s business and the province. PIPA was therefore constitutionally applicable.

The BCCA also emphasized that the Commissioner did not lose jurisdiction simply because Clearview later suspended its services in Canada, particularly given that it continued to collect facial data from individuals in British Columbia.

Takeaways

Taken together, the BCCA’s decisions confirm British Columbia’s reach over foreign entities. Airbnb, Inc. v. Ware shows that, when dealing with foreign litigants, jurisdiction must be established separately for each defendant and cannot depend solely on corporate affiliation or ancillary activity. Further, as demonstrated in Clearview AI Inc. v. British Columbia (Information and Privacy Commissioner), the lack of physical presence in the province will not, on its own, be determinative where a foreign entity’s own conduct has a sufficient connection to British Columbia.

Foreign businesses that operate online should expect British Columbia courts and regulators to look closely at the nature of the entity’s activities and their connection to the province, rather than simply relying on its corporate structure or the physical location of its operations.

For more information, please contact the authors or any other member of our Litigation & Dispute Resolution, Class Actions or Privacy & Data Protection groups.