Forum selection clauses before Canadian courts: a tale of two (or three?) solitudes.
As it now stands in Canada, only Quebec courts will systematically hold parties to the selection of another place for dispute resolution. In the other provinces, plaintiffs can still invoke the court's discretion to avoid the enforcement of a forum selection clause that would send them elsewhere to sue the defendants. Moreover, the breadth of that discretion may now be affected by whether the province's jurisdictional rules are drawn from statute or the common law. In addition, a series of appellate decisions appears to have modified the effect of the defendant's attornment on that party's ability to invoke a forum selection clause. All of these factors contribute to the increasing diversity and indeterminacy of the enforcement of forum selection clauses in Canada.
Before March 2012, the Supreme Court of Canada had twice considered the effect of forum selection clauses on the jurisdiction of a Canadian court. (1) In both cases, the Supreme Court gave strong support to forum selection clauses, underscoring the importance of maximizing legal certainty in international transactions. This was consistent with the Court's significant support of party autonomy in international dispute resolution expressed in its arbitration jurisprudence during the same period. (2) And yet, despite the Court's unwavering championing of contracting parties' freedom to select the place and mode of dispute resolution, the precise contours of that autonomy in the common-law provinces remained uncertain, particularly since the adoption of statutory jurisdictional rules in a few jurisdictions. (3) The Supreme Court recently had the opportunity to resolve some of the remaining ambiguity when it granted leave to appeal in the Ontario case of Momentous.ca Corp v Canadian American Association of Professional Baseball Ltd} But in a laconic twelve-paragraph confirmation of the lower court's decision, (5) the highest court failed to provide the anticipated resolution.
The dispute in Momentous arose out of the commercial failure of a professional baseball team in Ottawa. The team owners wanted to fold the team and claim the refund of a $200, 000 deposit. The League instead drew down on the team's letter of credit. In response, the team's owners launched proceedings in Ontario despite the presence of forum selection clauses in the League bylaws, the stadium lease agreement, and the League affiliation agreement. These clauses designated the courts of North Carolina as the forum for the resolution of all disputes; the defendants did not invoke these clauses until after they had submitted a defence on the merits, thereby giving rise to an argument regarding their attornment to the jurisdiction.
The Court of Appeal decision addressed some important developments regarding the interpretation and enforcement of forum selection clauses that had either given rise to some conflicting appellate decisions across the country or had never been considered. For example, the Court sought to redefine the conditions surrounding its discretion in terms of the "strong cause" test originally articulated by the Supreme Court of Canada in the ZI Pompey (6) case. Further, the Court of Appeal considered in some detail the issue of attornment in the presence of a forum selection clause.
In dismissing the appeal, the Supreme Court of Canada chose to overlook the challenging aspects of the case that had been addressed by the Court of Appeal, preferring to reaffirm its position favouring party autonomy in very general terms without providing any true guidance for future cases on the exact contours of the strong cause test or the practical conditions for establishing attornment. (7) As a result, parties considering litigation in Canada might wonder what lessons they may draw regarding the law and practice governing forum selection clauses in Canada after Momentous. This article will consider what has led to this situation and what might be done to address it.
To that end, this article will examine the law on forum selection clauses in Canada from the codified rule under Quebec law to the common-law and statutory rules in the common-law provinces. In so doing, we will seek to highlight the strengths and shortcomings of the various approaches, underscore what we believe to be the existing incongruities, and consider the potential for resolving these, perhaps by adhering to an international instrument, however imperfect it may be.
The article begins by drawing a distinction between prorogation and derogation, that is, between a court whose jurisdiction is extended by the parties' choice and a court whose jurisdiction is excluded by the parties' choice. Throughout the country, whether the court is designated or excluded has an immediate effect on how the court will analyze the forum selection clause. In contrast to relative uniformity in the treatment of prorogation across the country, there is a significant disparity in treatment of derogation, with at least three identifiable approaches that will be systematically examined: (i) the unequivocal rule in the Civil Code of Quebec (CCQ), (ii) the inconsistent use of forum non conveniens in some common-law provinces, and (iii) the potentially ambiguous effect of statutory jurisdictional rules in the remaining common-law provinces.
The article then turns to a consideration of attornment in the face of a forum selection clause. Attornment is relevant here for two main reasons: (i) as another form of consent jurisdiction, its relationship to forum selection clauses deserves examination, especially in light of attornment's apparent ability to replace or defeat the previously expressed agreement of the parties, and (ii) attornment was central to the parties' arguments in the Momentous case. The article will consider whether an analogy to arbitration clauses is appropriate only to conclude that there is currently insufficient judicial or academic consensus in that field to be of much assistance to the resolution of the issue in relation to forum selection clauses.
The final section of the article will advance some general suggestions for possible reform to the treatment of forum selection clauses across the country. The most likely to support the current judicial and legislative preferences for predictability, certainty, and party autonomy is implementation of the 2005 Hague Choice of Court Convention, (8) although the political challenges facing that option cannot be underestimated.
I. ARE FORUM SELECTION CLAUSES ENFORCEABLE IN CANADIAN COURTS?
Forum selection clauses allow parties to a contract the opportunity of designating in advance the place for judicial determination of disputes that may arise between them. (9) Their contractual nature renders them similar to arbitration agreements, yet they differ in two important and critical respects. (10) First, by choosing arbitration, parties are deciding to forego the option of court adjudication, whereas a forum selection clause keeps the dispute within the realm of judicial decision making. Second, and perhaps most crucial, the enforcement of the eventual arbitration award--and indirectly of the arbitration agreement itself--is largely guaranteed by international law, notably the 1958 Convention on the Recognition and Enforcement of Foreign Arbitral Awards. (11) The enforcement of foreign court judgments and of forum selection clauses, on the other hand, remains subject to the vagaries of private international law. (12)
The answer to the question of whether forum selection clauses are enforceable before Canadian courts depends, therefore, on the private international law rules of the court(s) involved. The short answer to this question of enforceability is that these clauses are indeed enforceable, at least in the sense that parties can legally include a forum selection clause in their contract and expect the courts to take it into account. (13) This is not insignificant since it was previously the case that attempts to affect the jurisdiction of a court by way of a forum selection clause were considered to be against public policy and therefore of no force or effect. (14) While this has no longer been true for quite some time in the common-law provinces, it was not until the advent of the new CCQ, only 20 years ago, that the situation changed in Quebec.
Before looking at this issue more closely, it is worth distinguishing between two different scenarios. The first scenario arises where the court seized of an action is the court designated by the parties; in other words, the parties had agreed to sue in State A and the claimant starts proceedings in State A. The second scenario arises where a plaintiff institutes an action in a court other than the court designated by the forum selection clause. In other words, the parties had agreed to litigate all disputes in the courts of State A, but one party starts proceedings in State B instead. In both scenarios, the same forum selection clause is involved but, as will be seen below, this does not translate into equivalent enforcement of the clause.
A. SCENARIO 1: PROROGATION OR SEEKING TO EXTEND A COURT'S JURISDICTION BY WAY OF A FORUM SELECTION CLAUSE
The scenario involving the court designated by the parties raises a specific jurisdictional issue: whether the parties' agreement can be the sole source of jurisdiction for the court. This will occur whenever the designated court is not otherwise competent to hear the case in private international terms. This is called "prorogation" in some legal systems (15) and refers to the idea that it is the parties' agreement that extends the court's jurisdiction to cover their dispute. (16)
Following the Supreme Court's Morguard jurisprudence, this type of jurisdiction may well accord with the general principles of "order and fairness" that are said to underpin jurisdictional rules in the interprovincial context. (17) Where the defendant is a non-resident, these principles usually require that there be a "real and substantial connection" between the case and the court for its jurisdiction to be constitutionally valid. (18) Where the only link to the court is through its designation in a forum selection clause, one would be hard pressed to define that as a "real and substantial connection". (19) And yet nobody appears to challenge the fact that express consent provides an appropriate basis for jurisdiction, such is the strength of the principle of party autonomy in cross-border litigation.
Prorogation is expressly provided for in those provinces that have legislated jurisdictional bases. So, for example, article 3148(4) of the CCQ states that Quebec courts have jurisdiction when "the parties have by agreement submitted to it all existing or future disputes between themselves arising out of a specified legal relationship". (20) Similarly, the Court Jurisdiction and Proceedings Transfer Act (CJPTA), currently in force in BC, Nova Scotia, and Saskatchewan, (21) specifies that territorial jurisdiction is established where "there is an agreement between the plaintiff and that person to the effect that the court has jurisdiction in the proceeding". (22)
The law governing prorogation of jurisdiction via forum selection clauses is remarkably uniform across the country. Whatever the source of the jurisdiction (legislative or common law), it is accepted as a legitimate and appropriate source of judicial competence over a cross-border case. By its very nature, the forum selection clause meets the constitutional requirements of order and fairness: order is assured by the predetermination of the place of litigation pursuant to the agreement of the parties, and that agreement assumes fairness on the basis of general contract theory.
However, order is only assured if courts enforce the clause against both parties. Where the court seized of the case is the designated court, the enforcement of the forum selection clause will be implicit unless the court's jurisdiction is challenged by the defendant. The defendant may seek to impugn the validity of the clause itself, usually on grounds based in contract, such as lack of consent or formal invalidity. Such a challenge does not offend order as it is a necessary part of contract enforcement generally. Only a valid forum selection clause merits enforcement. The challenge that may impugn order is rather a challenge based on forum non conveniens.
There is nothing in any of the existing jurisdictional regimes that excludes recourse to the doctrine of forum non conveniens to resist the enforcement of a valid forum selection clause before the designated court. (23) Recalling, however, the factors that are considered in the assessment of a forum non conveniens claim for a stay, it is difficult to justify giving effect to such a request in the face of prorogation based on a forum selection clause.
The factors going to forum non conveniens can usually be divided into two categories: those that go to convenience of the parties and the court (location of evidence and witnesses, applicable law, costs) and those that go to the good administration of justice (avoiding multiplicity of proceedings and potential conflicting decisions, enforcement of an eventual judgment). The general appeal to securing the "ends of justice" that comes from the earlier English precedents (24) can fall within both categories and provides rhetorical rather than particular justification for the court's exercise of its discretion in such cases.
Where the parties have contractually designated the courts before which proceedings have been instituted, why should a court allow one party to avoid the consequence of that choice on the basis of inconvenience to that party? This would be a marked departure from contract law, which typically holds parties to their bargain, however inconvenient it might have become to one of the contracting parties. It is not clear what justification there might be for treating a forum selection clause so differently than other clauses in the same contract. Would it not be surprising for a court to allow a party to pay a different price on the grounds that the original stipulation had become inconvenient or even too onerous?
Perhaps the conditions going to the administration of justice might prove more convincing for the exercise of the discretion. Considering first the question of applicable law, the issue is whether the presence of the forum selection clause should affect the impact of that criterion on the exercise of forum non conveniens. In answering this question, it may be useful to consider the likelihood that a contract that includes a forum selection clause also includes a choice-of-law clause. Indeed, these often travel together given that parties who turn their mind to choice of court are alert to the choice-of-law issues as well and are more likely to negotiate an applicable-law clause. Ifthe court seized is not required to muddle through the choice-of-law analysis because the parties have expressly designated the applicable law, this might be seen to diminish the relevance of that criterion. On the other hand, if the case has no contacts with the forum, the applicable law (whether chosen or not) is likely to be foreign, which will complicate the resolution of the litigation for the court (assuming that one of the parties invokes that law). (25) On this basis, however, the outcome of the forum non conveniens analysis would most commonly result in a stay, making the exercise a waste of judicial resources that could be avoided by refusing prorogation whenever the case has no links to the forum--which is not unheard off (26) but is not currently the law in any province of Canada.
