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The Second Opinion: This Week at the Supreme Court of Canada (07/05/2014) Enforcement of Foreign Judgments in Canada through an Unrelated Canadian Subsidiary

A Commentary on Recent Legal Developments by the Opinions Group of McCarthy Tétrault LLP

Posted in This Week at the SCC
Martin Boodman

This week the Supreme Court of Canada granted an application for leave to appeal the decision of the Ontario Court of Appeal in Yaiguaje v. Chevron Corporation 2013 ONCA 758.  As a result, the Supreme Court of Canada will review the jurisdictional requirements for the enforcement of foreign judgments in Canada.

The case is particularly important to multi-national enterprises because it involves an attempt to enforce in Canada a foreign judgment against a non-Canadian judgment debtor and against its Canadian subsidiary, which was not a party to the litigation. The foreign judgment debtor had no presence and no assets in Canada.

The appeal raises several issues. The first issue is whether there must be a real and substantial connection between the subject matter of the litigation and Ontario for an Ontario court to have jurisdiction to enforce the foreign judgment. The earlier decisions held that no such requirement exists and accepted jurisdiction over the non-Canadian judgment debtor on the basis of valid service ex juris.

The second issue is whether the lower courts were correct in holding that an Ontario court has jurisdiction over a Canadian subsidiary of a non-Canadian foreign judgment debtor on the basis of its presence in Ontario and economic relationship with its ultimate parent company, the judgment debtor.

The third issue is whether a court has discretion to stay enforcement proceedings based on its perception that there is no reasonable prospect for recovery against either of the defendants, where the discretion is exercised prior to argument on the merits of the enforcement proceedings.

For an analysis of the Ontario Court of appeal decision, see The Second Opinion Canadian Subsidiaries Beware ? The Ontario Court of Appeal Addresses Enforcement of Foreign Judgments against Related Entities, December 20, 2013.

The McCarthy Tétrault Opinions Group consists of members of the firm’s litigation department whose practices focus on written advocacy and the provision of strategic advice and opinions in the context of complex business disputes and transactions. The members of the Opinions Group are Anthony Alexander, Martin Boodman, Brandon Kain, Hovsep Afarian and Kirsten Thompson.