Thursday, 15 March 2012

SCC: Courts Should Enforce Forum Selection Clauses

In a very brief decision in Momentous.ca Corp. v. Canadian American Association of Professional Baseball Ltd., 2012 SCC 9, the SCC confirmed that forum selection clauses are prima facie enforceable and should be respected by the courts:
In Z.I. Pompey Industrie v. ECU-Line N.V., 2003 SCC 27, 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 Court also confirmed that filing a Statement of Defence, whether or not that constituted attornment, did not prevent the defendant from bringing an application to stay the proceedings based on the forum selection clause.  This aspect of the ruling, although important for Ontario, is moot in B.C. where procedure for jurisdictional dispute has been codified in Rule 21-8.  In particular, this rule provides that a party who raises an issue of jurisdiction in an application or a pleading filed within 30 days of being served with a Notice of Civil Claim or a Petition, does not attorn to the court’s jurisdiction and may, in the meantime, “(i) apply for, enforce or obey an order of the court, and (ii) defend the proceeding on its merits.”