Monday, 29 August 2016

OCA Reverses Itself, Lifting a Forum Non Conveniens Stay

An order staying an action based on forum non conveniens can be lifted if subsequent developments warrant.  Such an order is not final like an order dismissing the action.  Where the governing law is a key factor on the motion for a stay, a plaintiff should have that issue fully adjudicated as part of the motion, rather than let the court rely on the position taken by the defendant, which may change after the motion, as it suits the defendant.

In Kaynes v. B.P. 2016 ONCA 601, a group of Canadian shareholders of British Petroleum (“B.P.”) sued B.P. in Ontario, alleging B.P. had misled them about its operational safety programs in its public disclosure prior to the Deep Horizons oil spill in the Gulf of Mexico in 2010, and about clean up activities afterward.    These shareholders had bought their shares on the New York Stock Exchange.    B.P.  moved for, and obtained on appeal, an order staying the action on the grounds that Ontario was forum non conveniens.  (The Ontario court found it did have jurisdiction).  The court’s grounds for the stay were the facts that there was another class action seeking similar relief in the U.S., and that a U.S. statute asserted exclusive jurisdiction over claims such as those brought by the plaintiff.    

 Kaynes then brought a class action in the U.S. based on the Ontario Securities Act.  Later,  the U.S. court dismissed Kaynes’  class action, partly because it could not be included in a U.S. class action because it was based on Ontario law.   (Kaynes was not barred from bringing an individual action in the U.S.)    Kaynes then moved to have the stay of the Ontario proceedings lifted.   In deciding whether the plaintiff had sufficient grounds, the Ontario Court of Appeal considered not just the fact that his U.S. class action proceeding had been dismissed.  The Court also gave weight to the fact that B.P. now accepted that the plaintiff’s claim is governed by Ontario law, namely the Ontario Securities Act.   If Kaynes’ claim was governed by U.S. law (as B.P. had previously asserted) then under U.S. law the U.S. court would have exclusive jurisdiction over the claim.     

There are two comment-worthy features of this ruling.   One is that we now have an appellate ruling from Ontario confirming that a stay granted on grounds of  forum non conveniens is not necessarily permanent and the court has inherent jurisdiction to lift the stay “where circumstances later develop that make it unjust to continue the stay” (para. 11). 

The other feature relates to the fact that the ruling turned in part on the question of whether Kaynes’ claim would be governed by U.S. law in the U.S. proceeding.   The law to be applied is certainly one of the factors in a forum non conveniens analysis.  This factor carried extra importance here because the U.S. court would have, under American law, exclusive jurisdiction over the claim if it was governed by U.S. law.  However, when granting the stay, the court accepted as fact U.S. law applied without analysis and without any court having ruled on this issue.   Kaynes maintained throughout that Ontario law governed.  B.P. said, at the time of its motion to stay the Ontario proceeding, that U.S. law governs, and subsequently obtained the stay of proceedings.  Later, B.P. flip-flopped, which led to Kaynes’ claim (as a class action) being dismissed in the U.S.  A court hearing a forum non conveniens motion needs to carefully determine the applicable law. 

Friday, 29 July 2016

Limitation Periods for the Enforcement of Foreign Judgments

             Recent news stories tell of some Americans who had sued Iran in the U.S. for harm arising from Iranian-sponsored terrorism, and who were able to enforce their judgments against a house in Toronto and building in Ottawa.  The American judgments are all six more years old, but the Americans did not start proceedings to enforce them until 2013 or 2014.  Subject to a few exceptions, the limitation period in Ontario is two years.    How were they able to get around that?  
            There is no limitation period for enforcing a domestic judgment, but there is uncertainty as to whether that applies to foreign judgments too.    I would have welcomed a ruling on this issue, which I explain a bit more below.  Unfortunately the Court that enforced those American judgments – the Superior Court of Justice in Tracy v. Iranian Ministry of Information and Security  [2016] O.J. No. 3042 -- did not delve into that. 
            The enforcement proceedings were not statute-barred because they were commenced under two years from when Canada enacted the Justice for Victims of Terrorism Act (“JVTA”) and amended the State Immunity Act (“SIA”), both done in 2012.      Before then, the Islamic Republic of Iran (“Iran”) was immune from suit.  The amendment to the SIA meant that countries on a certain list of countries believed to be supporters of terrorism are not immune from suit for support of terrorism occurring on or after Jan. 1, 1985.   Iran is on that list.   
The JVTA gives victims of terrorism a cause of action against foreign states that support terrorism, for loss or damage suffered on or after Jan. 1, 1985,  caused by acts or omissions which if committed in Canada would be punishable under Part II.1 (Terrorism) of the Criminal Code.  The JVTA also provides that Canadian courts must recognize an otherwise enforceable foreign judgment granted in respect of such loss or damage, even against a foreign state, if that state is on the list of states believed to support terrorism. 
The Americans’ claims are statutory claims under the JVTA.  In Peixiero v. Huberman [1997] 3 S.C.R. 549at para 44, the Supreme Court of Canada held that there can be no cause of action until the plaintiff’s injury meets all the statutory criteria.  The Americans had no cause of action until the JVTA was enacted and Iran’s immunity was removed.  They brought their proceedings to enforce the American judgments a year later, in March 2013.
The Ontario Court of Appeal ruled in in Lax v Lax, (2004) 70O.R. (3d) 520 that the provision in the Limitations Act (the statute that precedes the Limitation Act, 2002) which exempts enforcement of judgments from the limitation period does not apply to foreign judgments.  The current legislation does not clarify the matter.   The Superior Court of Justice, in Commission de la Construction du Quebec v Access Rigging,  2010 ONSC 5897  interpreted the current statute find the limitation period does apply. 
However, more recent decisions have cast doubt on those rulings. The Superior Court in PT ATPK Resources TBK v, Diversified Energy and Resource 2013 ONSC 5913, held there was no reason to treat foreign judgments differently from domestic judgments.  The following year the Ontario Court of Appeal in SA Horeca Financial v Light  2014 ONCA 811, arguably in obiter, implicitly agreed with the PT ATPK ruling.