Hague Convention Choice of Court Agreement - Quebec Law 2007

Duty of a court asked to recognize and enforce the judgment of the chosen court

[39] For purposes of recognition and enforcement of foreign decisions, the Convention gives a different definition of what is international. Here, it is sufficient for the judgment to have been rendered by a foreign court. This means that a case that was not international when the initial judgment was given may become international if the question of its recognition or enforcement in another State arises. Under article 20 of the Convention, a State may declare that its courts may refuse to recognize or enforce a judgment rendered by the chosen court if the case is – with the exception of the location of the chosen court – connected solely with the State where recognition and enforcement are sought. In Quebec law, articles 3155 and 3168 C.C.Q. set out the conditions for recognition and enforcement of foreign decisions without mentioning this exception. At first glance, therefore, it is hard to see what advantage Quebec would have in making such a declaration. On this point, the Convention and Quebec law are therefore in agreement, although Quebec law applies the same provisions to the recognition and enforcement of judgments rendered by Canadian courts outside Quebec (see supra par. [38]).

[40] Article 8 of the Convention sets out the principle that the decision rendered by the chosen court will be recognized and enforced in the courts of the requested Contracting State. According to the first paragraph of article 3155 C.C.Q., a foreign decision will be recognized and, where appropriate, declared enforceable when it has been rendered by a foreign authority of competent jurisdiction. The foreign authority will usually be considered to be such when the parties have chosen by agreement to submit their civil and commercial disputes to that authority (art. 3168 (4°) C.C.Q.). Also, according to both article 8 (2) of the Convention and articles 3157 and 3158 C.C.Q., review of the merits of the judgment is prohibited. On this point, the Convention and Quebec law are in agreement.

[41] Article 8 (3) provides that a judgment will be recognized only if it has effect in the State of origin. According to the Explanatory Report, having effect means that it is legally valid and operative. If it does not have effect, it will not constitute a valid determination of the parties’ rights and obligations. Thus, if it does not have effect in the State of origin, it should not be recognized under the Convention in any other Contracting State. Furthermore, if it ceases to have effect in the State of origin, the judgment should not subsequently be recognized under the Convention in the Contracting States.[81] Article 3155 (2°) C.C.Q. also provides that “[a] Quebec authority recognizes and, where applicable, declares enforceable any decision rendered outside Quebec except in the following cases:… the decision is subject to ordinary remedy or is not final or enforceable at the place where it was rendered”.

[42] A question arises, however: what happens in Quebec law to an enforceable foreign judgment if, when the application for recognition and enforcement is made, it is no longer enforceable? Which law applies to the satisfaction of the limitation period by the filing of an action, as provided for in article 2892 C.C.Q? Does this provision apply to an action for recognition and enforcement of a foreign decision? In Ginsbow inc. c. Pipe and Piling Supplies Ltd,[82] this question was answered in the negative. Article 3131 C.C.Q. provides that as to the limitation period the law governing the substantive action. As to a foreign judgment, that law is the law of the court that gave the judgment. In Ginsbow, according to American law, the foreign judgment had become null and void and of no force or effect as of February 9, 1998. According to the Court, the appellant could not, through exemplification proceedings commenced on February 6, 1998, extend the period for which the foreign judgment was valid or revive it once it was extinguished. This solution designed to protect the interests of judgment debtors from Quebec can be understood as a way to avoid extending the useful effect of the original judgment. Indeed, the right that would arise from the Quebec judgment to recognition and enforcement of a foreign judgment would be statute-barred after ten years under article 2924 C.C.Q., and this period would be added to that for which the original judgment had already been in effect. However, a different effect can be contemplated. Indeed, it can be argued that it would not be fair to subject the judgment creditor to the risks of delay in the judicial system in Quebec in hearing these applications. Transitional law solutions should perhaps be applied here. Thus, since Quebec law provides that the enforcement a judgment is statute-barred after ten years, this period would apply to the original foreign judgment only in light of the time that has already elapsed since it was delivered.[83] Although the language of the Convention and that of Quebec law are in agreement on this point, the interpretation given in the case law in Quebec could yield results that ad variance from those contemplated by the Convention.

[43] Article 9 of the Convention lists seven exceptions to the recognition and enforcement of a decision.[84] These exceptions generally reflect those listed in articles 3155 and 3156 C.C.Q. Thus, recognition or enforcement may be refused when the decision would be manifestly incompatible with the public policy of the requested State. Other exceptions relate to procedural fraud and, in the case of a default decision, service of the originating or equivalent document. On this point, the Convention and Quebec law are in agreement.

