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The Gloaming of International Human Rights in Canada?

November 1, 2012

I prevously blogged about  Bill C-10 (short title: Safe Streets and Communities Act), an omnibus criminal law statute, which received Royal Assent on March 13, 2012 —which includes the “Justice for Victims of Terrorism Act and to amend the State Immunity Act” ["JVTA"] —creating a specific cause of action for victims of terrorism, enabling them to sue for loss or damage as a result of actions punishable under the Criminal Code. This part also amends the State Immunity Act (“SIA”) lifting state immunity of foreign states that sponsor terrorism or terrorist activity, but does nothing to improve the prospects for access to justice to Canadian victims of torture and war crimes.

Recently, the Quebec Court of Appeal in Islamic Republic of Iran c. Hashemi, 2012 QCCA 1449 (CanLII) upheld state immunity for torture of Canadian citizens abroad. See my previous post here.

Today, the Supreme Court of Canada denied an application for leave to appeal in Association canadienne contre l’impunité v. Anvil Mining Limited (Québec C.A., January 24, 2012) (34733). The Canadian Centre for International Justice (CCIJ) issued a press release describing the Court’s decision denying leave as the “end of any judicial relief in Canada for victims of the Kilwa massacre”. The CCIJ adds: (more…)

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Posted in impeachment defences, injunctions, international human rights, international law, international litigation, jus cogens, Mareva | Leave a Comment »

Chief Justice Spigelman, “Freezing Orders in International Commercial Litigation”

April 12, 2011
James Spigelman

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The Honourable James Jacob Spigelman, AC (Supreme Court of New South Wales), has published, “Freezing Orders in International Commercial Litigation“, Singapore Academy of Law Journal, Vol. 22, pp. 490-512, 2010.  The abstract reads:

Changes in the economy, in technology and in public policy, notably the easing of exchange controls, have transformed the ease and speed with which assets, particularly liquid assets and records, can be moved and hidden in fulfillment of acts of fraud and corruption. The development of freezing orders (Mareva orders) and search orders (Anton Pillar orders) by common law judges was a practical adaptation to this new challenge, drawing on similar concepts in the civil law.

One application of these orders continues to cause difficulty: the extension of such orders beyond the territorial jurisdiction of the court requested to provide a remedy. This is one of a number of contexts in which cross border issues require new forms of judicial assistance and co-operation. This paper considers the difficulty that has arisen in the making of orders in aid of foreign judicial and arbitral proceedings with respect to assets within the jurisdiction. The paper describes the various ways in which major jurisdictions have addressed this issue, and concludes that an inherent power to make an order in aid of foreign proceedings should be recognised as a common law principle by reason of the significance of reciprocity in the international law of nations. This is one step in reducing the transaction costs that impede mutually beneficial exchange by international trade and investment.

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Posted in Anton Piller, injunctions, international commercial litigation, international debt recovery, international dispute resolution, international law, international litigation, Mareva, Worldwide Freezing Orders | Leave a Comment »

Not an April Fool’s Joke: Bogus Court Order Enforcing Arbitrator’s Mareva Injunction Overturned

April 1, 2011

The Ontario court decision in Farah v. Sauvageau Holdings Inc., 2011 ONSC 1819 (CanLII) per Perell, J. has the makings of a great April Fool’s Day joke. The lesson is don’t believe everything you read,  including what appears to be a court order.

The motion involved an application to set aside a Mareva injunction granted by an arbitrator in arbitral proceedings. The respondents brought a motion to recuse the arbitrator and to set aside a Mareva injunction granted purportedly pursuant to the Arbitration Act, 1991, S.O. 1991, c. A.17.

The problem? Arbitrators do not have the power to grant injunctive relief against non-signatories to the arbitration agreement. As Perell, J. observes

[63]   In my opinion, there is nothing in the Arbitration Act, 1991 that empowers arbitrators to grant Mareva injunctions or for that matter to appoint receivers, grant Anton Pillar orders, or grant Norwich orders. Granting an interlocutory injunction that requires financial institutions to prevent the removal of monies and assets and to disclose and deliver up records and report to a litigant, is not an order in which the arbitrator is ruling on the scope of the arbitration agreement or on the scope of his or her jurisdiction; it is an order in which the arbitrator purports to enjoin or direct the conduct of strangers to the agreement to arbitrate who are not bound by the jurisdiction of the arbitral tribunal.

…

[73]   None of Sauvageau Holdings’ arguments are adequate to prove that arbitrators have the same jurisdiction as judges of the Superior Court. I conclude that while Mr. Montgomery had the jurisdiction to make an injunctive order or arbitral award against Mr. Farah and Ms. Mosharbash as parties to the agreement to arbitrate, he did not have the jurisdiction to grant a Mareva injunction effecting persons who did not sign the agreement to arbitrate.

