The problem of parallel actions: the softer alternative.

Author:Edinger, Elizabeth
Position:Canada
 
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Rules which cannot be modified by judicial discretion, even if they are arbitrary rules, are preferred by many because they produce order, in the sense of certainty, but even advocates for rules recognize that their production of fairness may be fortuitous. Even arbitrary rules cannot produce absolute certainty because the application of all rules may be disputed in particular cases. (1) Even arbitrary priority rule for deciding which of two actions commenced in different jurisdictions should be allowed to continue would definitely introduce more certainty, and hence more order, into the problem of parallel actions. Such an arbitrary rule, however, might be abused and lead to unfairness.

The genius of the common law conflicts jurisdictional rules might be said to be their flexibility. (2) Unsurprisingly, Canadian common law courts, including the Supreme Court, have been unwilling to create any arbitrary or 'bright line' rules for dealing with parallel actions.

It is not impossible, however, for the judicial branch to introduce more certainty, and hence more order, into the problem of parallel actions without sacrificing any fairness. The recent failure of the Supreme Court of Canada to do so in either Teck Cominco Metals Ltd. v. Lloyds Underwriters (3) or in Canada Post v. Lepine (4) should not be read as foreclosing future judicial amelioration of the problem, despite the surprising assertion of Lebel J. in Lepine, a case dealing with the very special problem of parallel class actions within Canada, that "[i]t is not this Court's role to define the necessary solutions." (5)

This article endorses, discusses, and develops the approach that the British Columbia courts seemed to be moving towards (6) to resolve this problem before the enactment of the Court Jurisdiction and Transfer of Proceedings Act. (7) The approach was put to the Supreme Court of Canada in Teck (8) and identified by it as the "softer alternative" but, instead of dealing with the argument as put, the Court read it up into an argument for a bright line approach that required blind deference to a foreign court's assertion of jurisdiction which amounted to a first to file rule. (9) The Court rightly rejected such a bright line approach.

A local court using the softer alternative approach would defer to a foreign court's decision to retain and exercise jurisdiction and would, therefore, stay the parallel local action provided that two conditions are satisfied: first, the foreign court's decision must be reasonably consistent with the local doctrine of forum non conveniens; and second, the stay of the local action in favour of the parallel foreign action must not work an injustice on the local plaintiff.

The approach proposed can be justified by principles and approaches developed by the Supreme Court in Morguard Investments v. De Savoye, (10) Pro Swing Inc. v. Elta, (11) Amchem Products Inc. v. B.C. (W.C.B.), (12) Beals v. Saldanha (13) and ECU Lines NV v. Pompey Industrie. (14) The deferential recognition of the foreign court's "positive assertion of jurisdiction" (15) might be said to be required by the principles enunciated in Morguard, Beals, Pro-Swing and Amchem and the granting of the stay as a matter of discretion to be analogous to the principle confirmed in Pompey.

Admittedly, this proposed approach is available in only that portion of the growing volume of parallel actions in which the foreign court has already made a decision about its own jurisdiction. Significantly, the proposed approach does not require complete deference to the foreign decision if considerations of fairness and justice persuade the local court to let the local action continue. Thus the order introduced into the problem of parallel actions will not satisfy those who prefer absolutely certain rules (assuming such phenomena exist) but it will modify the complete uncertainty resulting from the decisions in Teck and Lepine.

  1. Forum Shopping and Parallel Actions

    Before addressing the source and operation of the principles which are the foundation of the proposed approach, a few words need to be said about parallel actions and the spectre of forum shopping which inevitably raises its head in connection with parallel actions. Put very simply, parallel actions are those involving the same parties and the same causes of action and which have been commenced in two or more jurisdictions. The fact that the action has been commenced in more than one jurisdiction engenders accusations of forum shopping.

