Foreign Judgments - Quebec Law 1996

3 -  Content of the model Act

3.1. - Conditions of recognition

3.1.1. Criteria of direct and indirect international jurisdiction

For the sake of clarification, we will use in the following paragraphs the terminology of civil law: the direct international jurisdiction refers to the jurisdiction of the court originally seized of the action. The indirect international jurisdiction refers to the jurisdiction of the foreign court as determined by the rules of the state in which recognition and enforcement of the foreign court's judgment are sought (in other words, these rules are those used to verify the jurisdiction exercised by the court that has rendered the judgment to be recognized and enforced). General

It seems that s. 3 of the UECJA should be applied to the indirect jurisdiction of foreign courts, especially if the intention is to extend the principle of full faith and credit to foreign judgments.

We consider the model Act a solid basis for indirect jurisdiction, subject to a few clarifications.

As we mentioned above, s. 12 of the CJPTA has the potential to totally destroy the value of uniformity by providing that a provincial Act will prevail over the uniform jurisdiction criteria even if it is inconsistent therewith. This may be necessary to protect certain exceptional legislative rules of the common law provinces, but for Quebec all rules are legislative and do not generally correspond with the criteria proposed in the uniform Act. This provision accordingly seems to us to be prejudicial to the uniformity of statues. Real and substantial connection

At the recognition of foreign judgments stage, a control over indirect jurisdiction that takes forum shopping and the existence of multiple procedures into account involves the requirement of a real and substantial connection between the court and the case.

Ideally, it seems to us that the presumption in s. 10 of the CJPTA should not be found in a model Act and that it would be best for this provision to establish definite rules. However, in view of the vagueness and limited nature of some of these rules if the presumption were deleted, other factors of jurisdiction should be added, as the selected criteria are not the only ones that can represent a real and substantial connection.

However, if it is decided to retain the system proposed in the CJPTA, the presumption established in s. 10 of the CJPTA would be acceptable.

As we noted in our last report, certain rules would have to be improved, including s. 3(d) of the CJPTA on jurisdiction based on the defendant's habitual residence. That jurisdiction is found in art. 3148(1) C.C.Q.5, which also includes the defendant's domicile (although domicile theoretically includes habitual residence). However, s. 7(b) of the CJPTA, which is broader than art. 3148(2) C.C.Q., is satisfied with an address, and therefore an election of domicile. This jurisdiction could accordingly result in use of the forum non conveniens.

Some examples of differences between the uniform Act's rules of jurisdiction -- from ss. 3(e) and 4 of the CJPTA, which are completed by s. 10 and are accordingly

presumed to meet the real and substantial connection test -- and the Quebec provisions can be found in ss. 10(b) (administration of estates), (d) (trusts), and (j) (injunctions), which should be adopted in Quebec law due to their quality. Forum non conveniens

From the perspective of a uniform Act, it seems to us that the use of this doctrine should be conditional on actual assumption of jurisdiction by the court concerned.

The possibility of applying the forum non conveniens doctrine to foreign judgments is too uncertain and could either be rejected in its entirety or accepted on a far more restrictive basis than in s. 11 of the CJPTA. For example, the factors to be taken into account in this respect could be specified and the number of factors limited, or the use of the doctrine could be made most exceptional in a manner similar to that adopted by the Australian courts.

At any rate, it would be necessary to refuse to apply this doctrine in cases involving choice of forum, and perhaps those involving exclusive jurisdiction (if any).

This last solution would be in keeping with the objective of respecting the parties' expectations. Lis pendens

The uniform Act should specify the conditions of lis pendens so that all states that pass it can in fact use it. In this respect, the condition of identity of cause of action would have to be dealt with thoroughly in an international context.

As for the types of lis pendens, we feel that a uniform Act should contemplate the adoption of a rule similar to that in art. 3155 C.C.Q.6, which provides that a judgment rendered in a third country that meets the necessary conditions for recognition in Quebec bars the recognition of another judgment. However, the operation of such a rule should not be based on the authority of the first court applied to, as that would encourage forum shopping; on the contrary, preference should be given to out-of-court settlements. Regulation of injunctions

Permitting multiple suits seems a priori to promote respect for state sovereignty, although it could result in a war of injunctions, 7 which is less respectful of state sovereignty even if the order is directed to the parties and not to the foreign courts. The adoption of relatively liberal conditions of international effectiveness of injunctions would therefore promote this objective. However, in so far as the states agree on criteria of direct jurisdiction (respect for the requirement of a real and substantial connection between the court and the case), the use of such injunctions should decline.

At any rate, a uniform Act should take this increasingly important aspect of international proceedings into account to determine the conditions specific to judgments of this type. Incidental matters

As for jurisdiction over incidental or related matters (as provided for in art. 3139 C.C.Q. 8), it might be asked whether it should be found in the model Act. It should be noted that the CJPTA does not include it directly, as it does in the case of counterclaims (s. 3(a)), although it could be considered to flow from s. 3(e)) -- if the presumptive nature of that rule is retained -- because the cases in s. 10 are not exhaustive, according to the comments (10.2). It is possible that an action in warranty could be a basis for the court's jurisdiction.

3.1.2. Compliance with principles of procedure

We agree with our colleagues on the subject of compliance with the principles of procedure (report, par. 64-67): the model Act should contain a provision similar to art. 3155(3) together which clarifications similar to those in art. 3156 C.C.Q. 9 (non-recognition of a decision rendered by default if not served on the defaulting party in accordance with the law of the place where the decision was rendered or if the defaulting party was unaware of the proceedings or was not given sufficient time to offer his or her defence), which would be preceded by the words [translation] "including, without restricting the generality of the foregoing" to provide for other violations. However, this could also be included in a provision on inconsistency with public order.

