SCC Clarifies Contract-Based Jurisdiction in Cross-Border Disputes

In Sinclair v. Venezia Turismo (Sinclair), the Supreme Court of Canada (SCC) clarified when Canadian courts can assume jurisdiction over international or interprovincial disputes.

A contract made in a Canadian province and connected with a foreign dispute can presumptively give the Canadian court jurisdiction. In Sinclair, the SCC refined the circumstances where that presumption applies and strengthened the ability of defendants to rebut it. By upholding an order striking the claims against the foreign defendants, the SCC emphasized that jurisdiction must be assessed from the perspective of each defendant and that having jurisdiction over one defendant may not be used to bootstrap jurisdiction over another.

Background

While vacationing in Italy, the plaintiff, Mr. Sinclair, contacted his credit card’s concierge service to arrange transportation from the Venice airport to his hotel. The concierge in turn engaged a third-party travel provider, which arranged for a water taxi. The water taxi crashed, injuring the Sinclairs. They issued a tort action in Ontario seeking damages from several defendants associated with the crash, including the Italian companies that owned and dispatched the water taxi (Italian Defendants).

Under the SCC’s 2012 decision in Club Resorts Ltd. v. Van Breda, a Canadian court can assume jurisdiction over a foreign defendant if there is a “real and substantial connection” between the dispute and the province where the claim is filed. The Van Breda test has two stages:

(1) Is there a “presumptive connecting factor” linking the dispute to the province?

(2) If so, is the presumed real and substantial connection with the province nonetheless rebutted given the circumstances?

The Sinclairs relied on the presumptive connecting factor that the dispute arose from a contract made in Ontario. The Italian Defendants moved to strike the claim against them for lack of jurisdiction.

The motion judge found that the Ontario court could assume jurisdiction over the Italian Defendants. Relying on the contractual connection factor, the judge determined that the cardmember agreement giving the Sinclairs access to the travel concierge, or the contract between the concierge and the third-party travel provider, were contracts made in Ontario with sufficient connection to the dispute to justify jurisdiction.

The Ontario Court of Appeal unanimously reversed the decision, holding that even if the connecting factor applied at the first stage of the Van Breda test, the presumption was rebutted as the facts did not show a real connection between the dispute and Ontario. The Sinclairs then appealed to the SCC.

The SCC Decision

A five-member majority of the SCC agreed with the Court of Appeal’s conclusion that the Ontario court did not have jurisdiction.

The majority reiterated that jurisdiction must be considered from the perspective of each defendant. A contract’s connection to the dispute for one defendant cannot be used to extend jurisdiction to another nor can multiple weakly connected be aggregated to create jurisdiction. For each defendant, the presumption of jurisdiction based on the contractual connection factor applies only if the conduct at issue arises from the specific contract relied on.

Applying these principles, the majority was prepared to accept that the cardmember agreement between the Sinclairs and the credit card company was an Ontario contract and therefore concluded that the first stage of the Van Breda test was satisfied. As that contract led to the booking of the water taxi, which gave rise to the Sinclairs’ claims against the Italian Defendants, it was also sufficiently connected to the dispute to establish a presumption of jurisdiction.

Nevertheless, the Italian Defendants succeeded in rebutting the presumption of jurisdiction. While the first stage of the Van Breda test asks whether a connection with Ontario exists, the second stage examines the strength of the connection. The majority found that there was only a weak connection between the cardholder agreement and the dispute, which arose from a tort that occurred in Italy, on an Italian boat operated by an Italian national. The sole connection to Ontario was that Mr. Sinclair had made the reservation by calling the concierge under the Ontario cardholder agreement. The contract also had a weak connection to the Italian Defendants, who were not parties to it and had no reason to expect they would be sued in an Ontario court.

Four SCC judges dissented. Unlike the majority, they would have held that the Italian Defendants had not rebutted the presumption of jurisdiction created by the Ontario contracts. In their view, the connection between those contracts and the dispute was not so weak as to deprive an Ontario court of jurisdiction over what they would have characterized as a set of “integrally related torts.”

Key Takeaways

1. In international or interprovincial disputes, jurisdiction must be assessed from the perspective of each defendant, as one defendant’s connection to the Canadian forum cannot ground jurisdiction for all parties.
2. When assessing jurisdiction based on the contractual connection factor, Canadian courts will carefully consider the particulars of a contract made in the court’s jurisdiction, whether that contract is connected to the dispute and the strength of the connection.
3. Multiple contracts with weak connections cannot be combined to establish jurisdiction.

For further information, please contact the authors or any other member of our Litigation & Dispute Resolution group.