    'Forum shopping' is a dirty word; but it is only a pejorative way of saying that, if you offer a plaintiff a choice of jurisdictions, he will naturally choose the one in which he thinks his case can be most favourably presented: this should be a matter neither for surprise nor indignation. (16) Undoubtedly, parties will sometimes attempt to gain an unfair advantage by commencing an action in a forum which has no connection with the action but it is far more common for there to be a genuine disagreement, objectively and subjectively, about which forum is more suitable for the action.

    Frequently, there is no single forum that is clearly the most convenient or appropriate for the trial of the action but rather several which are equally suitable alternatives. (17) No presumption arises automatically, therefore, from the simple existence of parallel actions that one or other of the parties is forum shopping in the pejorative sense in order to gain an unfair advantage.

  2. Foum Non Conveniens and Parallel Actions

    Most common law jurisdictions limit the wide territorial jurisdiction they claim by application of the doctrine of forum non conveniens. (18) That doctrine is available both when the defendant is served within the jurisdiction and when the defendant is served outside the jurisdiction. (19) Both the formulation of the principles governing the doctrine and the list of relevant factors for consideration have evolved over the years, especially in connection with use of the doctrine following service within the jurisdiction.

    The result of the application of any discretionary principle is difficult to predict and the application of the doctrine of forum non conveniens is no different. The situations in which the doctrine of forum non conveniens may be invoked by a party seeking a stay of the local action can be sorted into three categories of ascending degrees of difficulty.

    First is the situation in which the only jurisdiction in which an action has been commenced is the forum.

    The second category consists of a situation in which an action has been commenced in the forum as well as in another jurisdiction, often referred to as a lis alibi pendens. This is the parallel action problem. The degree of difficulty for the court in identifying the most appropriate forum for the action is compounded simply by virtue of the additional factor, the foreign lis, which must be weighed and considered.

    Where, finally, there are parallel actions in existence and the foreign court in which the other action is pending, has reached a decision to retain jurisdiction, the degree of difficulty in the application of the doctrine of forum non conveniens increases dramatically. The reason for the quantum leap in difficulty arises from the fact that two sets of rules and principles have overlapped, potentially creating a conflict. Which rules are paramount? Potentially such a positive assertion of jurisdiction by the foreign court requires the importation and application of recognition and enforcement rules and principles into the jurisdictional decision.

    This overlap and possible conflict between jurisdiction and recognition and enforcement rules and principles is a direct result of the liberalization of Canadian common law rules for recognition and enforcement. So long as the only foreign judgments recognized were pecuniary judgments there were no recognition and enforcement rules to import into the jurisdictional decision, even after the Morguard extension of the bases for jurisdiction in the international sense. Once non-pecuniary judgments were open for recognition, foreign jurisdictional decisions were potentially recognizable.

    To date, the courts have continued to characterize such cases as jurisdictional cases and have not imported and applied recognition and enforcement rules. In Teck and Lepine, the Court had a clear opportunity to reconcile the principles governing jurisdictional decisions with the conflicts principles extending recognition to a wider range of foreign decisions and the constitutional principles delineating inter-provincial relationships and yet failed to seize that opportunity.

  3. The Principled Foundation for the Proposed Approach

    i. The Cases Requiring Recognition of Foreign Judgments

    In 1990, Morguard sensitized the Canadian legal system to the concept of comity and elevated its status to that of a working principle or value. Comity was hardly a new concept in 1990; the formulation which La Forest J. identified as his preference was taken from the 1895 case of Hilton v. Guyot. (20) English cases from the nineteenth century to the present invoke the concept of comity, most frequently, of course, in connection with service ex juris, often characterized by English judges as a claim of exorbitant jurisdiction.

    Comity, as contemplated in Morguard, should operate on both a national and an international basis. The globalization of the modern world was said to require greater deference to other legal systems than the common law had been prepared to give in past centuries. Federalism, at least in Canada, was said to require a very special form of comity. To import a requirement of full faith and credit for judgments emanating from sister provinces, provided only that the originating province assumed jurisdiction properly and appropriately. The new common law recognition rule articulated in Morguard requires the courts of one province to recognize and enforce pecuniary...

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