Apparently, Sauvageau Holdings filed the interim Mareva injunction in the Superior Court in Newmarket without notice to either Farah and third party affected by the arbitrator’s order and had the court staff issue and enter the order. Justice Perell held that this was “improper” and noted that to enforce an arbitral award (including an interim order), a party must make an application under s. 50 of the Arbitrations Act, 1991 on notice to all affected parties.

On December 5, 2010, Sauvageau Holdings served new statements of claim (alleging fraudulent conspiracy and fraudulent conveyances between Farah and Mosharabash) and a copy of the arbitral-Mareva injunction order.

On December 15, 2010, Farah and Mosharbash brought a motion to have the arbitrator, The Honorable Mr. Montgomery recuse himself and for an order setting aside the Mareva injunction. At the hearing on December 15, 2010, they presented very little evidence to rebut the material filed by Sauvageau Holdings and rather relied on a short affidavit from a law clerk employed by their lawyer. The arbitrator dismissed the motion and continued the Mareva injunction. Sauvageau Holdings then sent copies of what Justice Perell describes as a “bogus Order of the Superior Court” to major banks, other financial institutions, Farah’s employer and his real estate agent, and Mosharbash’s father, further noting:

[43]  For present purposes, I need not go into the details, but the recipients responded to the bogus Mareva injunction order as if the order was a lawful order of the Superior Court. Mr. Farah and Ms. Mosharbash have been unable to deposit cheques, including Mr. Farah’s paycheck and the family’s child tax benefit cheques. Mr. Farah was temporarily dismissed from his employment as a restaurant cook because his employer was disturbed by having to deal with the bogus order.

In the end, the court dismissed the motion to disqualify the arbitrator without costs and the applicant’s motion to enforce the Mareva injunction pursuant to s. 50 of the Arbitrations Act, 1991 without costs. Perell, J. did grant judgment to Sauvageau Holdings in the fraudulent conveyance action without costs and granted a Mareva injunction against Farah without costs, but dismissed the motion for a Mareva injunction Mosharbash with the matter of costs to be determined.

Does any one else think that an arbitrator exceeding his or her jurisdiction should have been argued as an alternative ground for recusal? (h/t Igor Ellyn, Q.C. via Twitter: @EllenLawLLP )

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Posted in Arbitration Act, arbitration clause, courts, injunctions, jurisdiction, litigation, Mareva, procedure | Leave a Comment »

Ontario court upholds World-Wide Mareva Injunction in Obégi v. Kilani

March 31, 2011

The recent decision of the Ontario Superior Court of Justice in Obégi v. Kilani, 2011 ONSC 1636 (CanLII) deals with the issue of an Ontario court’s jurisdiction to continue a worldwide Mareva injunction (also known as a “worldwide freezing order”)  in support of foreign proceedings. (more…)

Posted in assumed jurisdiction, Beals v. Saldanha, conflict of laws, consent-based jurisdiction, jurisdiction, jurisdiction simpliciter, Mareva, presence-based jurisdiction, private international law, Van Breda v. Village Resorts Ltd., Worldwide Freezing Orders | Leave a Comment »

United States v. Yemec: Ontario Court of Appeal rejects new foreign judgment impeachment defence

June 8, 2010
In a decision released today, the Court of Appeal for Ontario in United States of America v. Yemec, 2010 ONCA 414 has closed the door on the “new” impeachment defence of a “denial of a meaningful opportunity to be heard” in the recognition and enforcement of foreign judgments. (See my backgrounder here).
Writing for the unanimous Court, Justice MacPherson (Moldaver and Watt, JJ.A. concurring) considered two issues:
1. Whether an Illinois court order granting $19 million in damages and a permanent injunction against the defendants was enforceable in Canada? and 
2. Whether an Ontario court order requiring the U.S. to respond to damages undertakings given as a condition to the granting of a Mareva injunction and an Anton Piller order should be upheld?
MacPherson, J.A. rejected the notion that a fourth or “new” defence of a “meaningful opportunity to be heard” should be added to the three foreign judgment impeachment defences in Beals: fraud, natural justice and public policy. The Court of Appeal agreed with Justice Molloy of the Divisional Court that a defence “of a meaningful opportunity to be heard is indistinguishable from the natural justice defence.” (at para. 27); a submission also previously rejected by Lang J.A. in King v. Drabinsky, (2008) 91 O.R. (3d) 616,  who at para. 41 held:
“The appellants argue that a fourth category of defence should be added to the categories accepted in Beals on the basis of a denial of a meaningful opportunity to defend.  In my view, as aptly identified by the application judge, the considerations raised by the appellants under the proposed new category are the same considerations as under the rubric of the natural justice defence.  I would not give effect to the appellants’ arguments on this issue.”
Moreover, the defendants were”damned if you don’t, damned if you do”. If they did not defend, then default judgment would follow. Instead,
[30] The defendants retained Chicago lawyer Rakesh Amin, and the U.S. points to evidence that the defendants paid him at least $120,000 in legal fees to appear on their behalf in the U.S. proceedings. The U.S. and Ontario orders permitted the defendants to seek access to frozen assets to pay legal fees. Through their lawyer, the defendants filed a defence, engaged in discovery, brought motions, requested and obtained extensions, and contested an FTC summary judgment motion. They also filed and argued an unsuccessful appeal de novo.

