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Warsaw Convention, Article 28 Jurisdiction
Published in the October 2009 issue of Transportation Notes - View Article
On October 20th a single judge of the Divisional Court released the third, and certainly not the final, decision in a dispute concerning jurisdiction arising out of the Air France accident at Toronto on August 2, 2005. The plaintiff, Mariana Stefanova Strugarova was ticketed to travel from Mauritius on a round trip itinerary with stops in Paris and Toronto, returning through Paris and Sophia.
Not surprisingly, Air France maintained the carriage was governed by the Warsaw Convention. Although Mauritius signed the Montreal Convention in 1999, that Convention has not yet entered into force in Mauritius. In the course of the last year, three decisions have been rendered on jurisdictional issues. The first of these, dating back to February, is under appeal and we expect the appeal will be successful. The progress of that appeal has been slowed by an unusual development which will result in the reopening of the original hearing. We will review these developments in the following paragraphs.
In the early days following the accident Air France’s insurers made payments for medical care and treatment. For several months there was an exchange of correspondence between solicitors respecting the claim. In one letter the lawyers for Air France made mention of the Montreal Convention, agreed that Strugarova had a right to recover compensatory damages and suggested that it might be best if she elected to opt out of the class proceedings (a class action had been commenced on August 8) to continue direct negotiations over settlement of the claim. In September of 2006, Strugarova did opt out of the class proceedings. In May of 2007, solicitors for Air France gave the claimant’s lawyers notice that the case was in fact going to be governed by the Warsaw Convention and that the courts of Ontario lacked jurisdiction. Despite this warning, which was given approximately 3 months before the expiry of the two year period stipulated for the commencement of action under Article 29 of the Warsaw Convention, the lawyers for Strugarova elected to proceed in Ontario and commenced an action in July of 2007, a few weeks before the running of the Article 29 period. Air France delivered a Statement of Defence, pleading lack of jurisdiction, and followed with a motion to dismiss or permanently stay the action on the grounds that Canada was not a jurisdiction specified in Article 28 of the Warsaw Convention.
The decision begins with an unexceptional analysis of Article 28. There was no contest over the first three grounds of jurisdiction. Air France is ordinarily resident in France and has its principal place of business there. The ticket was purchased in Mauritius. The plaintiff argued that Toronto was the place of destination so as to ground jurisdiction on that basis. However, the court applied settled law and found that the place of destination was the ultimate destination, namely Mauritius. Thus the court concluded that France and Mauritius are the only jurisdictions available under the Warsaw Convention.
That, in our view, should have been the end of the matter. However, the court went on to address several additional questions which led it to conclude that the Superior Court of Justice for Ontario did indeed have jurisdiction to adjudicate the claim.
To arrive at this surprising conclusion, the court first declined to follow the only Ontario decision directly on point and went on to make a distinction between two types of statutory rules affecting jurisdiction. The first entirely removes the jurisdiction of a court to deal with a matter. The second however only modifies the jurisdictional rules of the court, without removing underlying subject matter jurisdiction. The court conceded that if Article 28 was an enactment of the first sort, there could be no jurisdiction in Ontario. However, if it could be found that Article 28 was of the second type, the result would be different. In such a case, the Ontario court would be bound to apply the terms of Article 28 unless the defendant, by its agreement or conduct, consented to the jurisdiction of the Ontario court.
Having made this distinction, the court found that Article 28 was indeed an enactment of the second type and that jurisdiction could be created by consent. Finally, the court examined the conduct of Air France and found that it had indeed waived its right to rely on Article 28.
In coming to this final conclusion, the court found that Air France had “attorned to the jurisdiction” of the court. It is very clear that the court was of the view that the filing of the Statement of Defence was in itself enough to establish the attornment. The court also comments unfavorably on certain other steps taken by Air France, although it is not clear whether it would have found these to be separate grounds for asserting jurisdiction.
There is much to be discussed in this decision and no doubt the issues will be more fully aired as the matter proceeds to the Court of Appeal. Time and space prevent us from examining each of the issues and we wish to concentrate on one point in respect of which we believe there is no doubt that the decision is contrary to well settled authority. That point is the court’s conclusion respecting attornment.