The last element going to forum non conveniens relates to the eventual judgment itself. Should that judgment be unenforceable in places where it is likely to be useful to the judgment creditor, judicial resources in the forum will have been wasted if the case is allowed to continue there. The non-recognition of an eventual forum judgment may occur under different circumstances, such as where (i) the forum judgment is not recognized in other relevant jurisdictions because the court rendering it is not considered to have had jurisdiction by the recognizing court; (ii) there are multiple proceedings and a foreign court renders judgment first, allowing one party to raise res judicata; or (iii) there are multiple proceedings, lispendens is not available, and a conflicting judgment could be rendered by the forum court. (27) What posture regarding forum non conveniens in the face of a prorogating forum selection clause is most consistent to avoid these negative outcomes from an administration of justice perspective? Arguably, the most consistent position would be to refuse to grant a stay and to enforce the forum selection clause. If the jurisdictional law of the forum recognizes the legitimacy of prorogation, it would be paradoxical to refuse to exercise that jurisdiction on the grounds that other states do not admit the same jurisdiction. In any event, in international litigation, it is very rare that parties have assets in a single foreign jurisdiction, and, as such, the eventual judgment creditor will have more than one option for recognition and enforcement on the judgment debtor's assets. Regarding parallel proceedings, these will have been brought before another court that is, by definition, not the designated court. To give preference to the non-designated foreign court would seem inconsistent with the court's own stance on forum selection clauses. Again, the most convincing posture is for the court to refuse to stay proceedings when its jurisdiction is based on the parties' own express choice.
These objections to the application of the doctrine of forum non conveniens in the face of a forum selection clause should be relevant throughout the country, including in Quebec. This is true despite the fact that the provision in the CCQ recognizing the prorogation of jurisdiction by way of a forum selection clause remains subject to article 3135 of the CCQ, which essentially codifiesforum non conveniens in Quebec, and that no textual argument is available to exclude recourse to the court's discretion to decline jurisdiction even where it has been seized on the basis of the parties' agreement. (28) However, as will be discussed below, the Supreme Court's strong endorsement of party autonomy as expressed in forum selection clauses (and arbitration clauses) makes it highly unlikely that the parties' prior consensual designation can be overcome by later arguments of mere convenience.
All in all, besides the potentially destabilizing effect of the available forum non conveniens doctrine, parties should expect courts across Canada to exercise jurisdiction accruing to them pursuant to the parties' prior contractual designation.
B. SCENARIO 2: DEROGATION OR SEEKING TO EXCLUDE THE JURISDICTION OF A COURT BY WAY OF A FORUM SELECTION CLAUSE
The flip side of prorogation is derogation. Indeed, the same clause that exclusively designates a particular court also excludes all other courts. Where the parties have chosen to resolve their disputes before the courts of State A but one of them eventually seeks to start proceedings in the courts of State B, that party is seeking to derogate from the forum selection clause. Canadian courts' reaction to this behaviour is uneven and has become more confusing as of late.
A preliminary point is worth emphasizing. Where a party begins proceedings in the non-designated court, that party must believe that the court has jurisdiction on some basis, the most common likely being a real and substantial connection to the jurisdiction in question. If there is doubt about this, the defendant who wishes to avoid that court will be in a position to challenge jurisdiction for reasons other than the forum selection clause. Moreover, whether or not the defendant challenges jurisdiction, it can usually also seek a stay on the basis of forum non conveniens. (29) The presence of the forum selection clause does not, a priori, preclude the defendant from choosing a different litigation strategy. However, such a choice may have an impact on that party's ability to invoke the clause concurrently or subsequently and on the way the court will treat the reference. This point will be further elaborated upon below when we discuss attornment and recent appellate jurisprudence, including the latest Supreme Court of Canada decision in Momentous.
1. DEROGATION UNDER QUEBEC LAW
The situation in Quebec can be presented first, as it is straightforward and unequivocal. The CCQ provides that where parties have contractually designated a court other than the court in Quebec seized of the plaintiff's action, the Quebec court has no jurisdiction to hear the case (article 3148 in fine). (30) In other words, the forum selection clause is deemed to oust the jurisdiction of the Quebec court. However, the mere existence of the clause is insufficient, as the court cannot raise it proprio motu. In order to be considered and thus enforced, the forum selection clause must be invoked by one of the parties. This confirms that that the jurisdictional clause does not affect jurisdiction ratione materiae, or those aspects of jurisdiction that are not within the parties' power to modify by mutual consent and that the court will raise on its own. (31) This is further confirmed by the fact that submission of the defendant is an explicit limitation on the ousting effect of the forum selection clause.
The legitimacy of forum selection clauses in Quebec law was introduced in the new Civil Code less than 20 years ago and marked a complete departure from the previous law that had viewed these clauses as against public policy. (32) Given this context, the legislator's decision to give full effect to choice-of-court agreements was significant. What remains odd, however, is the distinct treatment accorded to such clauses depending on the situation: in cases of prorogation, the clause is not absolutely enforceable since the CCQ does not expressly exclude recourse to forum non conveniens, as mentioned above; (33) but where derogation is involved, there is no discretion, and where the defendant invokes the clause, the court cannot hear the case, even if it would otherwise have jurisdiction to do so.
This interpretation was confirmed by the Supreme Court of Canada in 2005, in a decision that put an end to a line of cases that had subjected the new rules on forum selection clauses to the CCQ's general jurisdictional rules. Prior to the landmark decision in GreCon, (34) some courts in Quebec had held that jurisdiction based on a general head could supersede a valid choice-of-court agreement that designated a foreign court. (35) GreCon presented the perfect scenario to address the issue: a contract for the purchase of equipment between two Quebec businesses had led to litigation involving claims that the equipment was defective. The Quebec supplier tried to implead the foreign manufacturer, but the latter invoked a forum selection clause in the contract that designated German courts as the exclusive location for any litigation. The Quebec supplier argued that Quebec jurisdiction over the German manufacturer was established under article 3139 of the CCQ ("where a Quebec authority has jurisdiction to rule on the principal demand, it also has jurisdiction to rule on an incidental demand or a cross demand") notwithstanding the forum selection clause. (36) In other words, the claim was that jurisdiction under article 3139 of the CCQ could overcome the ouster of jurisdiction effectuated by the forum selection clause and prescribed under article 3148 of the CCQ. (37)
At the Court of Appeal, it was determined that the two provisions were not incompatible and that they could be reconciled by way of article 3135 of the CCQ and the forum non conveniens doctrine. (38) As will be discussed below, this approach is reminiscent of the way in which the common law has sometimes dealt with forum selection clauses in the derogation context, using forum non conveniens as a way of assessing the appropriateness of exercising jurisdiction despite a clause directing the parties elsewhere. Using that framework for analysis led the Quebec Court of Appeal to refuse to decline jurisdiction against the German defendant on the basis that the complete resolution of the case between the three parties militated in favour of a single trial proceeding in Quebec. (39)
The Supreme Court overturned the lower court and proclaimed the superiority of the principle of party autonomy in the CCQ's book on private international law, (40) thereby rejecting out of hand any interpretation that would tend to subject party autonomy to other rules or principles unless this was specifically provided for in the text of the CCQ itself. (41) In so doing, the Court underscored the extent to which this view also "provide[s] international commercial relations with the stability and foresee-ability required for purposes of the critical components of private international law, namely order and fairness". (42) Moreover, the Court drew a strong parallel between forum selection clauses and arbitration agreements, holding that they should be treated similarly (despite the fact that only the latter are subject to international law obligations): "Indeed, it would be difficult to justify different interpretations for clauses that have the same function, namely to oust an authority's jurisdiction, and that share the same purpose, namely to ensure that the intention of the parties is respected in order to achieve legal certainty." (43)
Following GreCon, there is no doubt that courts in Quebec cannot invoke a residual discretion to refuse to give effect to a forum selection clause designating a foreign court. Even where a Quebec court is otherwise competent according to another jurisdictional basis, the forum selection clause is hierarchically superior and neither party can invoke judicial discretion under forum non conveniens or any other test (such as "strong cause") to avoid the enforcement of the forum selection clause and dismissal of the Quebec court's jurisdiction over the case. This policy is further reinforced by the rule according to which a Quebec court will refuse to recognize a judgment rendered by a foreign court that was seized contrary to a forum selection clause designating a different court. (44)
2. DEROGATION UNDER CANADIAN COMMON LAW
The situation is different in the common-law provinces. One the one hand, the Supreme Court articulated a general approach to forum selection in its 2003 decision in ZI Pompey that provides for a uniform approach to their enforcement at common law. (45) On the other hand, this uniform approach may have been modified in those provinces that have adopted the CJPTA. Moreover, a diversity of approaches across the provinces cannot be excluded given the close link between rules of court and jurisdictional pleadings that can lead to jurisprudential developments particular to certain provinces.
Looking first to the guidance offered by the Supreme Court in its landmark 2003 decision in ZI Pompey, one cannot help but be struck by the similarity of language found in the GreCon decision handed down two years later. ZI Pompey involved a choice-of-jurisdiction clause in a bill of lading specifying the courts of Belgium as the forum for the resolution of all disputes. The shipper, having a contract to ship goods from Europe to Seattle, instead shipped the goods to Montreal to be transferred by rail for the balance of the trip. The goods were damaged during the trip, and the merchant sued. The prothonotary denied the motion to stay the proceedings, taking into account the forum selection clause. This decision was upheld at both the trial and appeal level at the Federal Court; however, the Supreme Court reversed the decision. (46) Justice Bastarache, writing for the Court, made the following general statement in relation to forum selection clauses in cross-border commercial cases:
[Forum selection clauses] are generally to be encouraged by the courts as they create certainty and security in transaction, derivatives of order and fairness, which are critical components of private international law[.] (47)
Those words were echoed by Justice LeBel in GreCon, in relation to the Court's generous interpretation of forum selection clauses under the CCQ: "[This interpretation] provide[s] international commercial relations with the stability and foreseeability required for purposes of the critical components of private international law, namely order and fairness". (48)
And yet, for forum selection clauses that designate a foreign court, that is, one other than the court seized of the claim, the effect of that general statement could not be any more different depending on whether one is in Quebec or elsewhere in Canada. As discussed above, in Quebec, such a clause ousts the jurisdiction of the Quebec court completely, leaving it with no residual discretion to exercise jurisdiction on any other basis. As will be further examined now, the result is the opposite under ZI Pompey, since a plaintiff will not be bound by a choice-of-court agreement if the court seized can be convinced that it ought to exercise its jurisdiction, that is, not to hold the parties to their contractually designated foreign forum.
The key question in the case was: what is the applicable test to determine whether the court should exercise its discretion not to enforce the forum selection clause or rather send the plaintiff to the contractually agreed-upon foreign court ? The Federal Court of Appeal had held that the test was essentially the one for temporary injunctions, (49) a conclusion that the Supreme Court rejected completely, holding instead that the decision whether or not to stay an action in the presence of a forum selection clause was subject to its own legal test.
The Supreme Court looked to the English decision in The Eleftheria, (50) which held that a court was not bound to grant a stay in the face of a foreign forum selection clause but should do so when the plaintiff showed a "strong cause" for not granting it. The difficulty posed by that approach lies in the list of factors going to establishing "strong cause", several of which are essentially those relied on in a standard forum non conveniens analysis. (51) Yet the contribution of ZI Pompey to the Canadian common-law jurisprudence on forum selection clauses was precisely to distinguish the strong cause analysis from the forum non conveniens analysis. Justice Bastarache was explicit about this:
I am not convinced that a unified approach to forum non conveniens, where a choice of jurisdiction clause constitutes but one factor to be considered, is preferable. As Peel [notes], I fear that such an approach would not ensure that full weight is given to the jurisdiction clause since not only should the clause itself be taken into account, but also the effect which it has on the factors which are relevant to the determination of the natural forum. Factors which may otherwise be decisive may be less so if one takes into account that the parties agreed in advance to a hearing in a particular forum and must be deemed to have done so fully aware of the consequences which that might have on, for example, the transportation of witnesses and evidence, or compliance with foreign procedure etc. In my view, a separate approach to applications for a stay of proceedings involving forum selection clauses in bills of lading ensures that these considerations are properly taken into account and that the parties' agreement is given effect in all but exceptional circumstances. (52)
Despite this statement, the Court went on to consider elements going to convenience, applicable law, enforceability of the resulting judgment, and others that are routinely part of the typical forum non conveniens inquiry. The only distinguishing features of the forum selection clause test appear to relate to the burden of proof, which lies on the plaintiff instead of on the defendant (53)--given the presumption that the forum selection clause should be respected--and which is framed as requiring the showing of a "strong cause" to remain in the forum rather than the identification of a "clearly more appropriate" alternate foreign court. (54) Thus while ZI Pompey stands as an important precedent for the legitimacy and enforceability of forum selection clauses at common law, it leaves intact the court's discretion to refuse their enforcement, thereby limiting the very predictability and certainty said to underlie these clauses.
