Foreign Judgments - Common Law 1996

1996 Ottawa, ON
Civil Section Documents - Foreign Judgments - Common Law


I. INTRODUCTION


A. General Considerations and Assumptions


[1]  This discussion paper has been prepared for the meeting of the Uniform Law Conference of Canada to be held in Ottawa in August 1996. Its purpose is to focus debate on the possible content and direction of a uniform act dealing with enforcement of judgments from courts (and possibly other tribunals) of foreign countries. Throughout this paper we will refer to those simply as "foreign judgments", a term which we use in distinction to "extraprovincial judgments", which denotes judgments emanating from other Canadian provinces.

[2]  The final communiqué of the meeting of the Ministers of Justice in May 1996 urged the ULCC to embark on the drafting of a uniform act dealing with the recognition and enforcement of foreign judgments. We understand such a request to be founded on three considerations: (1) the present law on this matter is not uniform across the country, and it should be; (2) the present law is perceived to be insufficiently certain; and (3) existing rules may be disadvantageous to Canadian defendants in comparison to defendants from other countries. In light of those considerations, the goal of this paper is to set out the major factors which might influence the scope and content of the uniform act requested by the Ministers of Justice.

[3]  This report should be considered against the background of the Department of Justice Canada's "Study Concerning Possible Law Reform on Recognition and Enforcement of Foreign Judgments in Canada". For the purposes of that study we prepared a report (1995) on the current law of the common law provinces and the problems it raises. We will not repeat in this report the detailed survey of the current law that we endeavoured to give there. The Department of Justice itself produced a Report (July 1995) as the conclusion of the Study. This was based on the common law and civil law background papers, and on consultations that the Department undertook across Canada with representatives of the practising legal profession. The Department's Report highlighted the uncertainty that Morguard Investments Ltd. v. De Savoye, [1990] 3 S.C.R. 1077 had created with respect to the enforcement of judgments, especially those from outside Canada. It also noted that further study was needed to provide more precise information about the day-to-day operation of the current system, and about the competitive disadvantage, if any, raised by Canada's more liberal approach to the enforcement of foreign judgments compared with other nations. The present paper is not the result of such a study, which we think would still be worthwhile pursuing.

[4]   Our mandate is limited to the common law provinces and the territories. A parallel discussion paper by Professors Jeffrey Talpis and Gerald Goldstein of the University of Montréal will take account of the Québec point of view. We have benefitted from reading a preliminary draft of that paper, and we make reference to it in this report. Although our mandate is limited to the common law jurisdictions, at a couple of points we make mention of the Québec position. We do this because in its recent revision of its Civil Code Québec updated its law dealing with foreign judgments. From the point of view of harmonization of provincial law this seems to us to be significant in two respects. First, having very recently revised its law on this matter, Québec may be less inclined than the other provinces to change that law by adopting a uniform act which significantly altered that law. The easiest route toward uniformity may be for the common-law jurisdictions to move closer to the Québec position. Secondly, and more importantly for our purposes, the common law provinces and the ULC may have much to learn from the Québec revisions. The Québec legislature is the only one to have examined the subject of enforcement of foreign judgments in recent years, and it may be the case that the provisions of Québec's new Civil Code provide good models for a new uniform act. Detailed analysis of that question is best left to the discussion paper from Québec, but where recent amendments to the Québec Civil Code seem to reinforce or cast light on points we make in our paper, we make mention of that fact.

B. Possible Courses of Legislative Action

[5]  Before discussing the content of a uniform statute it may be helpful to review the broad categories of the available courses of legislative action, along with some of the advantages and disadvantages of each.

1. Legislation based on bilateral treaties negotiated by the Federal Government


[6]  The provinces already have uniform legislation based on a treaty between Canada and the United Kingdom. Canada has just completed negotiating a comparable agreement with France (not yet implemented), and other bilateral discussions may be in the offing. It would be possible to draft and implement uniform provincial legislation piecemeal as such treaties are concluded at the international level. An advantage of this approach is that the negotiation process might elicit the easier enforcement of judgments from Canadian courts in those countries. This would respond to the perception that Canadian residents may be at a disadvantage in that, as things presently stand, Canada enforces foreign judgments more readily than most foreign countries enforce Canadian ones. The main disadvantage is that a bilateral treaty-making processs will proceed slowly and incompletely, so that the perceived deficiencies of the status quo would persist for some time.

