Court Of Appeal Accepts Ontario Jurisdiction Despite Forum Selection Clause For Germany

During the spring of 2012, the Canadian Appeals Monitor posted a five-part series on the Supreme Court's judgments in Van Breda, Black, and Éditions Écosociété (the "Van Breda Trilogy"). The Van Breda Trilogy was the Supreme Court's long anticipated reformulation of the common law principles of private international law.

Since the release of the Van Breda Trilogy, courts of first instance have applied the controlling test in Van Breda without much interference from appeal courts. However, on May 31, 2013 the Ontario Court of Appeal released its judgment in 2249659 Ontario Ltd. v. Sparkasse Siegen, overturning Justice Carole Brown's decision denying Ontario's jurisdiction to hear the matter. Of particular interest in the Sparkasse case is the court's finding on the non-applicability of the forum selection clause in favour of Germany.

Background

The plaintiff/appellant, Rohwedder Canada Inc. ("RCI"), is an Ontario-based manufacturer and retailer of automated assembly lines. (RCI was acquired by 2249659 Ontario Ltd. after its parent company declared bankruptcy).

The defendants/respondents are Thomas Magnete GMbH ("TMG"), a German manufacturer and retailer of solenoids (used in the production of automotive transmission systems), and Sparkasse Siegen Bank ("Sparkasse"), a German bank servicing TMG and other Thomas family companies.

Events at Issue

In September 2007, RCI and TMG entered into an agreement for the purchase and installation of assembly lines in an automotive plant in Cambridge, Ontario. The agreement, in the form of a purchase order, was negotiated in Germany and signed by RCI in Ontario. The purchase order contained a forum selection clause stipulating Germany as the jurisdiction of choice. A few months later TMG and RCI entered into a Confidentiality Agreement related to the assembly line project that also identified Germany as the choice of forum.

In the fall of 2007, TMG incorporated Thomas Magnete Canada Inc. ("TMC") in Ontario and sought financing from Sparkasse for TMC to purchase RCI's assembly lines. Sparkasse agreed to a loan on the condition that TMG provide a guarantee.

TMG then asked RCI to substitute TMC for TMG as the purchaser of the assembly lines. Some of these discussions took place in Ontario. After receiving a letter by email (received in Ontario) from Sparkasse to TMG confirming project funding, RCI agreed to make the substitution. A second purchase order was entered into on the same terms and conditions as the...