The tension between party autonomy and judicial discretion recently led the Ontario Court of Appeal, in Expedition Helicopters Inc v Honeywell Inc, (55) to propose a narrower reading of "strong cause" with a view to restraining the scope of judicial discretion in the face of a forum selection clause. (56) Expedition Helicopters arose out of a helicopter accident in Saskatchewan. Expedition Helicopters, an Ontario corporation operating helicopter charters, leased helicopter engines from Honeywell. One of these helicopters crashed in Saskatchewan, where the helicopter, the pilot, and a passenger were lost. Expedition sued Honeywell in Ontario for damages arising from the accident despite a clause selecting the courts of Arizona for disputes arising in relation to the contract.
Like Justice Bastarache in ZI Pompey, the Ontario Court of Appeal in Expedition Helicopters stressed the difference between forum non conveniens and the strong cause test for retaining jurisdiction in the face of a forum selection clause. But in so doing, the Court dramatically limited the factors to be considered in the analysis of strong cause:
A forum selection clause in a commercial contract should be given effect. The factors that may justify departure from that general principle are few. The few factors that might be considered include the plaintiff was induced to agree to the clause by fraud or improper inducement or the contract is otherwise unenforceable, the court in the selected forum does not accept jurisdiction or otherwise is unable to deal with the claim, the claim or the circumstances that have arisen are outside of what was reasonably contemplated by the parties when they agreed to the clause, the plaintiff can no longer expect a fair trial in the selected forum due to subsequent events that could not have been reasonably anticipated, or enforcing the clause in the particular case would frustrate some clear public policy. (57)
Unlike the list of factors from The Eleftheria that was declared to provide the relevant approach in ZI Pompey, this much-condensed list of factors eliminates those going to the convenience of the parties, the applicable law, the enforceability of judgments, and other elements of the forum non conveniens analysis. Instead, the Ontario Court of Appeal in Expedition Helicopters includes in its strong cause analysis those factors that relate to the expectations of the parties with regard to the place of litigation. In so doing, it appears to be resolving the tension between party autonomy and judicial discretion squarely in favour of the former. Save for the reference to forum public policy, this list of factors focuses on the parties' original bargain and the extent to which its enforcement will conform to a fundamental expectation presumed to underlie that bargain, that is, that the chosen jurisdiction will allow for a fair adjudication of the dispute. All other elements, such as place of witnesses and evidence, language, applicable law, etc., are assumed to have been considered in arriving at the agreement on the location of adjudication. Indeed, where parties have agreed to settle disputes in the courts of State A, why should a court relieve one party of that obligation on the basis that it later proves to be inconvenient or costly? Rather, the Court of Appeal in Expedition Helicopters limits the challenge to the forum selection clause to traditional contract-law arguments, framed in light of the nature of the clause involved. (58)
In so doing, the Court relies exclusively on ZI Pompey and cites numerous passages of that judgment that restrict the relevance of the forum non conveniens analysis. (59) Ultimately, however, the Court cannot escape the ambiguity remaining from the Supreme Court's endorsement of The Eleftheria:
Thus, even though the literal wording of the test in The "Eleftheria" may imply a conventional forum non conveniens analysis, Pompey makes clear that such an analysis is not to be used. Rather, the forum selection clause pervades the analysis and must be given full weight in the consideration of other factors. It is not enough for the plaintiff to establish a "strong" case that Ontario is the more convenient forum. The plaintiff must show "strong cause" that the case is exceptional and the forum selection clause should not be enforced. (60)
Expedition Helicopters was decided in 2010 (leave to the Supreme Court was denied), and its narrow list of "strong cause" factors has since been considered both outside the province and within Ontario.
The BC Court of Appeal appears to approve Expedition Helicopters' restricted reading of ZI Pompey in Viroforce Systems Inc v R&D Capital Inc, (61) while the Saskatchewan appellate court expresses some reservation about such a "closed list" of factors in Microcell Communications Inc v Frey. (62) In Momentous, the Ontario Court of Appeal implicitly agrees with the latter sentiment by referring to Expedition Helicopters as having merely set out a "useful list of factors that may amount to strong cause" and by then adding a new factor to the list, namely, whether the defendant "inordinately delayed" invoking the jurisdictional clause. (63) While the Supreme Court of Canada confirmed the Ontario Court's ruling in Momentous, it said nothing about the debate in Canadian common-law appellate courts concerning the relevant criteria for "strong cause". In fact, the highest court did not cite any case save ZI Pompey, and only in general terms, to endorse the "strong cause" test for exercising jurisdictional discretion in the face of a forum selection clause. (64)
It may be that resistance to a closed list is connected to the absence of protection for weaker parties bound to litigate in foreign courts by clauses in standard-form contracts. (65) In Stubbs v ATS Applied Tech Systems Inc, (66) for example, Justice Gillese "question[ed] whether the 'strong cause' test applies without modification because the clause in this case ar[ose] in an employment context, rather than a commercial situation where the parties are assumed to have equal bargaining power." (67) The inequality of bargaining power provided the impetus for legislative protection against forum selection clauses for franchisees in Ontario under the Arthur Wishart' Act, (68) but consumers in Ontario are only protected against arbitration clauses, not forum selection clauses. (69) Indeed, in Van Breda v Village Resorts Ltd} (70) the Ontario Court of Appeal specifically stated that Ontario tour operators could guarantee litigation in Ontario even with foreign visitors by including a forum selection clause in their service contracts. (71) This position can be contrasted with that under Quebec law (and European Union law), where two typical instances of contracts between parties of unequal bargaining strengths (consumer and employment contracts) are exempted from the binding rule on forum selection (and arbitration) clauses that is otherwise applicable to cross-border cases. (72)
Given the nebulous state of the strong cause test, one cannot fail to note the Supreme Court's silence relative to that test in its recent decision in Momentous. Although the Court of Appeal continued the line of cases regarding the definition of strong cause, the Supreme Court neglected to address the issue--even insofar as to agree with the Court of Appeal's interpretation of strong cause. (73)
3. DEROGATION UNDER LEGISLATED RULES ON JURISDICTION
The treatment of forum selection clauses is problematic even in those provinces that have chosen to replace the common-law rules for international jurisdiction with a legislative scheme. As mentioned previously, in those Canadian provinces that have adopted the CJPTA, forum selection clauses are recognized as being capable of establishing the jurisdiction of the court seized of a claim. But the statute is oddly silent about the effect of a forum selection clause when the court seized is not the court designated by the clause. Unlike in the CCQ, nothing in the CJPTA directs how courts are to deal with a derogation scenario as opposed to a prorogation one.
The uniform model for the CJPTA was elaborated prior to the Supreme Court's decision in ZI Pompey, (74) at a time when there was no consensus on the precise way to treat forum selection clauses before the undesignated court. One option was to use the forum non conveniens doctrine to determine whether it was more appropriate to stay the action and send the parties before the contractually designated court. The CJPTA does not appear to endorse this model since its provision on forum non conveniens does not refer to forum selection clauses in its list of relevant elements to consider in the application of the discretion (of course, the open nature of the list precludes any affirmation that forum selection clauses are expressly excluded). The other option was the strong cause test, later confirmed to be the only relevant approach in ZI Pompey, but this is nowhere to be found in the CJPTA either. In other words, the CJPTA is silent on the matter, leaving it to courts to determine how to respond to a defendant who seeks a stay on the basis of a forum selection clause.
The Viroforce decision from the BC Court of Appeal sought to reconcile the imperative to enforce forum selection clauses with the CJPTA's legislative silence. (75) The case concerned a loan agreement between Viroforce Systems from BC and R&D Capital, headquartered in Quebec. A dispute arose regarding the amount owed. Viroforce sought a declaratory judgment in BC regarding the amount owing, proceeding in BC based on the fact that R&D had a business address in British Columbia. As per subsection 3(d) of the CJPTA, the BC courts had territorial competence based on the defendant's residence in the province. The defendant, however, challenged the BC court's jurisdiction, invoking a forum selection clause in the loan agreement that designated Quebec as the forum for dispute resolution. (76)
Noting that the CJPTA is silent on derogatory forum selection clauses, the BC Court of Appeal nevertheless sought to deal with the clause within the statutory framework. Referring to the Ontario Court of Appeal's decision in Momentous, Justice Tysoe found the approach in that case to be "useful" and incorporated that framework into the analysis under the CJPTA. (77) According to the Ontario Court of Appeal in Momentous, the evaluation of the impact of the forum selection clause takes place at the discretionary stage of the jurisdictional analysis. In other words, the presence of the forum selection clause is not relevant to the assessment of jurisdiction simpliciter: (78) The BC Court of Appeal found that this two-step sequence applied, leaving the forum selection clause to be dealt with at the second discretionary stage, which also includes the forum non conveniens analysis. It is important to note that the court considered forum non conveniens and the forum selection clause to be alternative grounds for a stay, thereby confirming that the forum selection clause is not subsumed within the forum non conveniens analysis, a conclusion that is consistent with ZI Pompey. In the end, it granted the stay, enforcing the clause.
