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You’re It! Tag Jurisdiction over Corporations in Canada

Posted by on Monday, July 3, 2017 in Articles, Blog, Left column, Vol. 50 No. 3, Volume 50, Volumes.

In September 2015, the Supreme Court of Canada released its decision in Chevron v. Yaiguaje, a case that legal commentators had been keeping an eye on for years. The Chevron case has spanned several decades as well as several continents, and the enforcement action in Ontario was the latest in a series of procedural moves aimed at enforcing a nearly $10 billion Ecuadorian judgment against the oil giant. In Chevron, the plaintiffs sought to have the judgment enforced in Ontario against both Chevron (the judgment debtor) and Chevron Canada (a seventh-level indirect subsidiary of the judgment debtor). The Chevron case did not decide the merits of the dispute, but rather addressed two discrete jurisdictional questions: (1) Was a real and substantial connection between Chevron and Ontario required in order to enforce a money judgment against Chevron? And, (2) What was the appropriate basis of jurisdiction over Chevron Canada?

With respect to the first issue, the Court held that jurisdiction was properly assumed over Chevron, the judgment debtor, because service of process had been properly effected on Chevron pursuant to the Ontario Rules of Civil Procedure. No additional showing of a real and substantial connection between Chevron and Ontario was required. With respect to Chevron Canada, the Court held that jurisdiction was appropriate in Ontario because Chevron Canada was carrying on business in Ontario and it was served with process in juris. It is this latter holding that has the most potential to disrupt the existing case law.

What the Supreme Court of Canada did in Chevron was essentially endorse tag jurisdiction over a corporation. If a corporation is carrying on business—a fairly low standard judging from the Chevron case itself—and the corporation is served in juris, then a provincial court will have general jurisdiction over the corporation. General jurisdiction, a largely American term, refers to the power of a court to adjudicate any and all disputes involving a defendant, even those with no connection to the underlying forum. Although the Court justified its holding on presence-based jurisdiction over Chevron Canada on the basis of well-established precedent, this Article takes the position that this precedent is actually not that well-established.

For instance, in the leading case cited by the Supreme Court of Canada, Incorporated Broadcasters, the Ontario Court of Appeal actually appeared not to understand what is required to assert presence-based jurisdiction over a corporation. Additionally, this Article argues that there are various (likely unintended) conceptual problems created by the Supreme Court of Canada’s decision in Chevron: the adoption of too low a standard for carrying on business, which results in the assertion of universal jurisdiction over corporate defendants; the partial subsuming of the real and substantial connection test; and the conceptual misalignment between presence-based jurisdiction and assumed jurisdiction. This latest development in Canada ironically comes at a time when U.S. courts are dramatically reining in general jurisdiction. This Article suggests that the United States’ experience with this issue—and its reasons for severely limiting general jurisdiction—should inform Canadian jurisprudence on the topic.

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  • Barry Bartosik

    August 31st, 2017

    I really like reading through a post that can make men and women think. Also, thank you for permitting me to comment!|

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