“Strong Cause”, not “Forum Non Conveniens”, is the appropriate test for enforcing forum selection clauses

The recent Ontario decision in 2249659 Ontario Ltd. et al. v. Sparkasse Siegen et al., 2012 ONSC 3128 (CanLII)  provides a good summary of the “strong cause” test for enforcing the parties’ choice of forum. The motion judge cites the recent judgment of the Supreme Court of Canada in Momentous.Ca Corporation v Canadian American Association of Professional Baseball Limited2012 SCC 9 (CanLII), 2012 SCC 9, where the Court at para. 9 states:

In Z. I. Pompey Industry v ECU-Line N.V., 2003 SCC 27 (CanLII), 2003 SCC 27, [2003] 1 S. C. R. 450, this Court confirmed that, in the absence of specific legislation, the proper test in determining whether to enforce a forum selection clause is discretionary in nature. It provides that unless there is a “strong cause” as to why a domestic court should exercise jurisdiction, order and fairness are better achieved when parties are held to their bargains.

The motion judge writes,

[18]           The Supreme Court recognized the principle that it is essential that courts give full weight to the desirability of holding contracting parties to their agreement regarding choice of forum for deciding disputes and that, in exercising its discretion, the court is to be guided by the rationale that ordinary parties should be held to the bargain they have made. It recognized the burden on the plaintiff to satisfy the court that there is a good reason it should not be bound by the forum selection clause. In Pompey, supra, Justice Bastarache, writing for the Supreme Court, emphasized the policy reasons for upholding forum selection clauses, stating at para. 20 that “These clauses are generally to be encouraged by the courts as they create certainty and security in transaction, derivatives of order and fairness, which are critical components of private international law”.

[19]           The “strong cause” test requires that the court apply a different test than that used in tort cases or where there is no forum selection clause. As opposed to tort cases like Van Breda, the “strong cause” test recognizes the specific significance of the intent of the contracting parties in commercial law cases. The forum selection clause pervades the analysis and must be given full weight in the consideration of other factors. It is not enough for the plaintiff to establish a “strong” case that Ontario is the more convenient forum. The plaintiff must show “strong cause” that the case is exceptional and that the forum selection clause should not be enforced: Expedition Helicopters Inc v Honeywell Inc., 2010 ONSC 351, at para. 11.

[36]           The defendants argue that there is no jurisdiction simpliciter, as the claim does not fall under any of the provisions of R. 17.02. I have considered all of the materials before me, including the claims, the evidence, case law, and the submissions of the parties, and agree with the submissions of the defendants. I find that there is no jurisdictionsimpliciter with respect to the claims made by the plaintiffs against the defendants and that there is no real and substantial connection with Ontario.

[37]           I am guided by the cases of Momentous.ca and Pompey, cited above. Where forum selection clauses have been included in agreements between the parties, such clauses are to be recognized as critical components of private international law and are to be encouraged and upheld by the courts, except in exceptional circumstances. In the circumstances of this case, I do not find that the plaintiffs have established either a “strong cause” or “exceptional circumstances” to justify departing from the principle that parties should be held to their agreements. The relevant agreements in this case contain a forum selection clause and designate Germany as the forum for resolution of disputes arising from the agreements. This selection of forum as between sophisticated, multi-national corporations should be honored and enforced.b

The only quibble I have with the learned motion judge’s analysis is at paragraphs 38 where the court states: “I must still consider the issue of forum non conveniens and whether Ontario is a more appropriate forum than Germany.”

The “strong cause” test is conceptually distinct from the”forum non conveniens” test. Once the court determines there is no “strong cause”, then it is unnecessary for the court to undertake a forum non conveniens analysis.  In Z. I. Pompey, Justice Bastarache emphasized that the “strong cause” test and “forum non conveniens” test must remain conceptually distinct, noting:

21                              There is a similarity between the factors which are to be taken into account when considering an application for a stay based on a forum selection clause and those factors which are weighed by a court considering whether to stay proceedings in “ordinary” cases applying the forum non conveniens doctrine: E. Peel in “Exclusive jurisdiction agreements: purity and pragmatism in the conflict of laws”, [1998] L.M.C.L.Q. 182, at pp. 189-90.  The latter inquiry is well settled in Canada: Amchem Products Inc.v.British Columbia (Workers’ Compensation Board)1993 CanLII 124 (SCC), [1993] 1 S.C.R. 897.  In the latter inquiry, the burden is normally on the defendant to show why a stay should be granted, but the presence of a forum selection clause in the former is, in my view, sufficiently important to warrant a different test, one where the starting point is that parties should be held to their bargain, and where the plaintiff has the burden of showing why a stay should not be granted.  I am not convinced that a unified approach to forum non conveniens, where a choice of jurisdiction clause constitutes but one factor to be considered, is preferable.  As Peel, supra, notes, at p. 190, I fear that such an approach would not:

ensure that full weight is given to the jurisdiction clause since not only should the clause itself be taken into account, but also the effect which it has on the factors which are relevant to the determination of the natural forum.  Factors which may otherwise be decisive may be less so if one takes into account that the parties agreed in advance to a hearing in a particular forum and must be deemed to have done so fully aware of the consequences which that might have on, for example, the transportation of witnesses and evidence, or compliance with foreign procedure etc. [emphasis added]





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