The Statement of Claim was served on a representative of Air France within Ontario. That single statement should have disposed of the entire attornment argument. Although counsel for Air France was well aware of this and advanced the position accordingly, the court would not hear it. This is particularly surprising as the issue is not shrouded in arcane and riddling pronouncements. Over 50 years ago the issue was clearly addressed by a strong bench of the Ontario Court of Appeal in the case of Charron v. Montreal Trust. This case, which arose in the context of the administration of an estate, contains the following clear statement of the law: “I next consider the jurisdiction of the Supreme Court of Ontario in this case. The learned Chief Justice held that the defendant, having appeared to the writ of summons, had attorned to the jurisdiction of the Ontario Courts. . . . In my opinion, there is no question of attornment to the jurisdiction; the defendant was carrying on business here and was served within the jurisdiction. It was always subject to the Ontario Courts whether it entered an appearance or not. The cases relied upon by the learned Chief Justice were cases where process had been served ex juris and the non-resident party had entered an unconditional appearance.”
It is interesting to note that the error of the Chief Justice of the trial court, which was thus corrected by the Court of Appeal in 1958, was repeated by the court in the Strugarova case. Here, the court found it was bound by the decision of the Ontario Court of Appeal in M.J. Jones v. Kingsway General Insurance. That however was another case which considered exclusively the question of the effect of entering a defence after process had been served ex juris. In fact, an examination of the Jones case makes it clear that the Court of Appeal was very aware of the significance of service ex juris and the reason for applying the attornment rule in such cases. The court reasoned: “A foreign defendant is also precluded from contemporaneously disputing jurisdiction simpliciter and defending on the merits. Otherwise, litigants would incur unnecessary litigation costs in a claim which, as it may turn out, the court did not have jurisdiction to determine in the first place. Further, if foreign defendants were permitted to defend contemporaneously on the merits and to dispute jurisdiction, then, in addition to the possibility of unnecessary expense, a defendant could retreat if it appeared that the success of their defence was in jeopardy.”
This last passage identifies clearly the reasons behind the attornment rule and none of these reasons are present in a case in which the defendant is undoubtedly subject to the territorial jurisdiction of the court by reason of doing business in the jurisdiction and having agents and assets located here. Air France is present in Ontario and the concept of attornment should have no relevance whatsoever in determining whether it is entitled to rely upon Article 28 of the Warsaw Convention.
So far, we have considered only one of the issues raised in what we may call Strugarova 1. There was more to come in Strugarova 2, an extraordinary decision released this summer.
The plaintiffs, having been successful in Strugarova 1 nevertheless were mindful that the decision would be appealed. Perhaps fearing, rightly we believe, that the first decision would be reversed on appeal, they brought an application for permission to reopen the hearing, after judgment had been rendered, to argue a further point. The reopening of a hearing after judgment has been rendered is a most unusual measure especially when, as in this case, the issue could clearly have been identified and argued at the original hearing had the plaintiff’s lawyers exercised reasonable diligence.
Notwithstanding these facts, the court took the extraordinary step of allowing the reopening of Strugarova 1 to determine the following issue: Is Air France bound, by reason of the operation of EC Regulation 889/2002 to apply the Montreal Convention to the facts of this case? The court recognized that this question would involve the interpretation of the EC regulation and that this would involve foreign law. It therefore granted the plaintiff leave to introduce evidence “regarding the application and interpretation of EC Regulation 889/2002”.
While it is not surprising to speak of expert evidence regarding the interpretation of the EC regulation, the suggestion that such evidence should be received respecting “application” appears to us to be misconceived. Whether this regulation is capable of extra-territorial effect is, it appears to us, the question which would have to be answered in the affirmative before any question of interpretation could arise. The question of application should be answered by international law as applied by Canadian courts. There should be no question of expert evidence in this respect. There is a strong presumption against giving extra-territorial effect to foreign enactments and the plaintiffs appear not to have addressed this issue. Nevertheless, the matter is to be reopened. Strugarova 3, the recent decision of the Divisional Court, denied Air France’s request for leave to appeal Strugarova 2.
Strugarova 1, 07-CV-336943PD2, 20090202;
Strugarova 2, 2009 Carswell Ont 4575
Strugarova 3, 2009 Carswell Ont 6462