The Ontario Court of Appeal Assumes Jurisdiction over Absent Foreign Claimants

On October 17, 2017, the Ontario Court of Appeal (“ONCA”) released Airia Brands Inc v Air Canada, 2017 ONCA 792 [Airia], an important decision in which the ONCA clarified and restated the test for determining when Ontario courts can assume jurisdiction over class actions involving absent foreign claimants. This decision provided much-needed clarity on the certification of class actions with global classes.

In this article, I will begin by summarizing the factual background of Airia and the decision of the Ontario Superior Court of Justice (“ONSC”). I will then detail the ONCA’s decision, focusing on the new test for determining jurisdiction over absent foreign claimants in class action proceedings. Finally, I will explain why I believe the ONCA’s decision in Airia is justified and well-reasoned, effectively balancing the three critical public policy purposes of class actions: access to justice, behaviour modification, and judicial economy.

Factual Background

Airia involved a class action where the appellants, Airia Brands Inc., Startech Co. Ltd., and QCS-Quick Cargo Services GMBH, contended that between 2000 and 2006, a group of global airlines including Air Canada, AC Cargo Limited Partnership, and British Airways PLC, participated in a conspiracy to increase the price of air freight shipping services to and from Canada. Specifically, the appellants alleged that the respondents conspired to unduly lessen the supply of air freight shipping services and/or unreasonably increase the price of associated fuel and security surcharges.

In order to bring their claim as a class action, the appellants sought an order to certify the class action on behalf of persons who purchased air freight shipping services for shipments to and from Canada either directly or indirectly through freight forwarders. Although, for the purposes of Canadian certification, the action was limited to the Canadian parameters of the alleged global conspiracy (i.e. air freight shipping services for shipments to or from Canada), and the proposed class action included absent foreign claimants (“AFCs”) from more than 30 countries.

The respondents contested class certification and brought a motion for a declaration that the Ontario court did not have jurisdiction over AFCs and that the “class” should be defined to exclude any AFCs. They also sought an order staying the proposed action as far as it related to AFCs on the basis of jurisdiction simpliciter and, alternatively, on the basis of forum non conveniens. Forum non conveniens is a discretionary common law doctrine that provides a court the ability to decline to exercise jurisdiction over a claim if the interests of justice, fairness, and efficiency are best served if the trial were to take place in another jurisdiction. The respondent has the burden of establishing that another jurisdiction has a real and substantial connection to the claim and that there is another forum, which is clearly more appropriate for resolving the claim. In deciding whether there is another forum that is clearly more appropriate, a court will consider a broad range of factors enumerated in Van Breda, including, but not limited to, the location of the parties and the witnesses; the cost of transferring the case to another jurisdiction to declining the stay; the impact of the transfer on the conduct of the litigation or on related or parallel proceedings; the possibility of conflicting judgments; problems relating to recognition and enforcement of judgments; and the relative strength of the connection of the parties.

ONSC Decision

The motion judge granted the respondents’ jurisdiction motion, concluding that jurisdiction in Ontario had not been established. To the surprise of many, in determining whether the Ontario court had jurisdiction simpliciter over the AFCs, Justice Leitch declined to apply the “real and substantial connection test” detailed by the Supreme Court of Canada (“SCC”) in Club Resorts Ltd v Van Breda, 2012 SCC 17 [Van Breda]. Instead, Leitch J. noted that given the unique international circumstances of the case, the real and substantial connection test would be a “radical departure from the norms adhered to by other countries.” She noted that Van Breda invited courts to develop approaches to jurisdiction based on the principles of fairness, order, and comity, rather than establishing a bright-line test for questions of jurisdiction. Applying these principles, Justice Leitch determined that because the AFCs were not present in Ontario and did not consent or attorn to Ontario’s jurisdiction, jurisdiction had not been established.

In the alternative, Justice Leitch also addressed that if the real and substantial connection test did apply, it was satisfied on the facts of this case. In a very brief discussion, after simply describing the parties’ positions, she found that there was no real and substantial connection between the AFCs and Ontario.

Finally, Justice Leitch also considered whether the court had jurisdiction over the AFCs and if such jurisdiction should be declined on the basis of forum non conveniens. Taking into account the evidence that the respondents adduced, Justice Leitch found that: 1) the AFCs had no expectation that their rights would be adjudicated in Ontario; 2) Ontario courts would have to apply the laws of at least 30 different countries to resolve the matters involving the AFCs; and 3) an Ontario judgment would not be recognized in other jurisdictions creating risk of further litigation and double recovery. Based on this, she stayed the proposed class action as it related to the AFCs because Ontario was forum non conveniens (i.e. not the most appropriate forum).

The Appeal

The ONCA’s decision, written by Justice Pepall, allowed the appellants’ appeal and clarified the framework that courts should apply for determining jurisdiction over AFCs. The Court held that the motion judge erred in two ways: first, by anchoring her jurisdiction analysis in a negation of traditional bases of jurisdiction (presence in the jurisdiction and consent to the forum’s jurisdiction); and second, in failing to apply the real and substantial connection test enumerated by the SCC in Van Breda. In Van Breda, the SCC did not find that the principles of order, fairness, and comity are independent roots of jurisdiction, rather that these three principles are subsumed and embedded in the real and substantial connection test. The motion judge erred in permitting “foreign law to dominate her analysis to the exclusion of all other relevant factors.”

