Barrister and Solicitor
Legal Writing and Research
Enforcement - Foreign Judgments - Jurisdiction
Appeals - Standard of Review - Discretionary Orders
Enforcement - Foreign Judgments - Stays [CJA s.106]
Yaiguaje v Chevron Corporation (Ont CA, 2013)
In this unusual case a number of Ecuadorian citizens sought to enforce in Ontario a multi-billion dollar Ecuadorian judgment against Chevron for pollution caused in their country. They sought to enforce it against both Chevron, which did not maintain a business establishment in Ontario - and against Chevron Canada, which did.
The first issue was whether the Ontario Court had jurisdiction to determine whether such a foreign judgment could be enforced locally in the absence of the defendant having any 'real and substantial connection' to the local jurisdiction (here, Ontario). The Court of Appeal, upholding the motions court judge that the Superior Court of Ontario did have such jurisdiction, clarified that the 'real and substantial connection' test was applicable to this inquiry, however the connection to be examined was between the material facts of the case and the foreign jurisdiction, not the materials facts of the case and Ontario. On this understanding the plaintiffs met the 'real and substantial connection' test:
 The respondents contend that the principle of comity and the constitutional limitations of the Ontario court require the court to apply the real and substantial connection test at two stages of the recognition and enforcement process – was there a real and substantial connection between the subject matter of the litigation and the foreign court (Ecuador) that rendered the judgment, and is there a real and substantial connection between the subject matter of the litigation and the court (Ontario) being asked to recognize and enforce the judgment? The respondents concede that the answer to the first question is “Yes”, but assert that, if the motion judge had addressed it, the answer to the second question should have been “No”.The Court of Appeal also allowed that it had jurisdiction to countenance enforceability of the claim against Chevron Canada, despite it not being a defendant in the original Ecuadorian action, on the reasoning that any arguments respecting 'piercing the corporate veil' of Chevron Canada to get at it's parent was not a jurisdictional issue, and could thus be addressed in further litigation.
 The motion judge rejected this double application of the real and substantial connection test. He began by surveying, in considerable detail, the relevant case law, including Morguard Investments Ltd. v. De Savoye, 1990 CanLII 29 (SCC),  3 S.C.R. 1077 (“Morguard”); Beals v. Saldanha, 2003 SCC 72 (CanLII), 2003 SCC 72,  3 S.C.R. 416 (“Beals”); Pro Swing Inc. v. Elta Golf Inc., 2006 SCC 52 (CanLII), 2006 SCC 52,  2 S.C.R. 612 (“Pro Swing”); and Club Resorts Ltd. v. Van Breda, 2012 SCC 17 (CanLII), 2012 SCC 17,  1 S.C.R. 572 (“Van Breda”). He also examined academic commentary, as well as the recognition of foreign judgments under Ontario statutes, including the Reciprocal Enforcement of Judgments (U.K.) Act, R.S.O. 1990, c. R. 6, and the International Commercial Arbitration Act, R.S.O. 1990, c. I. 9, American jurisprudence, and the principles governing motions to set aside service ex juris.
 I agree with the motion judge’s analysis on this issue.
 The leading cases dealing with the recognition and enforcement of foreign judgments are Morguard and Beals. Morguard dealt with the enforcement of an Alberta judgment in British Columbia, Beals with the enforcement of a Florida judgment in Ontario. Obviously, Beals is directly on point in this appeal.
 In my view, Beals is crystal clear about how the real and substantial connection test is to be applied. Major J. stated, at paras. 18, 23, 28, 32 and 37:
In Morguard, supra, the “real and substantial connection” test for the recognition and enforcement of interprovincial judgments was adopted. Morguard did not decide whether that test applied to foreign judgments. The import of these passages, especially the emphasized portions, is clear: in recognition and enforcement actions relating to foreign (e.g. Ecuadorian) judgments in Canadian jurisdictions (e.g. Ontario), the exclusive focus of the real and substantial connection test is on the foreign jurisdiction. There is no parallel or even secondary inquiry into the relationship between the legal dispute in the foreign country and the domestic Canadian court being asked to recognize and enforce the foreign judgment. See also: Pro Swing, at para. 11; BNP Paribas (Canada) v. Mécs 2002 CanLII 49490 (ON SC), (2002), 60 O.R. (3d) 205 (S.C.J.) (“BNP Paribas (Canada)”), at para. 13; and Janet Walker, Halsbury’s Laws of Canada, Conflict of Laws, 2011 Reissue (Toronto: Ont.: LexisNexis Canada, 2011), HCF-69.
Morguard established that the courts of one province or territory should recognize and enforce the judgments of another province or territory, if that court had properly exercised jurisdiction in the action, namely that it had a real and substantial connection with either the subject matter of the action or the defendant. A substantial connection with the subject matter of the action will satisfy the real and substantial connection test even in the absence of such a connection with the defendant to the action.
International comity and the prevalence of international cross-border transactions and movement call for a modernization of private international law. The principles set out in Morguard, supra, and further discussed in Hunt v. T&N plc, 1993 CanLII 43 (SCC),  4 S.C.R. 289, can and should be extended beyond the recognition of interprovincial judgments, even though their application may give rise to different considerations internationally. Subject to the legislatures adopting a different approach by statute, the “real and substantial connection” test should apply to the law with respect to the enforcement and recognition of foreign judgments.
The “real and substantial connection” test requires that a significant connection exist between the cause of action and the foreign court. Furthermore, a defendant can reasonably be brought within the embrace of a foreign jurisdiction’s law where he or she has participated in something of significance or was actively involved in that foreign jurisdiction. A fleeting or relatively unimportant connection will not be enough to give a foreign court jurisdiction. The connection to the foreign jurisdiction must be a substantial one.
There are conditions to be met before a domestic court will enforce a judgment from a foreign jurisdiction. The enforcing court, in this case Ontario, must determine whether the foreign court had a real and substantial connection to the action or the parties, at least to the level established in Morguard, supra. A real and substantial connection is the overriding factor in the determination of jurisdiction. The presence of more of the traditional indicia of jurisdiction (attornment, agreement to submit, residence and presence in the foreign jurisdiction) will serve to bolster the real and substantial connection to the action or parties. Although such a connection is an important factor, parties to an action continue to be free to select or accept the jurisdiction in which their dispute is to be resolved by attorning or agreeing to the jurisdiction of a foreign court.
The Court did reverse the motions court's discretionary stay of enforcement, made on the basis that the defendant Chevron had no assets in the jurisdiction. The motions court relied on it's jurisdiction under Courts of Justice Act, s.106:
106. A court, on its own initiative or on motion by any person, whether or not a party, may stay any proceeding in the court on such terms as are considered just.The Court of Appeal did this for a range of reasons [paras 41-73], but primarily on the basis that the principle of comity between international courts ('comity') should be respected more robustly.
Lastly, on the issue of the standard of review to be applied by an appellate court to reviewing a discretionary order, the Court of Appeal stated:
 The test for appellate interference with a discretionary order was enunciated by Blair J.A. in Re Regal Constellation Hotel Ltd. 2004 CanLII 206 (ON CA), (2004), 71 O.R. (3d) 355 (C.A.), at para. 22:
The orders appealed from are discretionary in nature. An appeal court will only interfere with such an order where the judge has erred in law, seriously misapprehended the evidence, or exercised his or his discretion based upon irrelevant or erroneous considerations or failed to give any or sufficient weight to relevant considerations.