The world is currently in the midst of an era of globalization. The intensification of political, cultural, and economic relations transcends borders, resulting in an increasingly interconnected global community. As our world continues to progress in these areas of technology, specifically those that facilitate legal relationships across the globe, the prevalence of foreign judgements attempting to be enforced may be on the rise. While historically the enforcement of foreign judgements was seen as a weakness to the power that sovereignty afforded a nation, the free flowing of resources, mutual respect between the legal systems worldwide, and (how it makes it easier for courts) has resulted in regulations, treaties and jurisprudence that facilitate the recognition and enforcement of foreign judgements. This paper will explore a comparative review between the recognition and enforcement of foreign judgements in the European Union, the Netherlands specifically, and Canada, Ontario specifically. Most notably will be the recent Supreme Court of Canada Decision that signals an increasingly liberal approach adopted by Canadian courts in recognizing and enforcing foreign judgements. While the European Union Member states have historically been able to facilitate business relations due to sheer location, the increasing affect of transnational agreements and business relations has resulted in Canada, alike many other countries, to conduct business and create legal relations globally. As such, it is a hope for the future to have a global legislative scheme resulting in a harmonized legal system worldwide and the ability to recognize and enforce foreign judgements clearly and effectively in every nation.
Why enforce foreign judgments?
Private International Law encompasses three distinct facets; Jurisdiction, conflict of laws, and recognition and enforcement. When the first two are settled, being that a jurisdictional analysis has established that a court is competent to hear your claim and the correct law that applies to your claim has been determined, a judgment will be rendered. Thereafter what is important to the successful party is getting this judgement recognized and enforced in a court where the unsuccessful party possesses assets you can seize as a part of your judgement, so that you as the successful party do not have to relitigate your issue, resulting in a drainage of more time and assets. Further, in recognizing and enforcing foreign judgements the global legal system can ideally “harmonize problems of multiple proceedings within the context of enforcing said judgments.”
Countries will recognize foreign judgments in their home courts for a variety of reasons. Traditionally, common law countries recognized other judgements guided by the principle of comity. Comity defined by the United States Supreme Court in a decision denying recognition to a French judgment was defined as “neither a matter of absolute obligation on the one hand nor of mere courtesy and good will… it is the recognition which one nation allows within its territory to the legislative, executive or judicial acts of another…” Further, nations may recognize and enforce other nations judgements under the principle of reciprocity. Reciprocity is “the idea that States will and should grant others recognition of judicial decisions only if, and to the extent that, their own decisions would be recognized.” Additionally, the idea that a defendant be held accountable for his judgement, and justice be executed accordingly, has guided courts to recognize and enforcement, in the case of Schibsby v Westenholz it is outlined by the English House of Lords that “the judgment of a court of competent jurisdiction over the defendant imposes a duty or obligation on him to pay the sum for which judgment is given, which the courts in this country are bound to enforce.” While these ideas initially prompted recognition and enforcement they bred uncertainty in decisions and as such nations have since created treaties, conventions, or regulation that outlines recognition and enforcement of foreign judgements.
Hague Conference on Private International Law
There have been attempts by the international legal community to create global regulatory provisions detailing the process of recognition and enforcement judgements. The Hague Convention on the Recognition and Enforcement of Foreign Judgements in Civil and Commercial Matters (The 1971 Convention) has been adopted by five countries only. Due to the lack of reception for the 1971 Agreement, in 2005, the Hague Convention on Choice of Court Agreements (the “2005 Convention”) was born in hopes of this agreement being more accommodating to a wider variety of national players. The EU Member States as well as the U.S.A. are parties to the 2005 Convention, however, Canada is not. This is unfortunate because the certainty of forum selection clauses in Canadian law would be enhanced if Canada adopted the Convention.
Most recently in the works at the Hague Conference on Private International Law is the “Judgments Project” refers to the work undertaken by the Hague Conference since 1992 on two key aspects of private international law in cross-border litigation in civil and commercial matters: the international jurisdiction of courts and the recognition and enforcement of their judgments abroad. Initially, the Judgments Project focussed on developing a broad convention, which was subsequently scaled down to focus on international cases involving choice of court agreements. This led to the conclusion of the Hague Convention of 30 June 2005 on Choice of Court Agreements (“Choice of Court Convention”). The “Judgements Project” has delivered a preliminary draft of the proposed convention and according to the Hague Conference on Private International Law website, meetings and discussions between the parties will continue throughout 2018 and are expected to convene in mid-2019.