The ONCA found that jurisdiction over AFCs may be established where:

• There is a real and substantial connection between the subject matter of the action and Ontario, and jurisdiction exists over the representative plaintiffs and the defendants;
• There are common issues between the claims of the representative plaintiffs and the AFCs; and
• The procedural safeguards of adequacy of representation, adequacy of notice, and the right to opt out are provided, thereby enhancing the real and substantial connection between the AFCs and Ontario.

Applying the newly restated framework for jurisdiction simplicter in the context of an international class action, the ONCA held as follows on each prong:

• There was “unquestionably” a real and substantial connection between the subject matter of the class proceeding and Ontario. All three respondents carried on business in Ontario and the representative plaintiffs were either based in Ontario and/or consented to Ontario being the jurisdiction.
• Turning to the consideration of common issues, the ONCA found that there were common issues between the representative plaintiffs and the AFCs. Namely, whether the respondents are liable to the class members for the tort of conspiracy and breaches of the Competition Act arising from the supply and price of airfreight shipping services to and from Canada between 2000 and 2006.
• The Court found that the last element was also satisfied. The AFCs had been afforded adequate representation, adequate notice, and the right to opt out of the class proceeding.

Thus, the ONCA found that the Ontario court had jurisdiction over the AFCs. Having come to this conclusion, the Court then reviewed and overturned the motion’s judge forum non conveniens analysis. The ONCA overturned the motion judge’s decision on the basis that she failed to consider whether any other jurisdiction was more appropriate than Ontario.

The Court concluded that there was no clearly more appropriate forum to resolve the AFCs’ claims. The availability of class actions, the contingency fees, and the ability to defer costs favoured Ontario as the most appropriate and cost-effective forum. Given that the conspiracy was alleged to have taken place between 2000 and 2006, if the AFCs were denied recourse in Ontario, their claims may be time-barred in other jurisdictions. Finally, the majority of air freight services at issue were rendered for shipments to or from Ontario, demonstrating a robust connection between the parties and Ontario.

Takeaways

The primary criticism the ONCA’s judgment has received concerns the issues of recognition and enforcement. That is: should an Ontario court adjudicate claims of AFCs if ultimately its decision may never be recognized and enforced in the AFCs home jurisdiction? Indeed, this theme was underlined in the ONSC’s decision, which was strongly criticized by the Attorney General of Ontario, as intervenor, and the ONCA. In determining whether an Ontario court had jurisdiction simpliciter over the AFCs’ claims and reviewing the defendant’s submission of forum non conveniens, Justice Leitch noted that an Ontario class action judgment would not be recognized and enforced by a foreign court, exposing the respondents to the potential of double recovery by AFCs. This was an important consideration in granting the respondents’ jurisdiction motion.

The Attorney General of Ontario, in its submission, rightly argued that considering foreign enforceability wrongly conflates the analysis of jurisdiction simpliciter with forum non conveniens. To require a claimant to ensure that the judgment rendered in an Ontario court will be recognized and enforced in their home jurisdiction places an onus on a claimant to establish Ontario as the appropriate forum for adjudication, rather than requiring the defendant to establish that there is another forum which is clearly more appropriate for resolving the claim. This is contrary to the SCC’s well-established jurisprudence and to the important public policy purposes of class actions: access to justice and judicial economy. Foreign recognition and enforcement surely is a function of establishing jurisdiction, but they are not preclusive of all other factors.

Practically, one could very well contend that an unrecognized or unenforceable decision is equivalent to having no decision at all. An unenforceable judgment is a hollow remedy for a claimant. Chevron Corp v Yaiguaje, 2017 ONSC 135, is a frequently-cited case, in which the plaintiffs were awarded a US$9.5 billion Ecuadorian judgment for environmental damage, but have been unable to recover on the judgment in US or Canadian courts. While recognition and enforcement challenges are a genuine concern, it would be unfair to equate them with justice itself. Obtaining a remedy is simply one aspect of justice, not justice itself. Having a case adjudicated on its merits, bringing attention to a wrong, and obtaining a judgment that reaffirms that wrong was done are invaluable parts of the justice system that simply cannot be discounted at the expense of recognition and enforcement of a judgment. Further, the resounding effects of adjudication must not be forgotten. Law serves as a critical tool for informing and modifying the behaviour of individuals. A decision, regardless of its remedy, serves as a caution to all on how to behave to prevent further and future wrong.

Concluding Thoughts

Canadian courts have always struggled with striking the right balance between flexibility and predictability on the one hand, and fairness and order on the other. Airia provides much-needed clarity on the test for assuming jurisdiction over AFCs in Ontario class action proceedings with international elements, while effectively balancing the three critical public policy purposes of class actions: access to justice, behaviour modification, and judicial economy. As Justice LeBel wrote in Van Breda, (and with which I agree), it is critical that the framework for the assumption of jurisdiction, which forms the foundation for the adjudication of a claim, not be “an unstable, ad hoc system made up on the fly on a case-by-case basis—however laudable the objective of individual fairness be.”