2. Legislation based on a multilateral convention negotiated by the federal government

[7]   Canada has been involved in preliminary discussions at the Hague Conference on Private International Law exploring the possibility of a new, potentially world-wide, convention on the enforcement of judgments in civil and commercial matters. It would be possible to delay any law reform until such a treaty was concluded. A uniform statute could then simply implement the convention, as several ULC uniform acts do for other conventions. This would have the advantage of focussing law reform efforts in this country on the negotiation of that convention. In addition, as with option # 1, this route might gain concessions from foreign countries which would lead to easier enforcement of Canadian judgments abroad. As with the previous option there are disadvantages resulting from the fact that negotiation of an internationally acceptable convention (which is far from certain to succeed) will take a number of years, during which the status quo would persist.

3. Enactment of federal legislation dealing with foreign judgments

[8]  Apart from divorce and some peripheral matters the federal government has not viewed the enforcement of foreign judgments as within its legislative mandate. There are obiter dicta in recent decisions of the Supreme Court of Canada that such legislation might be valid. However, these dicta are almost certainly too frail a foundation to undertake such a large and controversial federal intervention in an area that has until now been regarded as one of provincial responsibility.

4. Uniform provincial legislative action in pursuit of reform and uniformity

[9]  The substantive rules for the recognition and enforcement of foreign judgments in Canada are not uniform. Two provinces - New Brunswick and Saskatchewan - have legislation codifying the common law rules as they stood many years ago. Québec deals with the matter in its Civil Code. The other seven and the two territories deal with it through the common law. (In each comon law province the Uniform Reciprocal Enforcement of Judgments Act provides, as an alternative to bringing a common law action, a registration procedure for judgments from designated reciprocating states. The conditions for registrability again reflect the common law enforcement rules of some years ago.) This lack of uniformity is considered to be unhelpful and could be eliminated if the provincial legislative régimes were made uniform. An advantage of doing this in advance of and apart from the treaty process described in options 1 and 2, is that it could be done quickly, or at least without the pre-condition of concluding international negotiations. A disadvantage is that this process will not attract concessions from foreign countries, though it does not necessarily stand in the way of the treaty negotiation process. It might, however, divert energy and attention which would otherwise be focussed on those avenues.

[10]  Uniformity might be achieved in either of two ways:

[11]   (a) The three provinces with distinct legislative schemes might abandon them by repealing their legislation. This would produce uniformity, at least among the common law provinces, by bringing into effect the judge-made law that currently prevails in the other seven provinces. It would not, however, address the concerns inherent in the common law approach, namely, that it (1) is not certain enough and (2) puts Canadian defendants at a disadvantage compared with their counterparts from other countries. We note as well that it is highly unlikely that Québec would be interested in amending its new Civil Code for this purpose.

[12]   (b) A model provincial statute could be adopted which would (1) replace the common law rules in the seven provinces and two territories which currently employ them, and (2) supersede the statutory régimes which presently exist in Saskatchewan and New Brunswick, and possibly also the Civil Code's rules in Québec. This would have the advantages of achieving uniformity - assuming, of course, that all jurisdictions adopted it - and addressing the perceived deficiencies in the common law approach. Unlike options 1 and 2, it would not operate to secure the easier enforcement of Canadian judgments in foreign countries. On the other hand, such a uniform act could employ a "tiered" approach using differentiated sets of rules. Judgments from certain countries, with which Canada had negotiated reciprocal arrangments or concessions, would be entitled to a more expeditious or unqualified enforcement in Canada than judgments from other countries. We refer to this possibility again later.

5. No action could be taken at this time

[13]  This would have the advantage, at least in the seven provinces and two territories that continue to be governed by the common law in this area, of the continuing flexibility of judge-made law. The disadantages are continued lack of uniformity, concerns over the high amounts of some foreign (i.e. American) awards, and persistence of the disadvantageous situation which seems to exist between Canadian residents and foreign ones with regard to the mutual enforcement of foreign judgments. This last-mentioned consideration should not be over-estimated, as Canada's largest trading partner, the United States, enforces Canadian judgments as readily as we enforce American ones.

[14]  It is not the goal of this paper to discuss all the pros and cons of the foregoing five courses of action. Our reason for not entering into a detailed discussion of this matter is that it does not seem to lie within our terms of reference. As noted in the introduction, this paper addresses the issues bearing on the content and scope of a new uniform act -- i.e. option 4 (b). It appears that the Ministers of Justice have weighed the options and have decided that that is the route which should be followed. Nevertheless we think it helpful to place option 4 (b) in the context of other possible actions, since they might have some bearing on the assessment of what should go into a uniform provincial statute dealing with enforcement of foreign judgments. The remainder of this discussion paper is devoted to that subject.

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