Recognition and Enforcement of Foreign Judgements in the European Union
The recognition and enforcement of foreign judgments may be regarded as a relatively novel topic. As depicted through history it was local law that was applied to foreigners and foreign judgments were denied any force beyond their territories. This attitude only heightened with the rise of sovereignty throughout nations in Europe. As explained, “A duty to enforce foreign judgments was rejected as an undue restraint of sovereignty. In France, Art. 121 Code Michaud (1629) denied foreign sovereigns’ judgments all effects; other European countries adopted similarly restrictive positions.” This idea now stands in direct contrast with how the recognition and enforcement of judgements is recognized with respect to judgements rendered by European Union member states.
Within the European Union Member States, the legislation which mainly dictates the jurisdiction and enforcement of judgements of member states is the Brussels I Regulation, particularly “the Brussels I Regulation, ‘recast’ in its most recent form as Regulation 1215 in 2012.” The Brussels I Regulation 1215/2012 sets out the mutual enforcement and recognition of judgments from courts in EU member states. The most recent 2012 recast Brussels I Regulation applies to any legal proceedings instituted, approved or concluded on or after January 10 2015. Any judgments given in legal proceedings instituted before January 10 2015 is still governed by The Brussels I Regulation 44 established in 2001.
Judgements Outside the European Union
When the European Union member states deal with judgements outside their member states, they look to conventions, treaties, or reciprocal agreements between Nations. Some examples of these include The Lugano Convention, which relates to the jurisdiction and the enforcement of judgments in civil and commercial matters between the European Community, Switzerland, Norway, Iceland and Denmark. However, the European Union has not entered into an agreement with every nation, and as such “in the absence of such an international treaty, the court applies the grounds stipulated in the Code of Civil Procedure and the main principles of international law.” Each individual nation may then reject or assert jurisdiction, recognition or enforcement based on their Code of Civil Procedure and principles of international law.
Within the Netherlands
As outlined above, what may govern the legal enforcement of foreign judgements can be bilateral treaties entered into between two nations, whereby the idea of reciprocity is mandated through these legal instruments. Currently, The Netherlands has concluded numerous bilateral treaties on mutual recognition and enforcement of foreign judgments. While many of these bilateral treaties have since been superseded by the European Union framework outlined above, some of the bilateral treaties remain important because they cover the reciprocal recognition and enforcement of judicial decisions in areas excluded under the European Union framework.
The treaties the Netherlands have entered into include: the Convention between the Netherlands and Belgium on Jurisdiction and Enforcement (1925); the Convention between Italy and the Netherlands on the Enforcement of Judgments (1959); the Convention between Germany and the Netherlands on the enforcement of Judgments (1962); the Convention on the Enforcement of Judgments between Austria and the Netherlands (1963); the Convention on the Enforcement of Judgments between the United Kingdom and the Netherlands (1967); and the Convention on the Enforcement of Judgments between Surinam and the Netherlands (1979). In the instance the Netherlands has not entered into a treaty with a nation attempting to enforce their judgement in a Dutch court, they refer to their code of civil procedure as outlined above, and the judgement will not be enforced under Article 431. However, when the criteria for recognition of foreign decisions, are met the court may grant a right of execution in a separate and independent judgment which will then be enforceable in the Netherlands. The recognition criteria include whether the foreign court had jurisdiction, whether the judgment granted after a proper administration of justice, whether the content is not contrary to Dutch public policy, and whether there is a conflict with an earlier judgment.
Recognition Enforcement of Foreign Judgements in Canada
Akin to the history outlined above with respect to the European Union, the idea of sovereignty limited the recognition and enforcement of foreign judgements. Prior to enforcing judgements from countries outside Canada, Canada tackled the issue of extra-provincial Judgements. As the Canadian constitution denotes a division of powers between the federal and provincial governments, the matter of private international law is a provincial matter and as such there is no denoted national legislation on how to deal with foreign judgements and Canadian jurisprudence has provided the framework for how courts handle foreign judgements. What has since evolved as a trend in common law jurisdictions, specifically Canada, is a liberal approach to enforcing and recognizing foreign judgements. The beginning of this trend can best be described through this passage found in the 1990 judgement of Morguard Investments Ltd. v. De Savoye:
“The common law regarding the recognition and enforcement of foreign judgments is firmly anchored in the principle of territoriality as interpreted and applied by the English courts in the 19th Century…. This principle reflects the fact, one of the basic tenets of international law, that sovereign states have exclusive jurisdiction in their own territory. As a concomitant to this, states are hesitant to exercise jurisdiction over matters that may take place in the territory of other states….