[44] Article 9 applies to cases where an incompatible judgment has been rendered. If this incompatible judgment comes from the State in which the enforcement proceedings were instituted, its very existence will always constitute a ground on which recognition may be denied. In the event that the incompatible judgment comes from another State, it must have been rendered prior to the judgment given under the choice of court agreement for which recognition is sought, involve the same subject-matter and the same cause of action and meet the conditions required for it to be recognized in the requested State. On this point, the Convention and Quebec law are generally in agreement (article 3155 (4°) C.C.Q.).

[45] Article 9 a) of the Convention provides that recognition and enforcement of a foreign judgment may be refused if the agreement is null and void under the law of the State of the chosen court. This article 9 a) of the Convention applies to the capacity of a party to enter into a choice of court agreement. The rules of the chosen court, including its conflict of laws rules, accordingly apply to this question. Article 9 b) of the Convention provides cumulatively for the application of the rules of the requested court to govern the capacity of the parties to conclude the agreement. As Quebec law now stands, it would be surprising if a Quebec court asked to recognize and enforce a foreign decision reviewed these issues since, according to articles 3157 and 3158 of the Civil Code of Quebec, examination of the merits of a decision is not allowed. On this point, therefore, the Convention differs from Quebec law.

[46] Another exception is found in article 11. It provides that recognition and enforcement of a judgment may be refused if, and to the extent that, this judgment grants damages and interest, including exemplary or punitive damages and interest, that do not compensate a party for the actual loss or harm suffered. The problem of exorbitant damages has been commented on in a number of Quebec decisions, although they did not involve situations where a choice of court clause had been agreed to. Usually, exorbitant damages are not seen as covered by the public policy exception.[85] Thus, in Beals v. Saldanha[86], the Supreme Court held that the amount of damages would not shock the conscience of Canadians. This common law decision should also be applied in Quebec law.[87] However, in an earlier decision, where evidence of a purchase of the respondents’ products in Texas for an amount of $96 had led to an award against them of nine million dollars US because of the confusion caused between these products and those of the applicant,[88] the Quebec court refused to recognize and enforce the foreign decision at all, even the compensatory portion. The main ground for the decision, however, was that, in the view of the Quebec court, the Texan court had lacked jurisdiction, but the Court commented that such an amount was so disproportionate to what a Quebec court would have awarded in the same circumstances that it was possible to conclude that it was contrary to public policy.

[47] Without imposing this solution, however, the Convention would allow the Court eventually to reduce the damages awarded rather than to refuse to recognize and enforce the foreign judgment. The Convention accordingly seems less favourable to recognition and enforcement of foreign decisions than the case law of the Supreme Court of Canada but more likely to protect the interests of the defendant. Furthermore, by introducing the distinction between the compensatory and the non-compensatory aspects of a foreign judgment, the Convention gives judgment creditors an opportunity to enforce at least the compensatory part.

[48] The enforcement of judicial settlements is covered by the Convention (art. 12), provided that there is an appropriate choice of court agreement and the transaction is accompanied by certification from the court located in the State of origin. This particular concept of judicial settlement is unknown in Quebec law. It does not mean the same thing as simple settlements [transactions] (concluded out of court), which are provided for in articles 2631 et seq. C.C.Q., although it plays the same role. In order to be enforceable in Quebec law, a settlement must be homologated (art. 2633 par. 2 C.C.Q.); it is then subject to the Convention in the same way as any other judgment. However, Quebec law offers the possibility that settlements that are enforceable in foreign law without being homologated in accordance with article 3163 C.C.Q. could be recognized and enforced.[89] On this point, the Convention and Quebec law are accordingly in agreement.

[49] Article 13of the Convention, which lists the documents to be submitted, reflects a large extent to article 786 C.C.P. The Convention also provides that an application for recognition or enforcement may be accompanied by a document issued by a court (including an officer of by the court) in the State of origin, in the form recommended and published by the Hague Conference on Private International Law. This amends the current law even though the use of the document is optional.

[50] The Convention provides further for the application of the procedure of the requested State, which does not accordingly require any change in article 785 C.C.P. Articles 15 of the Convention and 3159 C.C.Q. also provide that a judgment may be recognized and enforced only in part. Finally, article 18of the Convention abolishes the need to legalize[90] the documents to be filed, including an Apostille, just as article 2822 C.C.Q. also does away with the need for all formalities in the filing of documents purporting to be issued by a foreign public officer. On this point, therefore, the Convention and Quebec law are in agreement.

