CHAPTER 6 Declining Jurisdiction

• Date: 07 April 2025

129

CHA PTER 6

DECLINING

JURISDICTION

A. INTRODUCTION

As earlier chapters have explained, the f‌irst central question in the con-

f‌lict of laws considers whether a court has jurisdiction to resolve a dis-

pute. This chapter addresses a subsidiary question. It is quite possible

to have a legal system in which a court is required to resolve all disputes

that fall within its jurisdiction. But it is equally possible to allow a court

with jurisdiction to decline, in certain situations, to resolve a dispute.

On this approach, which has been adopted in Canada, the subsidiary

question is whether the court will exercise its jurisdiction.

As a matter of procedure, the obligation rests with the defendant

to request, by motion, that the court decline to exercise jurisdiction

and that it accordingly stay the proceedings.1 Such a motion can be

brought regardless of the basis on which the court has taken jurisdiction:

presence, submission, or service ex juris based on a presumptive con-

necting factor with the forum. It is not only available to defendants who

have been served abroad. In addition, a motion for a stay of proceedings

can be brought even after the defendant has taken steps that constitute

acceptance of the court’s jurisdiction, such as defending on the merits.

This is because the motion is not a challenge to the court’s jurisdiction.

1 Club Resorts Ltd v Van Breda, 2012 SCC 17 at para 102 [Club Resorts].

CONFLICT OF LAWS

130

Quite the opposite: it accepts the court’s jurisdiction but requests that

the court not exercise it.2

A motion for a stay should be brought promptly.3 Unexplained delay

in bringing the motion is weighed as a signif‌icant factor in determining

whether to stay proceedings.4

This chapter will examine three distinct bases for declining jurisdic-

tion. First, it will consider a stay of proceedings based on an exclusive

jurisdiction clause stipulating that the dispute be resolved in another

forum. Second, it will consider a stay of proceedings in order to allow

the dispute to be resolved in a more appropriate forum (under a doctrine

called forum non conveniens). Third, it will consider a stay of proceedings

based on an agreement by the parties to use arbitration to resolve their

dispute.

B. EXCLUSIVE JURISDICTION CLAUSES

Parties to cross-border contracts often aim to achieve certainty in their

arrangements by using jurisdiction clauses.5 A jurisdiction clause is a

provision in a contract under which the parties agree to submit some

or all disputes arising under or in connection with the contract to the

courts of a particular country. The clause might be exclusive, purporting

to exclude all other forums, or non-exclusive, conferring jurisdiction

on the court of one forum while leaving the parties free to choose to

sue elsewhere. Under Canadian private international law, jurisdiction

clauses will generally be enforced unless a party can demonstrate that

there are strong reasons for not doing so.6

2 Notwithstanding this logic, courts in British Columbia once held that a defendant

who attorns cannot seek a stay of proceedings: O’Brien v Simard, 2006 BCSC 814;

Andrew Peller Ltd v Mori Vines Inc, 2017 BCSC 203 at para 20. This view came

under f‌ire (see Blazek v Blazek, 2010 BCCA 188) before eventually being rejected

(see Nordmark (Litigation guardian of) v Frykman, 2019 BCCA 433 at para 59–60

[Nordmark]). See also Ucore Rare Metals Inc v IBC Advanced Technologies, Inc,

2019 NSCA 80 at paras 92–102 [IBC Advanced Technologies].

3 Nordmark, above note 2 at paras 59 and 93.

4 See, for example, Loat v Howarth, 2011 ONCA 509 at paras 37–39 [Loat].

5 These clauses are also called forum selection clauses, choice of court clauses, and

jurisdiction agreements.

6 In ZI Pompey Industrie v ECU-Line NV, [2003] 1 SCR 450 at para 20 [ZI Pompey],

Bastarache J noted for the court 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.”

See also Douez v Facebook, Inc, 2017 SCC 33 at paras 24 and 123–24 [Douez].

Declining Jurisdiction 131

Jurisdiction clauses play a major role in the issue of whether a court

will exercise its discretion to stay proceedings. A jurisdiction clause

pointing to the country where the litigation has been started makes it

dicult for the defendant to stay the proceedings, and a jurisdiction

clause pointing away from that country has the opposite eect. Courts

have consistently held that there is a heavy onus on a party seeking to

avoid an exclusive jurisdiction clause.7

A key case is ZI Pompey Industrie v ECU-Line NV.8 The plaintis had

contracted with the defendant to ship goods to Seattle. The goods arrived

damaged and the plaintis commenced litigation against the defendant

in the Federal Court of Canada. The defendant brought a motion for a

stay of proceedings, arguing that the bill of lading contained an exclusive

jurisdiction clause in favour of Antwerp. The court held that the party

opposing the enforcement of a jurisdiction clause, in this case the plain-

ti, must show “strong cause” as to why the clause should not be given

eect. The plainti could not do so and the stay was granted.

For many years, an exclusive jurisdiction clause was considered one

of the many factors in the analysis, discussed later in this chapter, of the

doctrine of forum non conveniens, looking holistically at whether there

is a more appropriate forum for the dispute. However, in ZI Pompey

Bastarache J stated: “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.” He suggested that, at least in cases

involving bills of lading, “a separate approach” should be followed that

would honour the clause in all but “exceptional circumstances.”9 This

language goes beyond the heavy onus traditionally imposed and moves

to an approach that makes most other factual connections and jurid-

ical advantages irrelevant, focusing the entire analysis on the clause.

This view of ZI Pompey was gradually adopted in some other decisions.

For example, in Expedition Helicopters Inc v Honeywell Inc the Court of

Appeal for Ontario elaborated, stating:

The few factors that might be considered include the plainti was

induced to agree to the clause by fraud or improper inducement or the

contract is otherwise unenforceable, the court in the selected forum

7 See ZI Pompey, ibid; Oulton Agencies Inc v Knolloce Inc (1988), 69 Nf‌ld & PEIR

65 (PEISCAD); Ash v Lloyd’s Corp (1992), 9 OR (3d) 755 (CA); Fairf‌ield v Low

(1990), 71 OR (2d) 599 (HCJ). The classic English case on this point is The

Eleftheria, [1969] 2 All ER 641.

8 Above note 6.

9 Ibid at para 21. See Genevieve Saumier & Jerey Bagg, “Forum Selection Clauses

before Canadian Courts: A Tale of Two (or Three?) Solitudes” (2013) 46 Univer-

sity of British Columbia Law Review 439 at 454–62.