The world has changed since the above rules were developed in 19th Century England. Modem means of travel and communications have made many of these 19th Century concerns appear parochial. The business community operates in a world economy and we correctly speak of a world community even in the face of decentralized political and legal power. Accommodating the flow of wealth, skills and peoples across state lines has now become imperative. Under these circumstances, our approach to the recognition and enforcement of foreign judgements would appear ripe for reappraisal.”
While this case dealt with the jurisdiction, recognition and enforcement of judgements within Canada and just across provinces, this idea with respect to the global legal community reigns especially true and comes full circle with respect to Canada’s recent 2015 Supreme Court decision of Chevron Corp v. Yaiguaje.
While the European Union, dominated by Civil Law systems, relies on regulation, treaties and conventions to guide the enforcement of foreign judgements. Canada, as a common law system relies solely on jurisprudence and not statutes or directives to guide their decisions. This concept of precedence is one that “is a principle or rule established in a previous legal case that is either binding on or persuasive for a court or other tribunal when deciding subsequent cases with similar issues or facts.” While precedence in theory is helpful, there are times where a decision can subsequently result in more complication and unanswered questions for the lower courts. This can potentially result in more uncertainty in future judgements. This was the case when it came to the established test for determining jurisdiction of the court, and further whether a foreign judgement was enforceable in a Canadian court.
Pertinent to the Chevron decision was the distinction between the ‘real and substantial connection’ test used by a court to assert jurisdiction and whether this test was used in the same fashion to recognize and enforce an already affirmed foreign judgement. At the heart of Canadian jurisprudence with respect to recognition and enforcement of foreign judgements lies a quartet of cases, which actually namely deal with the test for jurisdiction, particularly the Canadian test of “Jurisdiction simpliciter.” While these cases did not outright deal with issues of recognition and enforcement, the implications of the rulings in these cases weighed heavily on the process and tests employed to recognize and enforce a foreign judgement.
Initially the issue of jurisdiction was first tacked in Morguard Investments Ltd v. De Savoye in the 1990’s. In Morguard, the court death with extra-provincial judgements still within Canada, in the judgement “the Court established that the superior courts are subject to territorial limits when asserting jurisdiction simpliciter and for the purpose of the recognition and enforcement of foreign judgments.” However, the ‘real and substantial connection’ test formulated in Morguard was regarded as being “rife with uncertainty” In light of this, the issue was touched upon again in Muscutt v. Courcelles. In Muscutt a framework was created with eight factors to consider in order to determine whether the threshold for the real and substantial connection had been met, in an aim to produce more certainty and clarity in judgements. Muscutt, alike Morguard, was met with significant criticism. In 2012, the Supreme Court of Canada released the Van Breda Trilogy Decision, which can be regarded as Canada’s first attempt at creating private international law rules. In Van Breda, a couple took a vacation to Cuba in which she became paraplegic from use of resort equipment. The Supreme Court attempted to render a decision once again that would create predictability and certainty for future judgements. The judgement stated that “a party arguing in favour of jurisdiction simplic- iter bears the burden of identifying a “presumptive connecting factor” between the subject matter of the litigation and the forum.” The judgement clarified the four presumptive factors in the case of a tort claim, and left for novel presumptive connecting factors for other types of claims to be developed by the courts. With respect to all claims, the judgement eft the door open for the claimants to prove new presumptive factors on the basis of not their case alone but further to prove that a presumptive connecting factor be one that the courts believe should be recognized for all future cases.
While the test for jurisdiction simplicity was clarified in Van Breda, what was not made certain was the interplay between the test for jurisdiction and the test for recognition and enforcement. Where that left Canada in terms of enforcement of foreign judgements was uncertain until 2015 with the release of the Chevron judgement.
Landmark Supreme Court of Canada Decision: Chevron Corp. v. Yaiguaje
The dispute in the case is between Chevron, a large multinational energy corporation, and a class of 47 Ecuadorian villagers, representing the approximately 30,000 indigenous residents of the Sucumbios province. The plaintiffs allege there was mass environmental degradation of their village, the Sucumbios province, due to the actions of many oil companies, including Texaco, the predecessor of Chevron. After extensive time in the courts, a $9.4 billion dollar judgment was ordered against Chevron by the Ecuadorian Provincial Court of Justice and upheld by Ecuador’s Court of Cassation, the highest appellate court in Ecuador. The major problem with the judgment of the case was that Chevron had no assets in Ecuador, meaning the Ecuadorian Villagers could not enforce their judgement to obtain their monetary award. Chevron refused to acknowledge or pay the damage award. In order to enforce their award and claim the 9.4 billion dollar sum the Ecuadorian Villagers decided they would bring the judgement to the Canadian courts. The Ecuadorian Villagers sought enforcement of the Ecuadorian judgment against subsidiaries of Chevron, namely Chevron Corporation and its Canadian affiliate, Chevron Canada. They did so as the judgement was found unenforceable in the United States Courts, and the plaintiffs wanted to use the assets of Chevron Canada as a subsidiary of Chevron to satisfy the judgement.