This solution to the legislative silence in the CJPTA is difficult to square with the language of the statute and with a recent Supreme Court of Canada judgment interpreting the CJPTA. In 2009, in Teck Cominco Metals Ltdv Lloyd's Underwriters, (79) parallel proceedings were pending in both BC and Washington State. The defendant in the BC action, seeking a stay on forum non conveniens grounds, had argued that the analysis ought to apply differently in lis pendens situations. The defendant posited that a prior foreign assertion of jurisdiction, if legitimate, ought to be given significant, if not determinative, weight in the evaluation of a stay on forum non conveniens grounds. The Supreme Court rejected this contention and, in so doing, put forward the following description of the CJPTA:
The CJPTA creates a comprehensive regime that applies to all cases where a stay of proceedings is sought on the ground that the action should be pursued in a different jurisdiction (forum non conveniens). It requires that in every case, including cases where a foreign judge has asserted jurisdiction in parallel proceedings, all the relevant factors listed in s. 11 be considered in order to determine if a stay of proceedings is warranted. This includes the desirability of avoiding multiplicity of legal proceedings. But the prior assertion of jurisdiction by a foreign court does not oust the s. 11 inquiry. (80)
This is a fairly clear statement from the Supreme Court that the CJPTA has replaced the former jurisdictional analysis and that the text of the CJPTA is complete. Ifthe CJPTA regime "admits of no exceptions", (81) does this mean that it cannot be used to address a request for a stay based on a forum selection clause, since it is silent on this matter? Admittedly, the Supreme Court was not contemplating forum selection clauses when deciding Teck Cominco. But the apparent conflict with ZI Pompey remains. The only provision dealing with a stay in the CJPTA is section 11, which the Supreme Court says is a codification of forum non conveniens. (82) In ZI Pompey, the Supreme Court states that the test for a forum selection clause is not the forum non conveniens test, but the strong cause test. If the CJPTA is a complete code and it contains only the forum non conveniens test for stays, then courts in CJPTA provinces face a challenge fitting the strong-cause test for forum selection clauses within the statutory framework. (83)
The BC Court of Appeal in Viroforce did not resolve this apparent inconsistency, making instead a statement that is difficult to reconcile with the Supreme Court's pronouncement in Teck Cominco. Justice Tysoe presents the analysis in this manner:
In my opinion, the [CJPTA] does not alter the general approach to be taken when the parties agree to a forum selection clause. If it is determined or assumed that the British Columbia court has territorial competence, the issue is whether the court should decline jurisdiction, either because the forum selection clause ought to be enforced or a consideration of the factors contained in s. 11 of the Act leads to the conclusion that a court in another jurisdiction is a more appropriate forum. The existence of a forum selection clause can, by itself, be sufficient reason for a court to decline jurisdiction, and it is not simply one of the factors to consider in making a determination under s. 11. It will not be necessary in all cases to first determine whether there is territorial competence because it may be clear that the forum selection clause will govern the outcome of the matter. (84)
But if, according to Teck Cominco, the "existence of prior parallel proceedings" cannot by itself justify a stay or be treated differently than the other factors in section 11, why would a forum selection clause be treated differently? The court in Viroforce does not explain this. The Saskatchewan Court of Appeal cites Viroforce in drawing a similar conclusion about how to deal with a forum selection clause in a CJPTA jurisdiction. Like the BC Court of Appeal in Viroforce, it simply asserts, in Hudye Farms Inc v Canadian Wheat Board, (85) that "[w]hile there is no specific reference to a forum selection clause in s. 10 ... Pompey continues to apply notwithstanding the enactment of the CJPTA" (86)
The problem with these statements was put squarely to the BC courts in the recent case Preymann v Ayus Technology Corporation. (87) The case involved a loan between parties with links to BC and Austria. The contract included a choice-of-law clause and a jurisdictional clause, subjecting the contract to the law of Austria and its courts. (88) At the trial level, the judge declared that the case was indistinguishable from Viroforce and that he was therefore bound to follow it and grant the stay based on the forum selection clause designating the courts of Austria. (89) On appeal, however, the BC Court of Appeal heard the plaintiff's arguments regarding the potential conflict between Teck Cominco and Viroforce and ultimately rejected it. Moreover, the Court of Appeal sought to reconcile Teck Cominco and ZI Pompey in these terms:
It is important to note that the Court held in Pompey ... that applications considering forum conveniens and forum selection clauses should be separate inquiries; therefore, the Court's statements in Teck pertaining to forum conveniens do not mean that the CJPTA obviates common law principles pertaining to forum selection clauses. In other words, based on Pompey, it could be argued that while s. 11 codifies the common law pertaining to forum conveniens, it did not similarly codify the forum selection clause analysis.... If forum non conveniens is exhaustively codified in s. 11 (Teck) but forum selection clauses trigger a separate inquiry (Pompey), there is no concern that Teck and Viroforce conflict.... Viroforce holds that consideration of the enforcement of a forum selection clause is outside the Act, not just one of the s. 11 factors. This ratio is in conformity with Pompey. (90)
The BC Court of Appeal found some support in the Saskatchewan Court of Appeal's recent approval of Viroforce in two cases, but it was forced to concede that according to that court, the forum selection clause evaluation is part of the forum non conveniens analysis. (91)
What is clear from this recent line of cases is that Canadian common-law courts in CJPTA provinces are not prepared to accept that the new statutory source of international jurisdiction has changed the law regarding forum selection clauses, whether they designate the court seized or a different court. What is also clear is that the CJPTA and the Supreme Court's decisions in ZI Pompey and in Teck Cominco are not entirely consistent with that position. ZI Pompey states that a forum selection clause is not assessed underforum non conveniens; the CJPTA states that it is the sole source of law for determining international jurisdiction, which includes a partial rule on forum selection clauses and on stays of proceedings; and Teck Cominco states that the CJPTA is a complete code that allows for no exceptions. To claim, as the BC Court of Appeal does, that the CJPTA does not "oust consideration of common law principles pertaining to forum selection clauses" (92) is, in our view, not fully persuasive under the terms of the statute and its interpretation by the Supreme Court.
Because the Supreme Court's decision in the more recent case of Momentous did not involve the CJPTA, it is not surprising that it did not address this issue. Even if the Supreme Court eventually agrees to hear a case involving the CJPTA in the near future and distinguishes Teck Cominco in relation to forum selection clauses, it may still be preferable to contemplate a legislative amendment to the CJPTA to resolve the current impasse. We will return to this in the concluding section of the article.
II. THE EFFECT OF ATTORNMENT OR THE TIMING OF THE REQUEST TO STAY THE PROCEEDINGS
Attornment or submission has been called the "least controversial basis for jurisdiction", (93) and the courts clearly recognize it as sufficient to establish jurisdiction. (94) Cases concerned with attornment have typically addressed whether or not the defendant's actions constitute submission to the jurisdiction of the court, in the absence of an explicit statement of attornment. (95) In addition, the traditional common-law position has held that the defendant's attornment is also a waiver of the right to challenge the court's jurisdiction. (96) This may be particularly relevant in the recognition and enforcement context, where a judgment creditor's attornment to the foreign rendering court's jurisdiction will prevent any further challenge of recognition on jurisdictional grounds before the recognizing court. (97)
In Quebec, the CCQ specifically provides for jurisdiction based on attornment or submission, (98) as does the CJPTA in article 3(b). The CCQ also expressly provides that submission will supersede the jurisdictional ouster otherwise effected by a valid forum selection clause. (99) The CJPTA, being silent on derogation, does not speak to the connection between attornment and forum selection clauses designating foreign courts. The determination of this interaction is therefore left to the common law.
In addition to its jurisprudence on the scope of the strong-cause exception, the Ontario Court of Appeal embarked on a surprising interpretation of the consequences of attornment on the enforcement of a forum selection clause. In Momentous, it held that the defendant's participation in the trial did not estop it from successfully invoking a forum selection clause. (100) The Court treated the attornment issue as an element going to the establishment of jurisdiction simpliciter, the first stage in the jurisdictional enquiry. To this end, the Court expressly held that the defendant (101) in Momentous had attorned to the jurisdiction "by delivering a statement of defence responding to the merits of the plaintiffs' claim." (102) But this attornment was no longer operative in assessing the forum selection clause, whose effect was to be considered at the discretionary second stage of the jurisdictional inquiry. This was stated quite unequivocally by the Court: "Attornment, however, is relevant only to the question whether an Ontario court has jurisdiction. It has little or no relevance to the question whether an Ontario court should exercise that jurisdiction." (103)
The Court of Appeal found further support for this statement in the wording of the provision in the rules of court that the defendant had invoked:
Nothing in Rule 21.01(3)(a) suggests that a defendant is precluded from contesting jurisdiction because its statement of defence responds to the merits of a plaintiff's claim. The defendant is required only to bring its motion "quickly after the commencement of the suit". (104)
It is confusing for the Court to accept the relevance of this provision, which involves the court's authority to stay or dismiss proceedings for a lack of subject-matter jurisdiction. The Court states that attornment goes to subject-matter jurisdiction and that the Court indeed enjoys subject-matter jurisdiction in this case. However, the Court then accepts the defendant's use of rule 21.01(3)(c) of the Rules of Civil Procedure addressing stays when the Court lacks subject-matter jurisdiction. Typically, a lack of subject-matter jurisdiction is not a discretionary matter: either the court has jurisdiction or it does not. The court never makes clear how the exercise of the court's discretion at the second stage of the jurisdictional enquiry fits within a procedural rule governing subject-matter jurisdiction. Unfortunately, the Supreme Court, in upholding the decision, perpetuates this uncertainty. In its reasons in Momentous, the Supreme Court specifically refers to the provision invoked as one that applies where "the court has 'no jurisdiction over the subject-matter of the action'". (105) Again, if the court has no jurisdiction, then there is no second-stage inquiry to engage in, no discretionary assessment of whether a strong cause exists to retain jurisdiction or whether the forum selection clause should be enforced. One might infer from its reasons that the Supreme Court is suggesting that the forum selection clause in fact removes the court's jurisdiction on the matter. However, that idea remains undeclared and, while being the principle in Quebec, runs counter to the Supreme Court's own jurisprudence regarding derogation in the common-law provinces. (106)
As with the CJPTA provinces, it seems that the courts in this case want to uphold the forum selection clause almost at all costs, regardless of whether the jurisprudential or procedural rules provide a mechanism for doing so. In doing this, they fail to deal adequately with the very important issue of attornment as it relates to party autonomy in the jurisdictional sphere.
It is clear that attornment can be conceived of as consent to the jurisdiction. What is not immediately obvious, however, is the object of the defendant's consent. One possibility is that attornment is the expression of consent as between the parties. The plaintiff's institution of the action in a particular forum is akin to an offer. When the defendant responds to that action in the plaintiff's chosen forum, in a manner equivalent to attornment, the defendant is essentially accepting the plaintiff's offer to litigate in the chosen forum. In this regard, where there is submission to the jurisdiction of a court other than the one originally designated by the parties in a forum selection clause, submission could be understood as a tacit modification of the jurisdictional agreement. Indeed, if one accepts that party autonomy can be the source of jurisdiction via a forum selection clause, it stands to reason that actions by parties in litigation can be equally expressive of autonomy. (107) Under this view, the defendant's attornment removes the court's opportunity to consider enforcement of the original forum selection clause, since it is no longer effective between the parties, having been replaced with a new agreement on jurisdiction. (108)
The absence of any fresh consideration for this modified agreement is a significant obstacle to this argument unless it can fit within the waiver or estoppel exceptions. (109) The latter may be more promising because the equitable nature of the estoppel doctrine is not complicated by issues of consideration that continue to plague the waiver argument. The conditions for the application of the estoppel argument are met since (i) there is no creation of a new right, merely waiver of an existing right (i.e., the court seized by the plaintiff has jurisdiction in the absence of the forum selection clause) and (ii) the defendant's participation is an indication of tacit agreement with no suggestion of duress. (110) The defendant's act of responding substantively to the plaintiff's action induces the latter to rely on that course of action as indicative of an acceptance of the plaintiff's jurisdictional choice despite the forum selection clause. As a result of its own behaviour, therefore, the defendant is estopped from invoking the forum selection clause to avoid the jurisdiction of the court to which it has already attorned.
Under this approach, the defendant's attornment neutralizes the forum selection clause. In other words, the clause is no longer relevant to the jurisdictional inquiry, and therefore the court seized of the action cannot exercise its discretion to decline jurisdiction in reference to the forum selection clause.
Alternatively, the defendant's attornment could be understood to be directed at the court seized of the action as opposed to the plaintiff. Because the decision to object to personal jurisdiction is typically within the defendant's discretion, that party's failure to raise the forum selection clause designating a different court need only be interpreted as a waiver of the objection, which is directed at the court rather than the plaintiff. (111) Under this view of attornment, the court would retain its discretion to consider giving effect to the forum selection clause even in the face of an apparent waiver by the defendant, since in theory the forum selection clause is still effective as between the parties. Although technically defensible, this position does seem to run counter to the general principles supporting the legality and enforceability of forum selection clauses, that is, party autonomy and judicial economy.
Party autonomy is at least initially supported by holding the parties to their jurisdictional bargain, that is, enforcing the clause against the plaintiff who is seeking to avoid it. Judicial economy is also served under such a view by treating the jurisdictional question as a threshold question and limiting the scrutiny of the forum selection clause as much as possible so as to minimize the court's involvement in a dispute destined to be litigated elsewhere. Faced, however, with a defendant who fails to raise the forum selection clause as a preliminary objection and who instead engages in the litigation in a manner tantamount to attornment, both party autonomy and judicial economy are furthered by excluding that party's subsequent attempt to invoke the forum selection clause in order to escape the jurisdiction of the court seized. Once parties have invested in local proceedings, it stands to reason that it will be inefficient to restart somewhere else. While there might be a one-off savings in the original jurisdiction, the overall cost to the judicial systems involved will necessarily be greater than if the stay had not been granted. Overall, then, judicial economy is better served by a system under which attornment trumps and under which it is therefore incumbent upon every defendant to raise jurisdictional objections at the outset.
This conclusion raises the question of what constitutes attornment, a question that has no necessary answer and remains one of policy. One approach to resolving the issue is to mirror the rule applicable in the arbitral context, given the obvious analogy with forum selection clauses. Another approach would be to consider rules governing stay requests on forum non conveniens grounds. Both of these will be considered in turn.
