Access to justice and choice of law issues in multi-jurisdictional class actions in Canada.

Author:Scott, Valerie

This article first examines the treatment of choice of law in multi-jurisdictional class action cases in Canada. More specifically, it looks at Ontario, the province that has the longest experience with these cases. Analysis of the Ontario case law reveals that the courts are divided in their treatment of choice of law in such class actions. It also reveals that there is serious reason to believe that the Ontario courts often duck the issue. They do so either by ignoring it altogether, by acknowledging the dimension but adopting a "wait and see" approach by invoking the facultative choice of law doctrine, or by neglecting to assess this component at the settlement approval stage. The author then tries to determine whether this practice jeopardises the furtherance of access to justice by studying the apparent opposition between the facultative choice of law doctrine and adequate representation. However, the author notes that none of the jurisprudential trends can obviously be qualified as furthering or frustrating access to justice. This is because justice is multifaceted and also because the nature of the choice of law rules varies. The non-application of multilateral conflicts rules does not deprive non-resident members of their rights, whereas the non-application of conflicts rules that embody a material justice ideal appears problematic. Therefore, the author concludes that the facultative choice of law doctrine should not be abandoned completely in the class actions context. Instead, the judge should be alert to the applicable area of law and the nature of the choice of law rules that apply.

Cet article examine en premier lieu le traitement reserve au choix de la loi applicable dans le cadre des recours collectifs multi-territoriaux au Canada. Il se penche en particulier sur le cas de l'Ontario, soit la province qui possede l'experience la plus longue dans ce domaine. L'analyse de la jurisprudence ontarienne revele que les tribunaux sont divises quant au traitement qu'ils reservent au choix de la loi applicable lors de recours collectifs de ce type. Il en ressort en outre que les tribunaux ontariens ont plutot tendance a esquiver la question, Ils agissent ainsi soit en faisant fi de la demande, soit en reconnaissant cette dimension mais en adoptant une attitude prudente, passive con sistant a invoquer le caractere facultatif de la doctrine du choix de la loi applicable, ou en omettant d'evaluer cette composante a l'etape de l'approbation du reglement. L'auteur tente ensuite de determiner dans quelle mesure cette pratique compromet la poursuite de l'acces a la justice en etudiant l'opposition apparente entre le caractere facultatif de la doctrine du choix de la loi applicable et une representation adequate. L'auteur note toutefois qu'aucune des tendandes jurisprudentielles ne peut pretendre favoriser ou entraver l'acces a la justice. On peut l'expliquer par le caractere multiple de la justice et aussi du fait que la nature des regles regissant le choix des lois applicables varie. La non-application des regles relatives aux differends multilateraux ne prive nullement les membres etrangers de leurs droits, tandis que la non-application de ces regles, lesquelles incarnent une sorte d'ideal de la justice materielle, pose certains problemes. L'auteur conclut par consequent que l'on ne devrait pas completement renoncer au caractere facultatif de la doctrine du choix de la loi applicable dans le cadre des recours collectifs mais plutot faire en sorte que le juge soit informe du domaine de droit applicable et de la nature des regles regissant le choix de la loi applicable.

Table of Contents I. INTRODUCTION II. CHOICE OF LAW IN MULTI-JURISDICTIONAL CLASS ACTIONS IN ONTARIO A. The Legal Framework Within Which the Ontario Courts Operate 1. Overview of the Class Proceedings Act and the Facultative Choice of Law Doctrine 2. The Intersection between Class Actions and Private International Law: The Few Guidelines Given by the Supreme Court of Canada B. The Approaches Developed by the Ontario Courts: Typology 1. Cases Where no Mention of Choice of Law is Made 2. Cases Where the Choice of Law Dimension is Acknowledged 3. Ignorance or Elimination of the Choice of Law Issue ("Wait and See" Approach) 4. Ensuring that Choice of Law has an Impact on the Resolution of the Dispute III. CHOICE OF LAW AND ACCESS TO JUSTICE A. Access to Justice as the Possibility to Vindicate Substantive Rights in Accordance with Fundamental Principles of Procedure 1. The Possibility to Vindicate 2. Substantive Rights and Fundamental Principles of Procedure (a) The Theoretical Debate on the Nature of Choice of Law Rules (b) Canadian Choice of Law (c) Implications for the Relationship Between Choice of Law and Access to Justice in the Multi-Jurisdictional Class Actions Context in Canada B. Extrajudiciary Conception of Access to Justice 1. Justice as the Choice of an Entity 2. Ex Ante Justice IV. CONCLUSION I. INTRODUCTION

