Hague Convention Choice of Court Agreement - Quebec Law 2007

The duty of the court seized that is not the court chosen by the parties

[21] In Quebec law, prior to 1994, when the parties chose a foreign court, this choice was never considered to be exclusive and the Quebec courts retained jurisdiction.[38] Since 1994, it has been possible for the parties to exclude the jurisdiction of the Quebec courts but, the language of the clause must be clear. Thus, in M.F.I.,[39] the Superior Court noted that the use of expressions such as “exclusive (of all other jurisdictions)”, “any” or “all” (actions), “only (be taken in or enforced before the chosen jurisdiction)” and “irrevocably (attorn to)”, expressed the intention of the parties to exclude the jurisdiction of any other court. In that case, the choice of court clause was asymmetrical.[40] The Convention creates an irrebuttable presumption[41] of exclusivity unless the parties give an express indication to the contrary. It would thus amend the law of Quebec in this regard.

[22] According to both article 6 of the Convention and the end of article 3148 of the Civil Code of Quebec, a Quebec court that is not the chosen court should decline to hear a case when the proceedings are instituted in that court. This is what usually happens and, in this regard, the Quebec courts have on many occasions exhorted parties to contracts in Quebec to read their contracts carefully.[42] More often than not, in fact, foreign courts, usually those in Ontario[43] (see infra par. [38]) or the US,[44] although sometimes also in Italy,[45] Germany,[46] Switzerland,[47] France,[48] Bahamas[49] or Scotland,[50] are chosen by the parties under standard or general clauses to which the Quebec party does not appear to pay sufficient attention. On this point, the Convention and Quebec law are in agreement.

[23] Article 6 of the Convention sets out five express exceptions to the duty of a court that is not chosen to decline jurisdiction: a) the agreement is null and void under the law of the State of the chosen court, including its conflict of laws rules; b) a party lacked the capacity to conclude the agreement under the law of the State of the of the court seized (including its conflict of laws rules);[51] c) giving effect to the agreement would lead to a manifest injustice[52] or would be manifestly contrary to the public policy of the State of the court seized in accordance with its own concepts;[53] d) for exceptional reasons beyond the control of the parties, the agreement cannot reasonably be performed; or e) the chosen court has declined to hear the case.

[24] However, it must still be possible to show that there was indeed a meeting of minds. To do this, article 6 a)of the Convention provides for the application of the law of the chosen court, including its private international law rules. If it is clear (and this may refer both to the factual and the legal situation) that there cannot have been a meeting of minds, according to the Explanatory Report, there is, on the other hand, no need to examine the validity of the clause in accordance with the law designated by article 6 a); the court seized but not chosen will apply its own law.[54] In Hewlett-Packard France c. Matrox Graphics Inc., the Court referred to a sheer struggle opposing companies that exchange their reciprocal terms and conditions, each sincerely believing that theirs would prevail.[55] In that case, there was a choice of court clause in the terms and conditions of one company selecting the courts of Texas, but none in those of the other company. Even though the latter had not been as consistent as the first in sending its terms and conditions, it was the first to lay down the rules in question by placing its rules on the back of its first order form in legible and accessible print. The Court was of the view that, when two companies find themselves in a situation of reciprocity, it is incumbent on the company that was the first to receive an order form or other document containing terms and conditions by which it intends not to abide to protest. At that particular point, either the companies negotiate or they refuse to conclude a contract. Therefore, the choice of court clause selecting the courts of Texas had never been accepted by both parties and the Quebec courts were validly seized. The court so held without considering Texan law.

[25] Since 1994, in Quebec law, a choice of court agreement conferring jurisdiction on foreign authorities has been set aside for two main reasons, usually though not always related[56] to the more general problem of contracts of adhesion:[57] either 1° there was no meeting of minds since the unilateral clause outside the contract was not brought to the attention of the other party, which is prohibited by article 1435 C.C.Q.;[58] or 2° the clause is found to be abusive, contrary to article 1437 C.C.Q.[59]

[26] The first case, where there is no meeting of minds between the parties, illustrates what was discussed in paragraph [24]: absent a meeting of minds of the parties, there is no agreement and the Convention does not apply.[60] In Quebec law, as in any other contract, no particular formal requirements are imposed to establish the existence of consent to a choice of court clause. Acceptance may be express or tacit (art. 1386 C.C.Q.)[61]but there must be acceptance. The choice of court clause cannot be introduced surreptitiously in a complicated form[62] or be made impossible to view because there is a host of different kinds of information in print that is too small in a document that has no apparent structure,[63] or that has not been included in pre-contractual or contractual documents; it may not be printed deceitfully and imposed unilaterally after the fact on the back of an invoice accompanying delivery of the equipment.[64] On this point, therefore, the Convention and Quebec law are in agreement.