The case was first heard by the Ontario Superior Court of Justice in 2013. The pertinent issue in this decision was the Ontario courts jurisdiction to recognize and enforce the foreign judgment. The judgement held that Ontario did have jurisdiction over both the Chevron defendants. Justice Brown gave his judgement citing the principle of comity (Chevron Corp, para 51) and further the “real and substantial connection” that existed between that dispute and the forum in which it was heard. However, the judge ordered a stay of proceedings. The Chevron defendants did not have assets in Ontario and so Justice Brown found there to be “no prospect of recovery” would be ”academic”and a”waste of judicial resources”. 7 He accepted Chevron’s evidence that it would not have assets or carry on business in Ontario in the future.
The case was then appealed to the Ontario Court of Appeal. This court upheld the lower court’s finding on jurisdiction and more importantly expressly rejected the defendants’ claim that there needs to be a real and substantial connection between the subject matter of the litigation and the jurisdiction being asked to recognize and enforce the judgment. However, Justice McPherson overturned the stay, as he believed that Justice Brown “effectively imported a forum non conveniens motion into his reasoning on the stay, even though no such motion had been before him.”
Supreme Court Decision
At the Supreme Court of Canada, two issues were at stake. First, whether there must be a real and substantial connection between the defendant or the dispute and Ontario for jurisdiction to be established in order to recognize and enforce a foreign judgement. Second, what circumstances give rise to the Ontario Courts to have authority over a third party to a foreign judgement for which recognition and enforcement is sought. On the first issue, the Supreme Court of Canada answered that no, it was not necessary to have a real and substantial connection between the defendant or the dispute and Ontario to recognize and enforce the judgement. On the second issue, the Supreme Court of Canada answered that the Ontario Court can have have jurisdiction over a foreign judgement debtor’s subsidiary even when the the subsidiary has no connection to the foreign judgement. The judgement recounted legal history, specifically the Van Breda decision, and found that there was nothing contrary in the jurisprudence that would signal a need for a real and substantial connection test with respect to the recognition and enforcement of a foreign judgement, as it is required for the test of jurisdiction.
The ideas that guided the decision was the idea of Comity once again, however comity in a new sense described by Breyer J, “comity is co-evolving along with global commerce. Whereas comity was once concerned with the more formal objective of avoiding direct conflict among the laws of different nations, comity is now increasingly concerned with the more practical objective of harmonizing the enforcement of converging national laws by maintaining cooperative working arrangements with different countries’ court and enforcement authorities.”
Moreover, the Canadian legal system operates under the idea of a living tree, by where our legal decisions and precedent adapt to reflect the evolution of society. The Chevron decision is a clear example of that. The court in Chevron touched upon this with the idea of globalization guiding their decision stating: “In today’s globalized world and electronic age, to require that a judgment creditor wait until the foreign debtor is present or has assets in the province before a court can find that it has jurisdiction in recognition and enforcement proceedings would be to turn a blind eye to current economic reality.”
In conclusion, while the European Union, and its member states, have employed legal instruments to ensure the harmonization of judgements across borders, Canada has had a long history of trying to create clear and unified standard to recognize and enforce foreign judgements. The latest of these judgements, Chevron, has opened the door to a more liberal approach to recognizing and enforcing foreign judgements, in line with the staggering uprise of global legal transactions that exist and continue to be created in the ever globalized world we live in. In Canada, with the release of the Chevron judgement, our aims now include “…the existence of clear, liberal and simple rules for the recognition and enforcement of foreign judgments that facilitates the flow of wealth, skills and people across borders in a fair and orderly manner.” Through a comparative review of these nations it is clear that while Canada may be heading in the right direction, the ultimate harmony exists in a global legislative scheme for all nations, namely the Judgements Project currently in the works at the Hague Conference on Private International Law. With this type of legislation, the predictability and certainty of contracting with private parties around the world will be increased and the harmony between all global legal systems will benefit all nations involved.