Class actions are now an essential procedural vehicle through which consumers with fragmented and diffuse interests gain access to justice. Over the years, market globalization has profoundly modified consumerism. In response to this phenomenon, "opt-our" jurisdictions have been requested to certify multi-jurisdictional class actions.

A priori, multi-jurisdictional class actions seem to have a positive impact on access to justice. Indeed, more class members access the judicial system, the costs of the action for each member are reduced and the class gains more weight in the negotiation of a settlement. It also increases the likelihood of behaviour modification, is judicially more efficient (1) and finally, for defendants, multi-jurisdictional class actions offer complete closure.

However, there remains a divide between the national exercise of legislative and jurisdictional powers and a cross-border market. In Canada, the relationship between private international law and class actions is "still in its infancy." (2) Courts of opt-out jurisdictions (3) have been certifying multi-jurisdictional class actions since the 1990s, but questions of private international law only recently came to the fore. Notably, in three prominent decisions, Canadian courts refused to recognise and enforce foreign decisions certifying multi-jurisdictional class actions and approving settlements. (4) According to the courts, these decisions violated the procedural rights of non-resident class members. In the most recent one, the Supreme Court of Canada expressed in obiter some concerns regarding national classes, highlighting the need to determine what legal system may apply to subclasses and the duty to take account of each group's specific interests. (5)

This prompted a doctrinal effervescence in Canadian scholarship over multi-jurisdictional class actions. However, most of the attention so far has been directed toward the jurisdictional issue (whether or not these class actions are constitutional) and the attendant recognition/enforcement problems linked with jurisdiction. (6) The question of choice of law has been mostly left out. (7)

The importance of this question can be illustrated by the situation in the United States of America (US), which has a longer experience than Canada with class actions generally and multi-jurisdictional class actions specifically. In 1985, in the Shutts decision, (8) the Supreme Court of the United States (SCOTUS) considered that giving appropriate notice and offering procedural rights (opt-out and participation) was sufficient to establish jurisdiction over non-resident class members in a multi-jurisdictional class action. However, it considered that the choice of law question could not be eluded by a simple recourse to the law of the forum. This part of the ruling transformed choice of law issues into a major obstacle to certification, with regard to the predominance and superiority (manageability) criteria of Rule 23. (9) Often times, certification will be refused because variations in law result in the predominance of individual rather than common issues or render the class unmanageable. (10)

In 2005, the Class Actions Fairness Act (CAFA) (11) was adopted in the US to concentrate most class actions in the federal courts. However, the CAFA did not solve the choice of law problems because according to the decision of the SCOTUS in Klaxon, (12) federal courts sitting in diversity jurisdiction are required to apply the laws of the state in which they sit.

Different solutions have been proposed by scholars: the adoption of federal substantive law, the reversal of Klaxon with the adoption of federal choice of law rules to avoid forum shopping, the adoption of choice of law rules at the state and/or federal levels pointing to a single law (such as the place of business of the defendant) (13) and recourse to issue classes and subclassing. (14) The specifics of the American debate are not all relevant for Canada, but the point here is that the discussion south of the border definitely invites us to study the question in the Canadian context. (15)

The choice of law issue is also interesting because there is an apparent contradiction between the class actions requirement of adequate representation, which arguably includes the right of class members to have their claims pursued under the best law available, (16) and the procedural status of the choice of law and foreign law in Canada under the facultative choice of law doctrine. (17)

Finally, the fact that most cases settle, in conjunction with the difficulty of assessing the fairness of class settlements, creates the possibility of courts ducking the issue of choice of law under a general finding of reasonableness. These three elements together suggest that it is worth studying how the choice of law issues are and should be addressed in multi-jurisdictional class actions in Canada.

In Part II, this article will examine the treatment of choice of law in...

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