A. THE ARBITRAL ANALOGY
According to a number of international instruments, a party is entitled to invoke an arbitral agreement up until it engages in a defence on the merits in the court proceedings. Unfortunately, there is no single uniform expression of that requirement and thus no consensus on interpretation of the timing dimension, even within the Canadian provinces, despite the fact that all of them have endorsed the UNCITRAL Model Law on Arbitration. (112)
For example, in Quebec, the arbitration clause can be invoked up until the moment when the case is set to be heard, (113) which means that pretrial discovery can have taken place, including the production of documents and examination of witnesses. Courts have interpreted this deadline strictly, (114) claiming that this favours arbitration, although it is arguable that granting such a long delay allows parties to behave in a purely strategic manner that can constitute an abuse of both the judicial and arbitral processes that is hardly to be encouraged.
In most other provinces, the exact words of article 8(1) of the Model Law apply, requiring that a party invoke the arbitration clause "not later than when submitting his first statement on the substance of the dispute". (115) This has been interpreted as allowing a party to include the request for arbitration in its statement of defence, without that amounting to attornment. (116)
In BC, a different formulation is used, according to which "a party to the legal proceedings may, before service of any pleadings or taking any other step in the proceedings, apply to that court to stay the proceedings". (117) This latter formulation is certainly less generous than the Model Law version and the Quebec version. Still, it calls for judicial interpretation given the imprecision of "any other steps in the proceedings".
The advantage of following the arbitral model is obvious: it would ensure consistent treatment of the parties' exercise of their autonomy in jurisdictional terms. Whether they prefer judicial or arbitral proceedings, their choice will be treated equally in substantive and procedural terms. Courts will recognize and enforce arbitral and choice-of-court agreements under the same conditions. While this proposal might be defensible in principle, as we will endeavour to demonstrate below, it is premised on the appropriateness of the current solution for arbitration agreements, which may in fact be debatable.
The current approach regarding the timing of a party's request to be referred to arbitration is indeed subject to criticism. (118) As indicated above, legislation following the UNCITRAL Model Law, whether literally or not, preserves the right to invoke the arbitration clause in judicial proceedings well after the action has been instituted. Given the nature and extent of pretrial discovery throughout Canada, including Quebec, this means that parties can take full advantage of that process to obtain evidence and develop their dispute resolution strategy well before being required to "submit a statement on the merits of the dispute", so as to trigger the time limitation to invoke an arbitration agreement.
What are the advantages and disadvantages of this approach? The advantage is obvious: it maximizes opportunities for parties to resolve their dispute by way of arbitration. Such a consequence supports arbitration and party autonomy in international dispute resolution, both of which are favoured by all states that have adhered to the New York Convention and the UNCITRAL Model Law. Maximum reference to arbitration will also reduce the caseload of courts, as they will no longer be required to adjudicate upon disputes sent to arbitration. This in turn will allow scarce resources in the public judicial system to be deployed to resolve other disputes, in particular those that are not arbitrable, usually those disputes that involve important public-policy concerns and therefore justify public adjudication. The current model can be seen to have both private and public benefits, in substantive and economic terms.
What of the disadvantages ? Allowing parties to take advantage of the judicial process may appear to be the inescapable result of an open public judicial system. In principle, parties to contractual disputes are entitled to seize courts to resolve their disputes, with some limits based on rules of standing, registration for foreign plaintiffs, security for costs and jurisdictional conditions, etc. It may thus go too far to say that parties that have concluded an arbitration agreement are precluded from having their disputes resolved before a court. Indeed, these parties are entitled to change their minds regarding arbitration, and it would be inconsistent with party autonomy to suggest otherwise. However, it might not be inappropriate to require that such a modification in the parties' agreement be explicit and mutual. (119) Otherwise, where one party seizes a court contrary to an arbitration clause in the contract that is the source of the dispute, and the co-contracting party responds to that judicial proceeding in any manner other than to invoke the arbitration agreement, it is difficult to deny the appearance of an implicit agreement to forego arbitration, whether mutual or unilateral. Such a waiver of the arbitration agreement should preclude any later attempt by one of the parties to resurrect the clause. Moreover, this preclusion should apply even in the absence of prejudice to the other party or other estoppel-type arguments. Instead, the reason rests simply on party autonomy and consensualism, which are the fundamental backbones of arbitration theory. For what are the reasons that may explain a party's late reference to an arbitration clause and request to stay judicial proceedings in favour of arbitration? There appear to be three main categories: (i) one or more parties involved is unaware of the presence of the clause; (ii) it is not apparent from the claim as formulated by the plaintiff that the arbitration clause is applicable; or (iii) one or more parties is acting strategically in relation to the judicial process, reserving the opportunity to invoke the arbitration agreement if it proves to be opportune.
The first reason is clearly incompatible with party autonomy and consensualism as the basis for arbitration. If a party begins or participates in judicial proceedings because it ignores the existence of the arbitration agreement, it makes no sense to allow that party to invoke the clause once it becomes aware of it on the grounds that to do so furthers and supports arbitration. It concretely supports arbitration by removing the dispute from the judicial system; but it subverts the justification for arbitration by ignoring its fundamental premise, that of party autonomy and consensualism. Even conceding that consensualism is often largely a legal fiction, it remains the bedrock of arbitral law and theory.
The second scenario is not as straightforward. There are numerous cases where courts have refused a reference to arbitration on the basis that the dispute did not fall within the arbitration agreement. (120) It is true that these cases are often subject to stinging criticism in the literature and also in other judicial decisions, on the grounds that arbitrators should determine the scope of the arbitration provision, not courts. This narrow view of the court's role in interpreting arbitration agreements has been approved recently by the Supreme Court and may go some way to restricting judicial intervention of this type. (121) It may be, however, that it is not inappropriate for a defendant to engage in some pretrial discovery to determine whether or not the claim is likely to fall within the scope of the arbitration agreement. Still, such behaviour should be framed in explicit terms, revealing at the very first occasion the defendant's intention to proceed by arbitration should it conclude that the claim is within the scope of the arbitration agreement or, at the very least, that the question is for the arbitrator and not the court. While the defendant should not be required to immediately request the stay of judicial proceedings, it is not obvious why the defendant should not be required to refer to the arbitration agreement at the very first opportunity. This again conforms with and supports party autonomy and consensualism as the foundations of arbitration.
The third explanation for delay in invoking the arbitration agreement raises a series of objections. First, allowing one party to determine whether or not it will invoke the arbitration clause seems to disparage both judicial and arbitral dispute resolution. An extreme form of forum shopping, it treats the individual private interest as supreme, condoning the potentially futile investment of judicial resources for speculative purposes, and declaring the essentially optional nature of the arbitral agreement. Still, it may be seen as the ultimate example of party autonomy (though not of consensualism), given the unilateral nature of the exercise of autonomy. In this type of case, both parties are acting unilaterally. The plaintiff acts unilaterally by proceeding in court instead of by arbitration, assuming that the dispute is properly within the scope of the arbitration agreement (see scenario 2 above), and the defendant acts unilaterally by delaying the reference to the arbitration agreement for purely strategic reasons. Should either behaviour be defended or sanctioned?
One way to answer this question is to ask: What would be the consequences for arbitration if parties were not allowed to act unilaterally in this manner? In other words, if parties who did not invoke the arbitration agreement at the first opportunity were foreclosed from invoking it later, would that be better or worse for arbitration? In terms of party autonomy and consensualism, it would appear that these principles are better respected by forcing the parties to remain in the judicial sphere. Obviously the plaintiff who seizes the court has failed to raise the clause and can hardly complain of being forced to remain in court. Even the plaintiff who believes that the claim falls outside the ambit of the arbitration clause should have presented this challenge to the arbitrator whose "Kompetenz-Kompetenz" power would thereby be fully recognized. (122) The scenario of the plaintiff who was unaware of the existence of the arbitration clause at the start of proceedings has been discussed previously. Allowing that party to later invoke the arbitration clause cannot genuinely be said to be consistent with party autonomy and consensualism. Giving the defendant the opportunity to strategically pursue the judicial route while retaining the arbitral option until the very last moment hardly seems to support the arbitral process. On the contrary, requiring the defendant to make the choice at the outset--that is, at the first opportunity--supports party autonomy and consensualism by giving effect to the arbitration clause. It is also much more efficient, avoiding the expenditure of scarce public resources and transferring to the parties the costs of dispute resolution that they voluntarily agreed to by way of the arbitration agreement. If defendants knew that they would not be entitled to engage in pretrial discovery and benefit from other aspects of case management now common in the judicial sphere, would they be more likely to invoke an arbitration clause? If the answer is yes, then this option favours arbitration. If the answer is no, then it raises the question whether arbitration is to be favoured at all. Moreover, if the answer is no, this also challenges the consensual nature of arbitration and the extent to which parties should be bound to that process if they have agreed to it in advance. If parties can treat their arbitral agreement as optional on a unilateral basis, does this not, to a certain extent, devalue arbitration? Is it not arguable that the value of arbitration is rather preserved and fostered in a system that imposes on parties a much stricter obligation to invoke the arbitration agreement at the first opportunity?
Approaching the 30th anniversary of the Model Law on Arbitration, and the 60th anniversary of the New York Convention, it may be time to reconsider this issue. As more and more countries have turned to treat international arbitration as a legitimate form of dispute resolution and as courts have come to accept, for the most part, their very limited supervisory role, it may be time to tighten the requirement under article 8(1) of the Model Law with respect to the timing of the request for a reference to arbitration. Instead of a rule that allows parties to act strategically in a manner that can be seen as disparaging to both judicial and arbitral processes, it may be opportune to shift the onus onto the parties by forcing them to act in accordance with the justifications for the strong legislative protection accorded to arbitration in the international sphere. If party autonomy, consensualism, and efficiency are the pillars of arbitration, then arbitration law and courts should hold parties to those underlying policies and not condone strategic behaviour that contradicts those policies and creates negative externalities for the judicial system without any positive benefit to the arbitral system.
These arguments disfavour extending the approaches currently in place for arbitral clauses to forum selection clauses. Not only are these approaches inconsistent across the country, but they are also objectionable for the reasons set out above. Nevertheless, it would certainly be advisable to treat forum selection clauses along the same lines as arbitral clauses given the similar principles supporting their legitimacy and enforcement in transborder dispute resolution. (123) Further, shifting the burden to the parties with regard to forum selection clauses, as we have suggested should be done within the arbitration context, would support the very principles that the Supreme Court has stressed: certainty and fairness.
B. THE ANALOGY TO FORUM NON CONVENIENS
In Momentous (124) the defendant was forced to invoke a procedural rule on subject-matter jurisdiction as the basis for its stay request because its participation in the trial process precluded reliance on the stay provision otherwise more obviously applicable to its case. That provision provided as follows:
(1) A party who has been served with an originating process outside Ontario may move, before delivering a defence, notice of intent to defend or notice of appearance, ...
(b) for an order staying the proceeding
(2) The court may make an order under subrule (1) or such other order as is just where it is satisfied that,
(c) Ontario is not a convenient forum for the hearing of the proceeding. (125)
Similar to the provision in the CJPTA, and following its interpretation in Teck Cominco, this is a reference to stays onforum non conveniens grounds. The CJPTA does not contain a timing requirement, but, as in Ontario, provincial rules of court will usually be the source of such constraints. (126) Given the common discretionary nature of the forum non conveniens and forum selection clause analysis, it may be persuasive for similar timing considerations to apply to both requests for stays. There is, however, no consistent approach to the timing of a forum non conveniens challenge across the country, (127) again giving little guidance beyond a general requirement of timeliness.
Moreover, unlike with arbitration clauses, there is little symmetry between the rationales for the forum non conveniens doctrine and for enforcing forum selection clauses. It may well be that the facts that disclose a good case for forum non conveniens depend to some extent on the discovery process. If applicable law and place of judgment enforcement remain relevant elements to the exercise of the discretion, these are unlikely to be apparent from a mere statement of claim. There may thus be more scope for flexibility in the timing of stay requests on forum non conveniens grounds than in relation to forum selection clauses.
