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Foreign Non-Monetary Judgments Now Enforceable in Canada
Published in the December 2006 issue of Litigation Notes - View Article
It has long been settled under the common law in Canada that monetary judgments of foreign courts may be enforced in Canada. This principle is in keeping with the notion of comity – Canadian courts will respect the authority of foreign adjudicative bodies that extend the same respect to decisions of the Canadian courts. Traditionally, a final and conclusive decision of a reciprocating foreign court could be recognized and enforced in Canada provided that it was a judgment for a debt or a definite sum of money. The courts reasoned that a foreign monetary judgment was evidence of the existence of a debt and that the courts here could issue an order for payment on the strength of that evidence. However, non-monetary judgments, particularly injunctions, were not enforceable under this traditional view. It had been considered inappropriate that the Canadian courts could be enlisted by a foreign authority to constrain the personal or commercial affairs of Canadian citizens within Canada. In an age of increasing cross border commerce, travel and communications, this view has come to be seen as antiquated. The Supreme Court of Canada has now ruled that the common law should be gradually updated to allow for enforcement of foreign non-monetary judgments in Canada in appropriate cases.
The case in question arose from trade mark litigation brought by Pro Swing, the U.S. manufacturer and seller of golf clubs under the name Trident. The defendants were U.S. and Canadian companies selling clubs similar in appearance under names such as Rident and Trigoal. The parties settled the claim on the basis that the defendants would discontinue use of those names and would surrender the offending clubs and marketing material. However, one of the defendants that participated in the settlement continued to sell the infringing clubs by Internet. That company, Elta Golf Inc., operated in Ontario. Pro Swing obtained a contempt order in Ohio requiring compliance with the settlement agreement and brought a motion in Ontario for enforcement of that order. The enforcement order was granted by an Ontario judge. There was an appeal to the Ontario Court of Appeal and then to the Supreme Court.
The seven judges of the Supreme Court who heard the appeal agreed that the law needed to be revised to allow for enforcement of foreign non-monetary judgments, but were split on whether it was appropriate that this particular order be enforced. The majority decision of the court identified a number of considerations that Canadian courts should consider when exercising discretion as to whether to give effect to foreign judgments of this sort. While no one factor was determinative in this case, the majority concluded that a number of deficiencies in the Ohio order, when taken together, were fatal to Pro Swing’s enforcement motion.
The first factor identified by the majority was the fact that, under Canadian law, contempt is a quasi-criminal matter. Under U.S. law, a distinction is made between civil and criminal contempt. This particular contempt order was civil in nature in that it merely allowed for the settlement agreement to be incorporated into a judgment following Elta’s breach of the agreement. However, the majority expressed concern that there might be unintended consequences of giving effect to civil contempt orders in Canada where such orders are invariably quasi-criminal. They were also concerned by the fact that contempt orders are viewed as a fairly serious offence by the Canadian public.
The majority was also concerned that the Ohio order was not explicit in stating that the order was intended to have extra-territorial effect. While the circumstances under which the order was obtained indicated that the order was intended to apply to Elta in Ontario, the majority stated that an important consideration in such cases is whether it is clear that the foreign court intended the order to have world wide effect.
As well, the majority was troubled that Pro Swing approached the litigation in Ohio in a way that made it more expensive and difficult for Elta to respond, when a less costly procedure could have been adopted.
The minority reasons by three judges concluded that none of these factors were significant enough to warrant sheltering Elta from having to comply with the terms of a settlement that it had agreed to.
While the facts of this case leave matters somewhat muddy as to when foreign non-monetary judgments will be enforced, the court was unanimous in deciding that Canadian courts are no longer constrained from exercising discretion to give effect to such judgments in appropriate circumstances.
Pro Swing v. Elta Golf Inc., [2006] S.C.C. 52