[51] A particular feature of the Convention that is of some interest for Quebec law is the possibility that the judge seized under a choice of court clause will refer the case to an appropriate domestic court (correct district or correct subject-matter jurisdiction). According to article 8 (5) of the Convention, a decision rendered following this referral will also be recognized and enforced in the other States in accordance with the Convention.[91] Indeed, in Quebec law, neither the judge nor the parties have discretionary power to choose the domestic court that has jurisdiction over the subject-matter (art. 164 C.C.P.: lack of jurisdiction may be raised at any time and may even be ruled on by the court of its own motion). The parties may not designate the court having territorial jurisdiction in a choice of court clause. The rules set out in the Code of Civil Procedure must be observed notwithstanding any agreement to the contrary. Some agreements stipulate alternative territorial jurisdictions; in that case, the choice is made by the plaintiff and the defendant may object only if the court seized does not have jurisdiction. The courts have not yet had an opportunity to address the question as to whether recognition or enforcement of a foreign judgment could be refused because the domestic court chosen by the parties is not the court that gave the judgment. In our opinion, however, the condition that the court of origin have jurisdiction set out in article 3155 par. 1 C.C.Q. applies only to the State to which this court belongs and not to a specific subject-matter or territory. Moreover, articles 3157 and 3158 C.C.Q. would prevent an examination of the decision in the light of the domestic law that applies in the State whose court gave the decision. On this point, therefore, the Convention and Quebec law are in agreement.

[52] According to article 75.0.1 C.C.P., however, “in exceptional cases and in the interest of the parties, the chief judge or chief justice or the judge designated by the chief or chief justice may, at any stage of a proceeding, order that a trial be held or an application relating to the execution of a judgment be heard in another district”. In that case, according to article 8(5) of the Convention, recognition and enforcement of the judgment could be refused in respect of a party who had objected to referring the case in a timely manner to the State of origin. This possibility should be sufficient to make the application of article 75.0.1 C.C.P. unattractive in a situation where the Convention applied.

[53] Article 22 includes an opt-in provision extending the applications of provisions of the Convention respecting recognition and enforcement to the decisions rendered by a court designated in a non-exclusive choice of court clause. The appropriateness of making such a declaration, whose effect would be limited between Quebec and the Contracting States to the Convention, must be carefully considered.

[54] Moreover, article 3165 C.C.Q. prevents recognition and enforcement of a foreign decision where the dispute concerns civil liability for any harm suffered in, or outside, Quebec as a result of exposure to, or the use of, raw materials, whether processed or not, originating in Quebec. The Quebec courts[92] have not yet had an opportunity to express an opinion on this provision in the context of a choice of court clause, but, given the language of article 3165 C.C.Q., it may be asserted that, in this regard, the Convention and Quebec law differ. A declaration excluding this matter from the scope of the Convention, which is allowed under article 21 of the Convention, would therefore be necessary to bring Quebec law into line with the Convention. This declaration would allow the requested Quebec court to refuse recognition and enforcement of the foreign judgment given by the chosen court. However, this judgment could be recognized and enforced in the other Contracting States. Moreover, the judgment given by the chosen Quebec court would not be recognized and enforced in the other Contracting States.

[55] According to article 10(4) of the Convention, when recognition or enforcement of a foreign judgment is requested, this may be refused if, and to the extent that, the judgment was based on a ruling on a matter excluded pursuant to a declaration under article 21. On the other hand, as article 10 (1) of the Convention makes it clear, when a matter excluded under article 21 has arisen as a preliminary issue, the ruling on this issue will not be recognized or enforced under the Convention. The Quebec courts have not expressed an opinion on the question as to what would happen if recognition and enforcement of a foreign judgment were requested when it is based on a ruling concerning liability resulting from exposure to or the use of raw materials. Nor have they expressed an opinion on the question as to whether they would recognize and enforce a foreign judgment in a dispute that only incidentally involved liability as a result of exposure to, or the use, of raw materials. According to the Quebec Court of Appeal, however, only the formal judgment is deemed to be res judicata. Despite this principle, it is recognized that the rule of res judicata may be extended to the reasons where they include the formal decision or are intended to support it.[93]

[56] In Society of Lloyd's c. Alper,[94] the plaintiff was granted a judgment in England against the defendant, who was one of its members. Because the insurable risks relating to asbestos had been wrongly assessed, the plaintiff had had to make calls for funds against its members. The defendant was one of those who refused to respond. Although liability incurred following exposure to, or the use of, asbestos might have been at issue in an incidental manner, article 3165 C.C.Q. was not relied on to prevent recognition and enforcement of the foreign judgment and they were granted. On this point, therefore, the Convention is more explicit than Quebec law.

[57] Article 26 of the Convention clarifies the relationship between the Convention and other international instruments. Since Quebec is not a party to such instruments, the Agreement on Mutual Judicial Assistance between France and Quebec being a noteworthy exception, this aspect of things should not pose many problems.[95]

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