III. REFORM OPTIONS?
There is no uniformity in the law governing dispute resolution clauses in Canada. Given the federal nature of the country and provincial jurisdiction over civil procedure, this diversity should not be unexpected. What is expected, however, is some level of consistency with respect to the principles that courts apply to interpret statutory provisions dealing with dispute resolution clauses or to develop the common law. With regard to arbitration clauses, the Supreme Court of Canada has followed a relatively consistent pro-arbitration path, particularly in the context of transborder commercial arbitration. (128) With respect to forum selection clauses, however, the picture is not as clear.
On the one hand, the Quebec regime provides solid support for forum selection clauses and the Supreme Court has interpreted the CCQ provisions in a manner that leaves no room for discretion, whether for reasons of judicial efficiency or of fairness or convenience to the parties. (129) Parties that have concluded a valid foreign jurisdictional agreement know that a Quebec court will not hear their case, no matter the connections to the province or the risk of multiple proceedings, unless the defendant has attorned. Priority has been granted to party autonomy over other policies and principles.
On the other hand, in the common-law provinces, the Supreme Court's recent decision in Momentous has not provided the guidance that could have resolved emerging debates across the provinces, whether under the statutory CJPTA regime or at common law. In fact, it is arguable that the decision has muddied the waters--referring to the forum selection clauses as going to subject-matter jurisdiction, ignoring the redefinition of strong cause, and avoiding a clear resolution of the critical issue of attornment. Parties that have concluded a valid foreign jurisdictional agreement will not easily predict how a Canadian common-law court will respond to a plaintiff's claim that there is a "strong cause" to disregard the clause, which will inevitably increase litigation regarding jurisdiction, a paradoxical result given the policies supporting forum selection clauses.
One solution to this uncertainty may come from an amendment to the CJPTA prescribing the manner in which forum selection clauses are to be dealt with within the jurisdictional analysis. Also, given the subordination clause present in the CJPTA, forum selection clauses could be the subject of their own legislation. (130) Similarly, amendments to rules of civil procedure in common-law provinces would go a long way towards clarifying current practices. For example, rule 17.06(2) of the Ontario Civil Rules of Procedure could be easily modified to include forum selection clauses.131 In this way, a clear timeline for making discretionary jurisdiction motions would be set, and the confusion between rules 17.06 (service ex juris) and 21.01(3)(a) (subject-matter jurisdiction) would be eliminated. In either case, the Uniform Law Conference of Canada (ULCC) or individual provincial legislators would have to decide whether discretion to disregard a derogation clause should remain and, if so, what conditions should frame its exercise. Such an amendment process should also ideally include consideration of separate treatment of dispute resolution clauses for particular contracts such as consumer or employment contracts, given that principles of party autonomy and consensualism operate distinctly in those fields. (132)
While such legislative reform is desirable, it is difficult to overestimate the challenge in developing cogent and consistent legislative solutions in all the jurisdictions across the country. A testament to this challenge lies in the adoption of the CJPTA itself. As noted, the CJPTA draft was first circulated in 1993; (133) however, nearly 20 years on, only three provinces have enacted legislation substantially similar to the ULCC model law. Further, not all provinces seem inclined to follow suit. For example, a consultation paper for the Law Commission of Ontario has proposed a regime different from CJPTA. (134) Each province has differing levels of exposure to international transactions, a distinct method by which they support their citizens' interests, and a different set of legislative priorities. All of these considerations will lead to disparate outcomes with respect to the forum selection clause regime eventually settled upon in a particular province. This is not to suggest uniformity and consistency as important qualities in their own right, but these outcomes would seem to run against the grain of certainty and predictability as the principles governing forum selection clauses in the Supreme Court's jurisprudence.
Another option may lie in the adoption of the 2005 Hague Choice of Court Convention. (135) That Convention proposes a jurisdictional rule and a recognition rule, mirroring for forum selection clauses the regime currently applicable to arbitration. The Convention is intended to secure the enforcement of forum selection clauses in commercial contracts and to ensure the recognition of judgments rendered by the court designated by the parties. While the Convention is not without its critics, it has been signed by the European Union and the United States and ratified by Mexico. It also benefits from a significant body of doctrinal work, both official and critical, that serves to highlight the theoretical, practical, and technical aspects of its development and expected implementation. (136)
For Canada, the Convention would signal the end of judicial discretion in the common-law provinces, but only for business-to-business commercial contracts, since the instrument does not apply to consumer or employment contracts. (137) It would also provide the first international instrument on recognition of judgments in commercial matters, providing a significant advantage to judgment creditors in international litigation over the status quo. Indeed, while recognition rules in Canada are quite generous, this is not necessarily the case elsewhere, and Canadian parties litigating in foreign jurisdictions are at a distinct disadvantage when they lose abroad. That alone should provide an incentive for support of the Convention--arguably more than reasonable compensation for the loss of a narrowly defined and unpredictable judicial discretion in the enforcement of forum selection clauses before Canadian common-law courts. (138)
Another consequence of ratification of the Hague Choice of Court Convention would be harmonization of the law across the country. Uniformity for its own sake is hardly sufficient as an argument to support adoption of this instrument. Indeed, the existing diversity is not merely idiosyncratic, but reflects different historical developments across the provinces as well as divergent policy choices by legislators. In so far as the Convention leaves intact the main spheres in which legislative policies have tended to be distinct (such as consumer and employment contracts), the adoption of the Convention does not eliminate provincial variations. Moreover, the main argument for supporting this avenue is to resolve current incoherencies or inconsistencies arising from judicial or statutory sources that are unlikely to be addressed in short order.
Jurisdictional clauses in commercial contracts have received the support of courts and legislative bodies across Canada and internationally. Their legitimacy and usefulness in international dispute resolution is now firmly established. Party autonomy and predictability, the twin principles said to underlie the policy supporting jurisdictional clauses, are best served and respected by rigorous enforcement of these clauses. This militates in favour of the elimination of judicial discretion in the face of validly concluded clauses and the imposition of short delays on parties to raise jurisdictional objections or lose the right to invoke jurisdictional clauses. This article has argued that such a position is consistent and coherent with a jurisdictional model that prioritizes party autonomy and certainty with respect to jurisdictional agreements. The advocated position should in turn serve judicial efficiency, both domestically and across borders. Private and public interests would thus appear to favour a review of the current law governing forum selection clauses across Canada along these lines. The existence of an international instrument, the Hague Choice of Court Convention, provides a readily available model for consideration and debate within the various communities interested in this issue.
(1) In 2003, in ZI Pompey Industrie v ECU-LineNV, 2003 SCC 27,  1 SCR450 [ZI Pompey], the plaintiff initiated its claim in the Federal Court of Canada although the bill of lading provided for litigation in the Dutch courts. In 2005, in GreCon Dimter inc v JR Normand inc, 2005 SCC 46,  2 SCR 401 [GreCon], a defendant properly before a Quebec court tried to implead its German co-contractor despite a jurisdictional clause designating the courts of Alfeld in Germany.
(2) See especially Desputeaux v Editions Chouette (1987) inc, 2003 SCC 17,  1 SCR 178; Frederic Bachand, "The Canadian Courts' Contribution to the International Arbitration System--A Brief Assessment" (2009) 18:1 Canadian Arbitration and Mediation Journal 18.
(3) All things being equal, parties facing litigation in Canada could only be confident that a Quebec court would enforce their forum selection clause, and this would be only if the court designated by the clause was outside Quebec. See discussion at 16 and following, below.
(4) 2012 SCC 9,  1 SCR 359 [Momentous SCC].
(5) Momentous.ca Corporation v Canadian American Association of Professional Baseball Ltd, 2010 ONCA 722, 103 OR (3d) 467 [Momentous CA].
(6) ZI Pompey, supra note 1.
(7) Momentous SCC, supra note 4.
(8) Convention on Choice of Court Agreements, 30 June 2005, online: Hague Conference on Private International Law <http://www.hcch.net> [Hague 2005].
(9) We will not distinguish between forum selection clauses dealing with future disputes and those dealing with current disputes. If anything, the latter should suffer no exceptions to enforcement (save those based on consent) given the timing of their negotiation, which eliminates the pertinence of any arguments of convenience or fairness that might arise in relation to the former.
(10) Another important distinction relates to the nature of the underlying transactions. For example, Quebec and Ontario legislation prohibit mandatory arbitration clauses in consumer contracts whereas these remain enforceable under the general common-law rule put forward by the Supreme Court of Canada in the Quebec case Dell Computer Corp v Union des consommateurs, 2007 SCC 34,  2 SCR 801 [Dell Computer] that has been held to apply in BC. See generally Genevieve Saumier, "Consumer Arbitration in the Evolving Canadian Landscape" (2009) 113:4 Penn St L Rev 1203. For a recent narrow limitation to the general position at common law, see Seidel v TELUS Communications Inc, 2011 SCC 15,  1 SCR 531.
(11) As adopted in Canada: United Nations Foreign Arbitral Awards Convention Act, RSC 1985, c 16 (2d Supp).
(12) This may be about to change if and when the 2005 Hague Convention on Choice of Court Agreements comes into force. See Hague 2005, supra note 8. This Convention was adopted by The Hague Conference on Private International Law on 30 June 2005. It was ratified by Mexico in 2007 and signed by the European Union and the United States in 2009. Two ratifications are required for its entry into force (article 31). Full details on the Convention are available at www.hcch.net. For a detailed history and consideration from an American perspective, see Ronald A Brand & Paul Herrup, The 2005 Hague Convention on Choice of Court Agreements: Commentary and Documents (Cambridge: Cambridge University Press, 2008). For a Quebec view on the Convention, see Jeffrey Talpis & Nick Krnjevic, "The Hague Convention on Choice of Court Agreements of June 30, 2005: The Elephant that Gave Birth to a Mouse" (2006) 13:1 Sw J Trade Am 1. For a perspective from the common-law provinces, see Vaughan Black, "The Hague Choice of Court Convention and the Common Law" (2007) [unpublished report], online: ULCC <http://www.ulcc.ca/en/2007-charlottetownpe/216-civil-section-documents/566-hague- convention-choice-of-court-agreement- and-the-common-law-2007>.
(13) The discussion presumes that the clause is valid, both in formal terms (i.e., conforming to any writing requirements) and in terms of there being no issue going to essential validity (i.e., lack of consent, fraud, duress, etc). A party may also try to avoid the clause by arguing that the claim raised does not fall within it. While these are obviously important issues, the question of enforcement dealt with here can be treated autonomously, following on a presumption of validity and applicability of the clause.
(14) Nicholas Rafferty et al, Private International Law in Common Law Canada: Cases, Text and Materials, 3d ed (Toronto: Emond Montgomery, 2010) at 365. On the same point in relation to an arbitration clause, see e.g. National Gypsum Co v Northern Sales Ltd,  SCR 144 at 150-51, 43 DLR (2d) 235 (on the same point in relation to an arbitration clause).
(15) See e.g. art 23 (s 7) of the Council Regulation (EC) No 44/2001 of 22 December 2000 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters, (2001) OJ (L 12) 1 at ss 4-5 [Brussels I Regulation]; as explained by
William W Park:
The verb 'prorogate' sometimes causes confusion because it covers not only submission to a judge's jurisdiction by consent of the parties, but also a legislature's decision to adjourn ... its session until a later date. Common to both types of prorogation is the notion of extension. By contract the parties extend the judge's jurisdiction, and by adjournment the parliament extends its debate until a later time. The forum selection usage comes to us from Scots law, and derives from the French proroger, meaning to prolong or to protract.
William W Park, International Forum Selection (Boston: Kluwer Law International, 1995) at 11, n 18.
(16) This is not always possible if, for example, the court's jurisdiction is not amenable to prorogation. This is the case for divorce jurisdiction in Canada, for example, which requires one year of residence by one of the parties and which cannot be waived by consent. Similarly, if the dispute is for an amount less or more than that prescribed by the rules of court, it may not be possible for the court to accept such a prorogation. In any case where the jurisdictional incapacity should be raised by the court itself, as is the case for subject-matter jurisdiction, the parties will not be able to extend it through their own will. A good example is the limited jurisdiction of the federal courts and provincial courts.