 I’m not persuaded that the amount of legal fees paid should factor into the Court’s legal analysis.  After all, the defendants were facing serious U.S. federal criminal charges arising from an alleged telemarketing lottery scheme. In any event, Justice MacPherson provides a laundry list of active participation by the defendants, such that they “had a full, fair and “meaningful” opportunity to defend the U.S. proceeding before the United States District Court and thereafter in an appeal de novo heard by the United States Court of Appeals for the Seventh Circuit.(at para. 30-34). As MacPherson, J.A.concludes,
[39]         In summary on this point, on the basis of the U.S. District Court record, including the comprehensive reasons for judgment of Judge St. Eve, there is nothing to suggest any unfairness to the defendants in the U.S. summary judgment proceeding.  The defendants had a meaningful opportunity to be heard. 

[40]         Fifth, and particularly crucial in my view, in their appeal to the United States Court of Appeals for the Seventh Circuit, the defendants made no natural justice or denial of a meaningful opportunity to be heard argument.  The appeal related almost entirely to the defendants’ submission that Judge St. Eve erred by holding Yemec and Rapp liable for the various corporations’ allegedly deceptive practices: (2005), 415 F.3d 758. 

[41]         For these reasons, I conclude that there is no “new” defence relating to “a meaningful opportunity to be heard”.  Such a defence is extremely circumscribed by a fair reading of Beals and King v. Drabinsky. In any event, even if there were such a defence, the defendants have not established it in this case.  The U.S. court proceedings, trial and appeal, were fair throughout.  The defendants received, and exercised, a meaningful opportunity to be heard.

The Court of Appeal similarly rejected the defendants’ argument (not raised previously ) on the scope of the ban on telemarketing as well as other injunctive relief:

IT IS THEREFORE ORDERED THAT Defendants George Yemec, Anita Rapp, and the Canadian Corporate Defendants, are hereby permanently restrained and enjoined from engaging in, participating in, or assisting in the Telemarketing, in any manner, of any product or service to any person in the U.S.
Applying the test for foreign non-monetary injunctive orders in Pro Swing Inc. v. Elta Golf Inc., [2006] 2. S.C.R. 612, MacPherson J.A. held that:
“[47]         The terms of the injunction are simple, clear and specific; it would be obvious to the defendants what they cannot do in the United States. 
[48]         The order could have been narrower, restraining only telemarketing activities relating to the sale of foreign lottery tickets.  However, given Judge St. Eve’s ultimate conclusion that the defendants’ activities constituted deceptive practices in violation of the Federal Trade Commission Act, 15 U.S.C. §45(a) and the Telemarketing Sales Rule, 16 C.F.R. Part 310, I cannot say that a complete prohibition of telemarketing aimed at people in the United States is unfair or unreasonable.  Moreover, Judge St. Eve’s order specifically directed that the District Court would retain jurisdiction to enable any party to seek modifications to the order. 
[49]         Enforcement of the U.S. court order does not place an undue burden on the Canadian justice system.  
[50]         I can see no unforeseen obligations to which the defendants will be exposed. Compliance with U.S. law is not, of course, an unforeseen obligation.
[51]         The U.S. court order does affect some third parties (it requires the defendants to provide information about their customers).  However, this information is needed in light of the $19 million damages award; it is unlikely that consumers will object on privacy grounds to the release of contact information that might assist the U.S. government to distribute that amount.
[52]         Finally, enforcement of the U.S. court order is consistent with the types of orders that would be allowed for domestic litigants.”
Finally, the Court of Appeal agreed with the motion judge that in lieu of “special circumstances”, this was “not an appropriate case to depart from the strong presumption that a party who gives an undertaking to obtain an interlocutory injunction should be held to the undertaking”. The undertaking for damages is codified under Rule 40.03 of the Rules of Civil Procedure which provides:
UNDERTAKING
40.03  On a motion for an interlocutory injunction or mandatory order, the moving party shall, unless the court orders otherwise, undertake to abide by any order concerning damages that the court may make if it ultimately appears that the granting of the order has caused damage to the responding party for which the moving party ought to compensate the responding party. R.R.O. 1990, Reg. 194, r. 40.03.
 While Justice MacPherson disagreed with the motion judge’s view that the Yemec organization had not engaged in conduct “that was clearly in breach of Canadian criminal law”. this did not absolve the U.S. from facing a damages inquiry forthwith. Hence, the enforcement of the $19 million damages component of the U.S. court order was stayed until the damages inquiry in Ontario is concluded.

Posted in Anton Piller, audi alteram partem, conflict of laws, enforcement, foreign judgments, impeachment defences, injunctions, Mareva, natural justice, private international law, United States v. Yemec | 3 Comments »

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