January 02 2018
In a recent decision,(1) the Court of Appeal for Ontario clarified the test for determining whether the Ontario courts have jurisdiction over class actions involving proposed global classes that include 'absent foreign claimants' (ie, class members that reside outside Ontario). The decision provides clarity in the wake of a lower-court decision which:
As a result of the Court of Appeal for Ontario's decision, the Ontario courts can certify class actions that include proposed classes consisting of absent foreign claimants if:(3)
In the underlying class proceeding giving rise to the defendants' jurisdictional challenge, the plaintiffs alleged that the defendant airlines had participated in a conspiracy to fix prices of air freight shipping services for shipments from or to Canada between 2000 and 2006.(4) The plaintiffs sought to include absent foreign claimants (persons who had resided, entered into contracts for air freight shipping services and suffered losses outside Canada) in the certified class. In response, the defendants brought a motion for an order staying the proposed action as it concerned the absent foreign claimants on the basis of jurisdiction simpliciter and, alternatively, forum non conveniens (ie, discretionary court power to dismiss a case where a more appropriate court or forum is available).
The motion judge concluded that:
On that basis, the motion judge held that because the absent foreign claimants were not present in Ontario or had not consented to the jurisdiction of the Ontario courts, jurisdiction had not been established. In the alternative, the motion judge held that there was no real and substantial connection between the absent foreign claimants and Ontario. Further, even if jurisdiction simpliciter could be established, the court should exercise its discretion to stay the proceeding as it concerned the absent foreign claimants because Ontario was forum non conveniens.(6) The motion judge subsequently issued an order certifying the action as a class proceeding, but excluding the absent foreign claimants from the class.
The plaintiffs' appeal of the motion judge's order was allowed. The Court of Appeal for Ontario held that the motion judge had erred in law by failing to apply the real and substantial connection test and in respect of her conclusion that the Ontario courts had no jurisdiction over the absent foreign claimants. The court also concluded that the motion judge had further erred by failing to consider an alternative forum in her forum non conveniens analysis.
The court held that the motion judge had erroneously replaced the real and substantial connection test with tests based on imported foreign law.(7) Specifically, "the motion judge permitted foreign law governing recognition to dominate her analysis to the exclusion of all other relevant factors".(8)
The court recognised that international class actions present unique jurisdictional challenges because such proceedings, by their nature, involve unidentified claimants.(9) Thus, "to allow for jurisdiction, either the members must be identified and present or consent to jurisdiction or there must be another doctrinal mechanism available to anchor jurisdiction".(10) As presence and consent to jurisdiction did not apply to the absent foreign claimants, the court considered the doctrinal mechanism by which jurisdiction simpliciter could be established for absent foreign claimants in international class actions.
In its analysis, the court discussed two existing approaches to the real and substantial connection test in the context of class actions. Under an expansive approach, focus is placed on commonality of interest between claims of resident and non-resident class members.(11) Alternatively, an expansive approach might focus on the connection between the defendants and the proposed jurisdiction and whether the plaintiff class has been provided with:
Under a more restrictive approach, a substantive connection between the non-resident class members and the proposed forum, beyond a mere common interest, might be required.(13) Ultimately, the court adopted the more expansive approach and held that the motion judge had made a reviewable error by anchoring her analysis on the traditional basis of presence in the jurisdiction and consent to the forum's jurisdiction.(14)
Applying its newly restated test for jurisdiction simpliciter in the context of an international class action, the Court of Appeal for Ontario held as follows:(15)
Having found that it had jurisdiction simpliciter in respect of the absent foreign claimants, the court reviewed and overturned the motion judge's forum non conveniens analysis on the basis that the motion judge had failed to consider whether any other jurisdiction was clearly more appropriate than Ontario.(16) The court concluded that there was no clearly more appropriate forum to resolve the absent foreign claimants' claims, as:(17)
The Court of Appeal for Ontario's decision clarifies the test for assuming jurisdiction over absent foreign claimants in Ontario class actions with international elements, opening the door to the potential certification of class proceedings on behalf of global classes. While the jurisdictional hurdle for absent foreign claimants appears to have been lowered as a result of the court's decision (at least in comparison to the lower-court's decision), it remains to be seen how the lower courts will interpret and apply the court of appeal's test. The Court of Appeal for Ontario may not have the last word on the subject, as the defendants may seek leave to appeal to the Supreme Court.
For further information on this topic please contact Matthew Fleming or Thomas Wilson at Dentons by telephone (+1 416 863 4511) or email (firstname.lastname@example.org or email@example.com). The Dentons website can be accessed at www.dentons.com.
The materials contained on this website are for general information purposes only and are subject to the disclaimer.
ILO is a premium online legal update service for major companies and law firms worldwide. In-house corporate counsel and other users of legal services, as well as law firm partners, qualify for a free subscription.