(17) Morguard Investments Ltd v De Savoye,  3 SCR 1077 at 1097, 1103-04, 76 DLR (4th) 256 [Morguard]. In fact, Morguard had specifically noted that the existing consent-based jurisdictional bases were appropriate.
(19) The issue of implied consent through attornment will be discussed below.
(20) Art 3148(4) CCQ.
(21) SBC 2003, c 28 [BC CJPTA]; SNS 2003 (2d Sess), c 2 [NS CJPTA]; SS 1997, c C-41.1 [SK CJPTA].
(22) Uniform Law Conference of Canada, Proceedings of the Seventy-Sixth Annual Meeting (1994) 48. This is section 3(c) in the Uniform CJPTA but when adopted it has occasionally been renumbered such that in Saskatchewan it is section 4(c). For a presentation and discussion of the BC version of the Act, see Elizabeth Edinger, "New British Columbia Legislation: The Court Jurisdiction and Proceedings Transfer Act; The Enforcement of Canadian Judgments and Decrees Act" (2006) 39:2 UBC L Rev 407 [Edinger, "New BC Legislation"].
(23) In Quebec, art 3135 CCQ codifies the discretion and limits it to cases where the Quebec court has jurisdiction and one of the parties invokes the discretion. Both of those conditions are presumed in this scenario. In the CJPTA provinces, the discretion is provided for specifically and applies to all bases of jurisdiction listed in the statute, of which prorogation is one (section 10 of the model law). In the common-law jurisdictions, the availability of the discretion is usually provided by rules of court and is generally available without express limitation according to the way jurisdiction is established. See e.g. Ontario, Rules of Civil Procedure, r 17.06.
(24) See generally Genevieve Saumier, "Judicial Jurisdiction in International Cases: The Supreme Court's Unfinished Business" (1995) 18:2 Dal LJ 447 at 451 [Saumier, "Judicial Jurisdiction"].
(25) If neither party invokes the foreign applicable law, the court will not raise it on its own.
(26) New York State, for example, will not accept jurisdiction under a choice-of-court agreement if the case has no links to the State, unless the value of the litigation is at least $ 1 million. The rationale appears to be that the overall economic value of such litigation to the State is an adequate price for the demands it imposes on its judicial system. See General Obligations Law, NY Stat, tit 14 [section] 5-1402 (2006).
(27) For Quebec, see generally art 3155 CCQ; for the common law provinces, see Tech Cominco, infra note 79.
(28) Art 3135 CCQ.
(29) But see the uncertainty after amendments to the rules of court in BC: Edinger, "New BC Legislation", supra note 22.
(30) Art 3148 CCQ reads in part that "a Quebec authority has no jurisdiction where the parties, by agreement, have chosen to submit all existing or future disputes between themselves relating to a specified legal relationship to a foreign authority or to an arbitrator, unless the defendant submits to the jurisdiction of the Quebec authority".
(32) Les Importations Cimel Lteec Pierre Auger, Produits deBeaute,  RJQ 2345 (CA); G Goldstein et E Groffier, Traite de droit civil: droit international prive, tome 1, Theorie generale (Cowansville: Yvon Blais, 1998) 361.
(33) No case has confirmed this, and arguably GreCon, supra note 1, should prescribe it, but there is no denying the fact that art 3135 of the CCQ applies on its own terms to give the defendant the option of invoking the court's discretion not to exercise its jurisdiction, however acquired.
(34) GreCon, supra note 1.
(35) Crestar Ltd c Canadian National Railway Co,  RJQ1191; Guns N' Roses Missouri Storm inc c Productions musicales Donald K Donald inc,  RJQ 1183 (CA).
(36) Art 3139 CCQ.
(37) Art 3148 CCQ.
(38) Art 3135 CCQ.
(39) Grecon Dimter Inc c JR Normand Inc,  RJQ 88, , 132 ACWS (3d) 465 (CA).
(40) GreCon, supra note 1 at para 21.
(41) This is the case in art 3149 CCQ, which declares non-binding the foreign forum selection clause in a consumer or employment contract with a Quebec resident consumer or employee. This is noted in GreCon, supra note 1 at para 25. For a full discussion of that provision, see Genevieve Saumier, "L'affaire Dell: La spheres d'application de l'article 3149 C.c.Q. et le consommateur quebecois" (2007) 37:2 RGD 463.
(42) GreCon, supra note 1 at para 22.
(43) Ibid at para 45.
(44) Art 3165 CCQ (as noted in GreCon, supra note 1 at para 38).
(45) ZI Pompey, supra note 1 at para 38.
(46) ZI Pompey, supra note 1. It should be noted that under narrow circumstances, section 46 of the Marine Liability Act, SC 2001, c 6, preserves the jurisdiction of Canadian courts despite the presence of a forum selection clause. This was not at stake in this case.
(47) ZI Pompey, supra note 1 at para 20.
(48) GreCon, supra note 1 at para 22.
(49) ZI Pompey Industrie v Ecu-Line NV (2001), 103 ACWS (3d) 3, 268 NR 364 (FCA).
(50) Owners of Cargo Lately Laden on Board the Ship or Vessel Eleftheria v The Eleftheria (Owners),  2 All ER 641, 2 WLR 1073 [The Eleftheria].
(51) For a discussion of this aspect of the decision see M Paul Michell, "Forum Selection after Z.I. Pompey Industrie v. ECU-Line N.V., The Canmar Fortune' (2003) 39:2 Can Bus LJ 262.
(52) ZI Pompey, supra note 1 at para 21 [citations removed]. The reference to Peel is to Edwin Peel, "Exclusive Jurisdiction Agreements: Purity and Pragmatism in the Conflict of Laws",  LMCLQ182 at 190.
(53) However, the burden of proof in forum non conveniens litigation is not obviously on the defendant since Amchem Products Inc v British Columbia (Workers' Compensation Board),  1 SCR 897, 102 DLR (4th) 96 [Amchem cited to SCR], where the Supreme Court specifically refused to adopt the English law's distinctions regarding the burden of proof depending on the nature of the jurisdiction (as of right versus assumed). For a discussion, see Saumier, "Judicial Jurisdiction", supra note 24 at 447. See also Elizabeth Edinger, "The Problem of Parallel Actions: The Softer Alternative" (2010) 60 UNBLJ 116 at 125 [Edinger, "Parallel Actions"].
(54) It is not immediately evident that "strong cause" is significantly heavier than "clearly more appropriate" as expressed by the Supreme Court in its forum non conveniens precedent: Amchem, supra note 53. In fact, The Eleftheria, supra note 50, was decided prior to the key forum non conveniens decision from the House of Lords in Spiliada Maritime Corp v Cansulex Ltd,  3 WLR 972, 3 All ER 843 that revised the forum non conveniens to rid it of the "vexatious and oppressive" condition that the defendant originally had to meet.
(55) 2010 ONCA 351, 100 OR (3d) 241, leave to appeal to SCC refused, 33790 (November 23, 2010) [Expedition Helicopters].
(56) The case law offers various factors going to strong cause. For example, there is conflicting jurisprudence as to whether a plaintiff's impecuniosity can be strong cause for not enforcing a forum selection clause. In Hans v Volvo Trucks North America Inc, 2010 BCSC 1700 at 55, 2 CPC (7th) 149, one could infer from the BC Supreme Court's statements that the plaintiffs' impecuniosity, although not the stated strong cause, did weigh on the judge's mind. However, in Zhan v Pfizer Inc (2007), 158 ACWS (3d) 744 at para 29, 37 BLR (4th) 132 (Ont Sup Ct), the Ontario Superior Court suggests that although impecuniosity is a factor, it cannot constitute strong cause. Also, there are instances where strong cause has been found because the litigation would be needlessly complex if the forum selection clause was enforced (Skyway Canada Ltd v Clara Industrial Services (2005), 143 ACWS (3d) 674, 47 CLR (3d) 311 (Ont Sup Ct); Inline Fiberglass Ltd v Resins Systems Inc (2007), 161 ACWS (3d) 198, 52 CPC (6th) 335 (Ont Sup Ct)). The lack of connection between the parties and the chosen forum has also been claimed to be a relevant factor (Brisbin vLunev, 2010 ONSC 1840 (QL), aff'd 2011 ONCA 15 (QL) (but without discussion of the forum selection clause)).
(57) Expedition Helicopters, supra note 55 at para 24.
(58) Interestingly, this is equivalent to the position under the CCQ, as explained in the previous section, although this is not mentioned in the judgment.
(59) Expedition Helicopters, supra note 55 at paras 6-10.
(60) Ibid at para 11.
(61) 2011 BCCA 260, 306 BCAC 271 [Viroforce].
(62) 2011 SKCA 136, 377 Sask R 156 [Microcell]. The fact that both BC and Saskatchewan have legislated jurisdictional rules had no impact on this part of the decision.
(63) Momentous CA, supra note 5 at paras 41-42.
(64) Momentous SCC, supra note 4 at para 9. Admittedly, the holding in Momentous did not depend on the criteria going to "strong cause".
(65) However, this concern could fall within the "public policy" condition retained in Expedition Helicopters, supra note 55.
(66) 2010 ONCA 879, 272 OAC 386
(67) Ibid at para 58. See also Straus v Decaire, 2007 ONCA 854, 162 ACWS (3d) 596 for similar consideration of the negotiating power of the parties as relevant to strong cause.
(68) Arthur Wishart Act (Franchise Disclosure), 2000, SO 2000, c 3. See e.g. s 10 ("Any provision in a franchise agreement purporting to restrict the application of the law of Ontario or to restrict jurisdiction or venue to a forum outside Ontario is void with respect to a claim otherwise enforceable under this Act in Ontario."). In Di Stefano v Energy Automated Systems Inc, 2010 ONSC 493, 68 BLR (4th) 209, because the plaintiffs were unable to categorize their relationship as franchisee-franchisor for the purposes of the Act, the forum selection clause was enforced against them. The fact that the litigation turned on this definitional point instead of the forum selection clause is an indication of how difficult the strong cause test can be.
(69) See Consumer Protection Act, 2002, SO 2002, c 30, Sch A, s 7.
(70) 2010 ONCA 84, 98 OR (3d) 721, aff'd 2012 SCC 17,  1 SCR 572 [Van Breda CA].
(71) Ibid at para 125. The Supreme Court did not comment on this aspect of the judgment in its recent decision in that case: Club Resorts Ltd v Van Breda, 2012 SCC 17,  1 SCR 572 [Van Breda SCC].
(72) See art 3149 CCQ; Brussels I Regulation, supra note 15 at ss 4-5.
(73) The omission is interesting given the recent decision in Van Breda SCC, supra note 71. There, LeBel J stressed the importance of objective criteria regarding the real and substantial connection test, objective criteria being required for certainty, predictability, order, and fairness. It is ironic that when faced with this exact kind of issue in Momentous (i.e., defining objective criteria regarding strong cause), the Court chose not to do so.
(74) The draft text was circulated at the 1993 meeting of the Uniform Law Conference of Canada: Uniform Law Conference of Canada, Proceedings of the Seventy-Fifth Annual Meeting (1993). See the introductory comments for the Act's purpose: ULCC, "Uniform Court Jurisdiction and Proceedings Transfer Act", online: <http://www.ulcc.ca> at s 0.1 [Uniform Act]:
This proposed uniform Act has four main purposes: (1) to replace the widely different jurisdictional rules currently used in Canadian courts with a uniform set of standards for determining jurisdiction; (2) to bring Canadian jurisdictional rules into line with the principles laid down by the Supreme Court of Canada in Morguard Investments Ltd. v. De Savoye,  3 S.C.R. 1077, and Amchem Products Inc. v. British Columbia (Workers' Compensation Board),  1 S.C.R. 897; (3) by providing uniform jurisdictional standards, to provide an essential complement to the rule of nation-wide enforceability of judgments in the uniform Enforcement of Canadian Judgments Act; and (4) to provide, for the first time, a mechanism by which the superior courts of Canada can transfer litigation to a more appropriate forum in or outside Canada, if the receiving court accepts such a transfer.