[27] The second case, that of a choice of court clause that is abusive, is more complex because it has given rise to curial controversies in Quebec law. Indeed, on the one hand, in 2617-3138 Québec inc. c. Rogers Cantel Inc.,[65] the Superior Court stressed the fact that while article 3149 C.C.Q., to which we referred earlier (see supra par. [3]), protects consumers and employees, it does not contain anything particular concerning the adhering party. Furthermore, the issue of jurisdiction must be resolved before the substantive question. Also, it would be the province of the chosen court to consider this question.

[28] On the other hand, in Quebec, the case law has sometimes asserted that protection against abusive provisions in the case of contracts of adhesion applies only when the Quebeclaw is the substantive law applicable to the contract. Thus, in United European Bank and Trust Nassau Ltd. c. Duchesneau, the applicable law was that of Bahamas; moreover, the client sued the banking institution and the clause conferring jurisdiction on the Bahamian courts was not in any way abusive.[66]

[29] It may be asked, however, what would happen if the law applicable to the contract were the law of State X and the chosen court that of country Y. Absent an express choice of law by the parties to govern their choice of court clause, which law would the Quebec courts seized but not chosen apply to determine whether the clause was abusive? One thing is certain: once the applicable law is identified and if that system is foreign, the application of the conflict of laws rules of this system is excluded under Quebec law by article 3080 C.C.Q.[67] The Quebec court would not therefore apply the conflict of law rules of the chosen court. On this last point, therefore, the Convention and Quebec law differ.

[30] Article 6 b) of the Convention also raises the question as to whether, in Quebec law, in the absence of case law on the question as to which law governs the capacity of the parties to conclude an agreement that excludes the jurisdiction of the Quebec courts, a Quebec court seized but not chosen would apply its conflict of laws rules and thus article 3083 C.C.Q., as required by article 6 b) of the Convention, or whether it would refer to the law of the chosen court, as provided for in article 6 a) of the Convention.

[31] Article 3136 C.C.Q. allows a court in Quebec to hear a dispute if an action could not possibly be instituted in the court chosen by the parties or where the institution of such proceedings could not reasonably be required,[68] which could reflect paragraph d) of article 6 of the Convention. This provision, which is based on Swiss federal law, is an exception to the normal rules of jurisdiction and is meant to resolve certain problems of access to justice for a litigant located on the territory of Quebec, when the foreign court that would normally have jurisdiction is inaccessible to him or her for exceptional reasons such as impossibility in law or some practical impossibility. Thus, situations may arise in which diplomatic or trading relations with a foreign State have been severed, where it is necessary to protect a political refugee or where there is serious physical danger if the plaintiff institutes proceedings in the foreign court, etc.. This basis for the jurisdiction of Quebec courts would apply in situations of war, disorder or disturbances in a country that impacted on its judicial organization. According to the Court of Appeal, even if in view of the judicial notice principle, it must be established that it is impossible to act as a result of the inability of the courts to act or because their capacity for action is restricted, whether because the situation in the country is politically precarious or because of ongoing violent insurrection. The forum provided for in article 3136 C.C.Q. is a subsidiary forum but it must be necessary to avoid miscarriages of justice and not merely to accommodate one of the parties.[69] The cost or inconvenience of a trial abroad do not justify its application any more than the physical impossibility alleged by a party of paying the necessary costs of representation in the chosen court. Two decisions of which we are aware have considered the interpretation of article 3136 C.C.Q. in a situation where a choice of court clause existed, but the applicants were unsuccessful.[70]

[32] According to article 3138 C.C.Q.,[71] a Quebec court that is seized but not chosen may order provisional or conservatory measures. The Convention does not prohibit this or require it (article 7). Everything depends on the domestic law of each State.[72] According to the Court of Appeal, a Quebec court could order such measures even though they were to be enforced on the territory of another State and a non-complying defendant would then be subject to contempt of court proceedings in the Quebec court.[73] The Quebec courts have not yet had an opportunity to address this question in the context of a choice of court clause selecting foreign courts.

[33] In addition, the question of the relationship between article 3139 C.C.Q., which confers jurisdiction on the Quebec courts in incidental demands in guarantee, and the end of article 3148 C.C.Q., which deprives them of all jurisdiction when the parties have chosen a foreign authority, has been answered by the Supreme Court of Canada. In GreCon, it held that in an action in Quebec by A against B, B could not implead C because that would be contrary to the choice of court agreement between B and C designating Germany.[74] On two occasions, the courts have indicated that it would be in the parties’ interest to provide that, if such a situation occurred, the Quebec courts could decide an action in guarantee despite the arbitration clause, and this was so in order that a decision could be given on all issues of the case in accordance with articles 71 C.C.P. and 3139 C.C.Q.[75] This comment could be applied to choice of court clauses. Where this is clearly what the parties’ intend, it would undoubtedly be necessary to consider that the clause is not exclusive, which would mean that the Convention could no longer apply to it. Be that as it may, the decision of the Supreme Court in GreCon brought Quebec law into line with the Convention.