3.1.3. Solution of a judgment not contrary to public order

As Professors Black and Blom suggest (report, par. 70), we consider that the provision on consistency of the foreign judgment with public order must be flexible, as flexibility is the very essence of the concept.

However, as we mentioned above, it would be necessary to ensure that this rule also applies to a judgment the result of which would be inconsistent with a policy implemented by means of legislation passed to protect the vital interests of the jurisdiction of the recognizing court. One example of this would be the provisions recently added to the Foreign Extraterritorial Measures Act in February 1996 to counter the U.S. legislation on foreign companies dealing with Cuba. To do this, the model Act's provision could be based on the article from the draft Civil Code quoted above.

In the specific case of the inconsistency with public order of a decision awarding excessive punitive damages, the question comes down to whether the reasons for a judgment can be severed from its disposition. Where excessive exemplary damages are awarded, the problem faced by the recognizing court is clearly related not to the reasons for the judgment, which it is prepared to accept in all good faith, but to the disposition, which it finds exaggerated in the circumstances (either objectively or due to a local interest in not condemning the party against whom damages are awarded too harshly). In such a case, it is justifiable to ask whether it would not be more equitable or more appropriate to review the amount of the damages on the merits rather than purely and simply refusing the judgment on the basis of public order. It is easy to understand that a court oriented toward what is practical would prefer the first solution: this bending of the theoretical prohibition on reviewing the merits is more equitable for both parties. We are prepared to agree that this solution should be given serious consideration in a uniform Act.

As for the position to take on this subject, we accordingly agree with our colleagues (report, par. 72-79), especially on limiting such a review to cases in which the solution has an impact on the legal order of the receiving court. Thus, the place where the persons acted and their residence will be taken into account in particular (report, par. 78).

3.2. - Other issues

3.2.1. Finality of the foreign judgment

We agree with our colleagues (report, par. 80-81) on the issue of the finality of foreign judgments.

3.2.2. Legislative jurisdiction and review on the merits

Refusal to review foreign or Canadian judgments on the merits and abandonment of the verification of legislative jurisdiction are consistent with respect for state sovereignty.

A uniform Act should therefore abolish review on the merits in all forms. In this respect, a specific problem concerns foreign judgments awarding excessive damages (see supra).

3.2.3. Judgment from a third state

We also consider that a provision should be added to the model Act similar to article IV of the Canada-U.K. Convention (R.S.C., c. C-30, Schedule):

Registration of a judgment shall be refused or set aside if . . . (f) the judgment is a judgment of a country or territory other than the territory of origin which has been registered in the original court or has become enforceable in the territory of origin in the same manner as a judgment of that court.

3.2.4. Effect of foreign judgments

Our opinion is similar to that of our colleagues (report, par. 91).

3.2.5. Limitation period

We agree with our colleagues that s. 5 of the UECJA could be used as the basis for a provision on a limitation period for foreign judgments, although we feel that a uniform period should be adopted (e.g. six years).

3.2.6. Conversion date for foreign judgments in foreign currency

The uniform Act should definitely deal with this issue.

3.2.7. Post-judgment interest

Likewise, this issue, which is related to the preceding one, should be dealt with in a uniform Act. To do so, the second paragraph of art. 3161, par. 2, C.C.Q.10 could be used as the basis for a rule that the rate of interest will be governed by the law of the authority that rendered the judgment until the date of recognition of the judgment, at which time the rate will be that of the recognizing court.

3.3 - Enforcement mechanisms

The best enforcement method would not require application to a court and the resulting involvement of lawyers, as such a method would place responsibility on the parties to international transactions and reduce the costs of extraprovincial or foreign judgment creditors, as our colleagues mention in their arguments (report, par. 83-89). The registration system provided for in the UECJA, as in the system for mutual enforcement of maintenance orders, is therefore a good solution along these lines.

In Canada, the registration system is entirely appropriate, as our colleagues also mention, but it seems to us that in the case of foreign judgments, it must be based on reciprocal treatment of Canadian judgments abroad, in the absence of which the mechanism would have to be that of the general law of each province. Otherwise, the recognition of foreign judgments in Canada would be promoted without promoting the recognition of Canadian judgments abroad.

Finally, concerning the CJPTA, Part III, which the ULCC has proposed to make it applicable to foreign judgments, the following comments can be made, inter alia:

1. These mechanisms give judges greater discretion, which reduces the quality or degree of uniformity of the law;

2. They presuppose extensive co-operation between foreign courts: this implies great physical and intellectual capacity for communication, which is easier to attain in a federation than between countries with very different legal cultures.

3. In essence, these mechanisms represent a means to remedy the disadvantages of applying the forum non conveniens doctrine that would not depend on the certainty that the court considered the most suitable to hear the case will in fact assume jurisdiction. To avoid a possible miscarriage of justice, we could simply adopt a forum non conveniens doctrine that will be applied only if the court in question actually assumes jurisdiction, in which case the proposed mechanisms would no longer be necessary, at least not from this perspective.

4. Finally, these mechanisms may increase the costs of litigation, as the parties can, in addition to arguing jurisdiction, also argue the conditions of transfer and of a possible return to the court of origin.

We are accordingly not in favour of extending this part of the model Act to foreign judgments, as we doubt that doing so would improve the situation.

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