(75) Viroforce, supra note 61.
(76) The loan agreement also contained a choice-of-law clause selecting Quebec law as the applicable law governing the contract.
(77) Viroforce, supra note 61 at para 13.
(78) Momentous CA, supra note 5 at paras 35-39.
(79) 2009 SCC 11,  1 SCR 321 [Teck Cominco].
(80) Ibid at para 21.
(81) Ibid at para 22 (at least in regard to forum non conveniens).
(82) This is despite the fact that the Latin maxim is not used in the statute itself, which is also true of the equivalent in Quebec (Art 3135 CCQ).
(83) See Edinger, "Parallel Actions", supra note 53 at 126, which contends that it is inconceivable that the Supreme Court in Teck Cominco would have intended to exclude the "strong cause" test from section 11 if this meant eliminating deference to forum selection clauses.
(84) Viroforce, supra note 61 at para 14 [emphasis added].
(85) 2011 SKCA 137, 342 DLR (4th) 659 [Hudye Farms].
(86) Ibid at para 10. The stay provision in the Saskatchewan version of the CJPTA is found at section 10 of the SK CJPTA, supra note 21.
(87) 2012 BCCA 30, 346 DLR (4th) 541 [Preymann], aff'g 2011 BCSC 1819, 32 BCLR (5th) 387.
(88) Ibid at para 11.
(89) Ibid at para 4.
(90) Ibid at paras 37, 39 [citation removed].
(91) Ibid at para 48. The cases were Microcell Communications v Frey, 2011 SKCA 136,  3 WWR 423, and Hudye Farms, supra note 85. A Nova Scotia court, in Curves International Inc v Archibald,, 2011 NSSC 217, 303 NSR (2d) 288, did not refer to these issues in its decision not to enforce a forum selection clause, essentially because the plaintiff was seeking an in-province injunction which the court held was a strong cause sufficient to allow it to maintain its jurisdiction rather than sending the parties to Texas.
(92) Preymann, supra note 87 at para 48.
(93) Janet Walker, "Reforming the Law of Crossborder Litigation--Judicial Jurisdiction" (Toronto: OHLS Law Commission of Ontario, 2009) at 7. Perhaps this statement is no longer true given the Momentous decision.
(94) See Shekhdar v K&M Engineering and Consulting Corp, (2006), 148 ACWS (3d) 568 at para 2 (QL) (Ont CA):
The defendants ... concede that, if their attornment to the courts of Ontario is sufficient to constitute consent, the appeal must succeed. In our view, it is incontrovertible that the defendants did attorn to the Ontario jurisdiction and thus consented to it.... [Matlow J] rejected consent as a separate basis of jurisdiction and focused on assumed jurisdiction. He concluded that his hands were tied because ... the action had no real and substantial connection with Ontario and the Superior Court therefore had no jurisdiction to entertain it. While he undoubtedly had the authority that he purported to exercise under s. 106, having regard to the costs the parties had already incurred in this litigation, it was inappropriate for him to exercise his discretion in the way he did. Moreover ... his decision was wrong in law.
(95) For an overview of the types of actions that constitute attornment, see Stephen GA Pitel & Nicholas S Rafferty, Conflict of Laws (Toronto: Irwin Law, 2010) at 63. For discussion specific to British Columbia, see Elizabeth Edinger, "Disputing Jurisdiction, Attornment and Mid-Ohio" (2009) 67:1 The Advocate 33 [Edinger, "Attornment"].
(96) See Lawrence Collins, ed, Dicey, Morris and Collins on The Conflict of Laws, 14th ed, (London: Sweet & Maxwell, 2006) at 360, para 11-138, where he states that submission gives jurisdiction to the "extent of removing objections thereto which are purely personal to the party submitting as, for example, that he has not been duly served with the process." It seems that contesting jurisdiction for the reason of a choice-of-court clause is an analogous "purely personal" objection. See also Michael James, Litigation with a Foreign Aspect: A Practical Guide (New York: Oxford University Press, 2009) at 99. For Canadian sources, see e.g. Wilson v Servier Canada Inc (2000), 50 OR (3d) 219, 49 CPC (4th) 233 (Ont Sup Ct) (where setting service aside was precluded by attornment); Charlottetown Metal Products Ltd v Lucas-California Co (1982), 134 DLR (3d) 438 at para 27, 101 APR 115 (precluding a forum non conveniens challenge after attornment). Also, for a discussion of how attornment may (or may not) foreclose the possibility of arguing forum non conveniens, see Edinger, "Attornment", supra note 95 at 36 (British Columbia-specific).
(97) See Edinger, "Attornment", supra note 95 at 35.
(98) Art 3148(5) CCQ.
(99) Art 3148 CCQ in fine.
(100) Momentous CA, supra note 5. For a critical appraisal of this aspect of the decision see Antonin I Pribetic, "A "Momentous" Decision on Consent-Based Jurisdiction" (2011) 19:2 Ontario Bar Association Civil Litigation Section, online: <http://www.oba.org>.
(101) This issue concerned only the Can-Am defendant, who was not otherwise subject to the jurisdiction of the Ontario courts.
(102) Momentous CA, supra note 5 at para 35.
(103) Ibid at para 44.
(104) Ibid at para 45. The defendant was precluded from invoking the more relevant provision (Ontario, Rules of Civil Procedure, r 17.06) dealing with a stay because that rule is not available where the party has submitted a defence. The defendant's only option was to rely on rule 21.01(3)(a), which only requires that the motion be brought "quickly after the commencement of the suit". For a discussion of these rules and appropriate orders in relation to them, see Cheryl D Dusten & Stephen GA Pitel, "The Right Answers to Ontario's Jurisdictional Questions : Dismiss, Stay or Set Service Aside" (2005) 30:3 Advocates' Q 297.
(105) Momentous SCC, supra note 4 at para 7.
(106) See discussion of ZI Pompey, above at 22 and following.
(107) One limitation to this would be a writing requirement specified in the parties' original jurisdictional agreement. As will be discussed below, this is often a condition for variation of an arbitral agreement and may also be the case under the Hague Convention on Choice of Court Agreements. See Hague 2005, supra note 8.
(108) In terms of contract law, this argument is best expressed in estoppel terms to avoid any problems involving the probable lack of consideration for the contractual modification. This argument may be more difficult to sustain if the defendant was subjectively unaware of the forum selection clause, although this would be more relevant to an argument based on waiver than one based on estoppel. On contractual waiver and estoppel, see Edwin Peel & GH Treitel, The Law of Contract, 12th ed, (London: Sweet & Maxwell, 2011) at 111-28.
(109) I thank my colleague Stephen A. Smith for this point.
(110) Peel & Treitel, supra note 108.
(111) This is how submission is characterized in Andrea Schulz, Report on the Work of the Informal Working Group on the Judgments Project, in Particular on the Preliminary Text Achieved at Its Third Meeting - 25-28 March 2003, Hague Conference on Private International Law, Prel Doc No 22, (2003) at 17. This view explains why there is no provision on submission in the final version of the Hague Convention, since it was argued not to involve an agreement between the parties.
(112) Model Law on International Commercial Arbitration, UNCITRAL (1985) [UNCITRAL Arbitration]. See generally J Brian Casey & Janet Mills, Arbitration Law of Canada: Practice and Procedure (Huntington, NY: Juris, 2005).
(113) Art 940.1 CCP.
(114) See e.g. Ant Labbe inc c General Motors du Canada ltee, 2010 QCCS 4235 at paras 41-47,  JE 1846.
(115) UNCITRAL Arbitration, supra note 112, art 8(1).
(116) See e.g. Autoweld Systems Limited v CRC--Evans Pipeline International, Inc, 2009 ABCA 154,  AWLD 2004.
(117) International Commercial Arbitration Act, RSBC 1996, c 233, s 8(1) [emphasis added]. This is slightly different from the language found in the domestic arbitration: " ... before filing a response [to the claim] or taking any other step in the proceedings ... ", Commercial Arbitration Act, RSBC 1996, c 55, s 15(1). There does not appear to be any case law interpreting this provision.
(118) F Bachand, L'intervention du juge canadien avant et durant un arbitrage commercial international (Paris: LGDJ, 2005) at 197-209.
(119) Not only would this be consistent with party autonomy, it would also seem to be necessary under the formal requirements currently in place regarding arbitration agreements, namely, that they be in writing (although this is no longer the preferred position de lege lata if not yet de lege ferenda). See Gary B Born, International Commercial Arbitration (Netherlands: Kluwer Law International, 2009) at 581.
(120) See e.g. Patel v Kanbay International Inc, 2008 ONCA 867, 70 CCEL (3d) 205, Pandora Select Partners, LP v Strategy Real Estate Investments Ltd, 27 BLR (4th) 299, 155 ACWS (3d) 1014 (ON SC), and Ocean Fisheries Ltd v Pacific Coast Fishermen's Mutual Marine Insurance Co,  1 FC 586, 220 NR 68.
(121) See Dell Computer, supra note 10, and the discussion of this aspect of the case in Frederic Bachand & Pierre Bienvenu, "L'arret Dell et le controle de la competence arbitrale au stade du renvoi a l'arbitrage" (2007) 37:2 RGD 477.
(122) UnifundAssurance Co v Insurance Corp of British Columbia, 2003 SCC 40 at para 36,  2 SCR 63.
(123) On this point, see Dell Computer, supra note 10 at para 140. Admittedly the recent result in Momentous is consistent with the Model Law, although arguably by default rather than by design, since it appears that the defendant raised the jurisdictional clause in its defence.
(124) Momentous SCC, supra note 4
(125) Ontario, Rules of Civil Procedure, r 17.06. See supra note 104 [emphasis added].
(126) See e.g. British Columbia, Supreme Court Rules, rs 13, 14, as repealed by British Columbia, Supreme Court Civil Rules, discussed in Edinger, "Attornment", supra note 95.
(127) Currently there is no specific rule in Quebec, but proposed modifications to the CCP would subject the request to decline jurisdiction to the same conditions as those applying to a challenge to jurisdiction, both being required to be brought at the latest at the first case-management meeting (Draft Bill to enact the new Code of Civil Procedure, 2nd Sess, 39th Leg, Quebec, 2011, art 490).
(128) Some readers have interpreted the recent Supreme Court decision in Seidel v TELUS Communications Inc, 2011 SCC 15,  1 SCR 531, as involving a retreat from the general pro-arbitration position (see Frederic Bachand, "Lafavor arbitrandum remise en cause par la Cour supreme du Canada",  2 Rev arb 533).
(129) This assumes that following GreCon there is no scope for forum non conveniens to avoid a prorogation clause before a Quebec court. See discussion above.
(130) See e.g. BC CJPTA, supra note 21, s 12: "If there is a conflict or inconsistency between this Part and another Act of British Columbia or Canada that expressly ... (b) denies jurisdiction or territorial competence to a court, that other Act prevails."
(131) The rule already includes a provision on forum non conveniens. See Ontario, Rules of Civil Procedure, r 17.06(2)(c).
(132) For a discussion of consumer arbitration, see Genevieve Saumier, "Consumer Arbitration in the Evolving Canadian Landscape" (2009) 113:4 Penn St L Rev 1203.
(133) Uniform Act, supra note 74.
(134) Walker, supra note 93.
(135) Hague 2005, supra note 8.
(136) The Conference website contains an extensive bibliography, including many hyperlinked items.
(137) Hague 2005, supra note 8, art 2(1).
(138) However, one must acknowledge that the pan-Canadian adoption of the Convention would likely proceed at a slow pace and in a piecemeal manner given the division of powers inherent in the constitution of a federal state.
GENEVIEVE SAUMIER, Faculty of Law, McGill University, and member of the research group Private Justice and Rule of Law. Research for this article was supported by an SSHRC grant. With thanks to Catherine Walsh and Elizabeth Edinger for comments.
JEFFREY BAGG, McGill BCL/LLB 2012.