[34] Finally, it should be noted that article 3151 C.C.Q. confers exclusive jurisdiction on the Quebec courts when the case raises the issue of 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. Quebec law is then also imperatively applicable (art. 3129 C.C.Q.). The courts have not yet had an opportunity to address this article in the context of a choice of court clause, but on this point, given the unambiguous language of article 3151 C.C.Q., it can be asserted that the Convention differs from Quebec law. Although article 2 (1) j) and k) of the Convention provide that this does not apply to claims for personal injury and the related moral damages brought by, or on behalf, of natural persons or to tort or delict claims for damage to tangible property that do not arise from a contractual relationship, the possibility cannot be excluded that a situation will give rise to contractual liability for damage to property caused by exposure to or the use of raw materials originating in Quebec. A declaration excluding this matter from the application of the Convention, which is allowed under article 21, would therefore be required to bring Quebec law into line with the Convention. This declaration would allow the Quebec court that is seized but not chosen, and the foreign court that is chosen to continue hearing the case. A foreign court that is seized but not chosen would still have a duty to stay proceedings in favour of the court chosen under the Convention.

[35] In addition, the question arises as to what would happen if the Quebec court were seized but not chosen in a case that only incidentally for damage suffered as a result of exposure to or the use of raw materials. As provided in article 2 (3), the Convention does not apply to certain matters listed in paragraphs a) to p) of article 2 (2), but this exclusion applies only where one of the subjects referred to in paragraph 2 is an “object” of the proceedings. This means that a dispute is not excluded from the application of the Convention if one of these matters arises as a preliminary question in proceedings where that question is not the subject-matter of the action. The Quebec courts have not yet had an opportunity to address this question.

[36] Since the Convention makes it possible to exclude same subject-matters by declaration, careful thought should be given as to the scope of the declaration that might be made. Thus, an insurance contract covering civil liability for any harm resulting from exposure to, or the use of, raw materials originating in Quebec would normally by covered by the Convention. Since such a contract provides for the insured to be compensated even for punitive damages, they would also be covered. To the extent that a Quebec court was seized but not chosen, that court would be required under the Convention to stay proceedings. Thus, a simple declaration excluding civil liability for any harm sustained in, or outside, Quebec as a result of exposure to or the use of raw materials, whether processed or not, originating in Quebec, would not be sufficient for the Quebec court to remain seized in the situation described above. To what extent it would be appropriate for a more general declaration to be made remains to be determined.

[37] We should note in conclusion that the Convention applies only to international cases (art. 1). In other words, if a case is otherwise solely connected with Quebec, the mere fact that a foreign court is chosen does not make it international. A Quebec court that is seized but not chosen would not therefore be required to stay proceedings in that case.[76] In Quebec law, the courts have not yet had an opportunity to address the question as to whether the parties may choose a foreign court that has jurisdiction in a situation where all the relevant elements are connected solely with Quebec. Two arguments have been made concerning the need for a foreign element in order for article 3148 par.2 C.C.Q. to apply. The first argument is that the legislature did not intend that a foreign element would be required for it to apply; this argument reflects a desire to give precedence to the independence of the parties’ wishes.[77] The second is that since article 3148 par.2 C.C.Q., unlike article3111 C.C.Q.,[78] does not state that the provision applies even where there is no “foreign element”, and since this silence should not be ascribed to simple forgetfulness,[79] it would follow that a choice of court clause selecting a foreign court would not be permitted in the event that no foreign element was present. In our opinion, a choice by the parties of a foreign court is a foreign element that would allow use to be made of article3148 paragraph 2 C.C.Q. It seems to us that there is no legal obstacle to a choice of court clause selecting a foreign court in the event that no other foreign element is present, although the Code does not contain a similar rule to that set out in article 3111 C.C.Q. as to choice of law. The language of the current article 68 C.C.P. would justify the assumption that the choice of a foreign court is sufficient to make the provisions of Book X of the Civil Code on private international law applicable.[80] On this point, therefore, the Convention is more explicit than Quebec law.

[38] Moreover, we should note that the Convention would not apply in a situation, which is very common in practice, where a choice of court clause agreed to by parties one of whom is from Quebec and the other from another Canadian province, designated Canadian courts outside Quebec. Unlike the Convention, Quebec law applies to Canadian situations in the same way as situations involving elements from outside Canada (art. 3077 C.C.Q.). On this point, therefore, the scope of the Convention is more restrictive than that of Quebec law.

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August 12 - 16, 2018