Real And Substantial Connections And Beyond: Responding To Foreign Lawsuits And Challenging Jurisdiction

First presented at a Sports Liability Seminar

With the proliferation of e-commerce, the past decade has seen a significant increase in the development of "do-it-yourself" online travel booking. Business and leisure travellers alike turn to online travel agents on their computers and mobile devices to co-ordinate and make their travel arrangements. In turn, the increased ease in making travel arrangements has given rise to more travellers. In Canada, many families travel outside of their home province, or even outside of Canada, for winter ski trips or summer trips filled with water activities. With the increased frequency of such trips comes a corresponding increase in activity-related injuries. These can result in lawsuits for injuries sustained abroad. Managing where lawsuits may be commenced becomes a source of concern for those involved in the travel industry, such as resort and tour operators and their insurers. Ontario hotel and resort operators may therefore unknowingly find themselves being named as defendants in actions commenced outside of Ontario.

This paper will first discuss how a defendant may intentionally or unintentionally subject itself to a foreign jurisdiction, known as attorning to the jurisdiction, which can be a frustrating ordeal for a litigant. It is thus crucial to examine the choices available to the defendant when facing a foreign action, whether it is to contest or to attorn to jurisdiction. The discussion will further examine the options a defendant has if it did indeed unintentionally acquiesce to the foreign jurisdiction. These same considerations apply when a foreign defendant is being sued in Ontario.

Secondly, the paper will discuss the legal test for finding and challenging jurisdiction in Ontario, as enunciated by the Supreme Court of Canada in Van Breda v. Club Resorts Ltd.1 The discussion will also touch on the legal principle of forum non conveniens, which presents another method to stay a foreign action for being brought in an improper forum.

As a final note, the paper will discuss how properly drafted forum selection clauses and governing law clauses can be effective tools in managing the certainty and predictability of claims arising out of a given policy, and how such a clause may be interpreted by an Ontario court. While they may not prevent all actions from being commenced in a foreign jurisdiction, a proper forum selection clause can afford certainty to insurers in terms of where claims brought against them by their insured could be litigated. Governing law clauses are useful as well to provide guidance and certainty as to which set of laws has been chosen to resolve the dispute arising out of the contract, regardless of the forum in which the claim was commenced.

1. Making the Decision: To Contest or to Attorn?

   By way of example: an American couple from the state of Kentucky plans a canoe and hiking trip to Georgian Bay, Ontario. The husband makes the booking online through a travel website and uses his credit card to pay for the vacation, including the hotel. During their excursion in Ontario, organized by the hotel, the wife sustains injuries from a boating accident wherein a hotel employee acted in a negligent manner. She receives medical treatment in Ontario and upon returning home to Kentucky, the couple decides to sue the Ontario hotel in a Kentucky court. The hotel's insurer now faces a claim commenced outside of Ontario. At this stage, before taking any steps, the insurer has two options: to contest or to attorn to Kentucky's jurisdiction. Attornment to a particular jurisdiction refers to instances where the defendant in an action consents (intentionally or unintentionally) to the jurisdiction in which the plaintiff has commenced the action.

   1. Deciding to Contest

      It is crucial that this decision is made before any steps are taken in response to the foreign claim. This is because attornment to jurisdiction can occur by filing a consequent pleading, such as a Statement of Defence, or by participating in the litigation process. In Ontario, another example of how attornment can happen is through the service and filing of a Notice of Intent to Defend.2 In our Kentucky example, the hotel's insurer would need to look to the laws of Kentucky to determine what responding pleadings should be filed and the effect of same on attorning to the jurisdiction of that state.

      Therefore, if jurisdiction is to be contested, this should be done before the delivery of a pleading. In our example, once the Kentucky plaintiffs' claim from the foreign jurisdiction is received, the Ontario hotel defendant and its insurer should consider whether they would like to contest jurisdiction or to attorn before responding to the claim. Moreover, it is important that the case not be engaged on its merits, which may also constitute attorning to the jurisdiction.3 Engaging the case on its merits involves litigating with respect to the substance of the legal dispute, versus dealing with the technicalities that can affect a lawsuit, such as jurisdiction

   2. Deciding to Attorn

      In some cases, it may be in the interest of a party to attorn, particularly where the law in the foreign jurisdiction is more favourable than the law in the home jurisdiction. For example, in our American couple case, the foreign jurisdiction, Kentucky, might have more favourable discovery rules compared to Ontario. Undoubtedly, making such a decision is inherently complex. It requires understanding the legislation and case law in both Ontario, as the home jurisdiction, and in Kentucky, as the relevant foreign jurisdiction. This involves interpreting foreign law according to that country's methods as well as understanding the hierarchy of courts in a given region. Even Canadian jurisdictions outside of Ontario may have differing procedural and substantive laws that require consideration if that is the relevant foreign jurisdiction. This would likely require retaining counsel in that foreign jurisdiction. Likewise, attornment to the jurisdiction of Ontario must be carefully considered when an action is brought in Ontario relating to an accident occurring outside of the province. Counsel should also be consulted in making such a decision in Ontario.

      1. Limitation Periods

         Where a tort has occurred in a jurisdiction with a shorter limitation period than Ontario's two year limitation period4, it may be beneficial for a defendant to plead that jurisdiction's law. Doing so may mean that the claim will be dismissed for being outside of the shorter limitation period. Thus, in our case with the American couple, it may be to the advantage of the Ontario insurer to attorn to the jurisdiction of Kentucky if it happens to have a shorter limitation...