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Transaction/Case Details

Court refuses to assume jurisdiction over foreign class members in Airia Brands Inc v Air Canada

DATE CLOSED

August 26, 2015

BUSINESS SECTOR

Transportation

LEAD OFFICE

Toronto

VALUE

200 Million CAD


OVERVIEW

On August 26, 2015, the Ontario Superior Court of Justice rendered its decision that it does not have jurisdiction over foreign class members in Airia Brands Inc. v Air Canada. The class action, which names a host of international airlines accused of fixing the price of air cargo to and from Canada since 2000, was certified by Justice Lynne Leitch.

The Plaintiffs alleged that the Defendants conspired in Canada and throughout the world to fix prices of airfreight cargo shipping services for shipments to or from Canada (excluding shipments to and from the United States).

Justice Leitch gave three alternative reasons for her decision:

First, based on the defendants’ evidence of foreign law that an Ontario class proceedings judgment would not be recognized or enforced in the foreign countries where the absent foreign claimants reside, Justice Leitch accepted the defendant’s argument that it would be contrary to the constitutional principles of order and fairness to apply the common law “real and substantial connection” test for asserting jurisdiction to the absent foreign claimants. Accordingly, she found that the only basis on which jurisdiction could be asserted over foreign class members (i.e. class members who reside outside of Canada, entered into contracts for airfreight shipping services outside Canada, and suffered any alleged losses outside Canada) would be their presence in Ontario or consent to Ontario’s jurisdiction, both of which are necessarily lacking given the definition of foreign class members above.

Second, Justice Leitch found that even if the real and substantial connection test were constitutionally applicable, it was not met on the facts. In part, this was because none of the traditional presumptive connecting factors in the real and substantial connection test applied to the foreign class members’ claims against the defendants. Further, she held it would be inappropriate to apply the new presumptive connecting factor of “common issues” between Ontario and non-resident class members recognized in some national class actions given the global nature of this class action. Additionally, Justice Leitch held that even if any of these connecting factors did apply, the presumption of jurisdiction which they created would be rebutted given the tenuousness of the foreign class members’ links to Ontario and their lack of a reasonable expectation that their claims would be adjudicated by an Ontario court.

Third, Justice Leitch held that even if jurisdiction existed, the claims of the foreign class members should still be stayed based on the doctrine of forum non conveniens. This was largely owing to the comity concerns associated with permitting the foreign class members to sue in Ontario in the face of expert evidence that an Ontario judgment would not be enforced abroad. Additionally, Justice Leitch relied on the Statement of Defence in concluding that an Ontario action involving foreign class members would be too complex given the need to consider the 30 different bodies of foreign law that were pleaded.

McCarthy Tétrault advised one of the defendants, Cathay Pacific Airways Ltd. with a team consisting of John P. Brown and Brandon Kain.

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