Claims for Appropriation of a Foreign Corporate Opportunity: Do Ontario Courts Have Jurisdiction?
On August 23, 2011, the Ontario Court of Appeal will hear an appeal on the question of whether Ontario courts have jurisdiction over a claim for appropriation of a foreign opportunity.
In Dundee Precious Metals Inc. v. Marsland, Corrick J. dismissed a claim by an Ontario mining company, Dundee, against an employee, Marsland, on the basis that the Ontario courts lacked jurisdiction. Dundee alleged that Marsland misappropriated a mining project in Serbia through the use of improper use of confidential information while working in Bulgaria.
The motion judge applied the test for jurisdiction recently set out in Van Breda v. Village Resorts Ltd. There was a presumption of a real and substantial connection under rule 17.02(f)(ii) because the claim was based in part on a management contract between Dundee and Marsland which was governed by Ontario law. However, the presumption was displaced for two reasons.
- In the motion judge's view, the connection between the plaintiff's claim and Ontario was weak. Marsland was working in Bulgaria to pursue a mining project in Serbia. Injunctive relief was sought against Marsland from discussing the development of the project with the Serbian government. Equitable relief was sought regarding the beneficial ownership of Serbian land and funds located abroad. Further, the alleged breaches of duty most likely occurred in Serbia or Bulgaria, where Marsland was operating. While it was true that Marsland's management contract and a release and indemnity signed at the end of his employment with Dundee were governed by Ontario law, neither contract contained a forum selection clause.
- The motion judge held that the defendant's connection to Ontario was weak. Marsland lived in Bulgaria during his employment with Dundee, had never lived in Ontario, had no assets in Canada and only attended board meetings in Toronto on a few occasions over the course of many years.
The balance of the Van Breda factors similarly pointed in favour of dismissing the action.
The motion judge also concluded that even if the Court had jurisdiction, he would have stayed the action on the basis that Ontario was not a convenient forum.
The Dundee appeal will have implications for the ability of domestic corporations in various industries to pursue their claims in Ontario against employees, directors and officers working in foreign jurisdictions. If Dundee is upheld, they may be required to litigate abroad.
Dundee Precious Metals Inc. v. Marsland
Hearing Date: August 23, 2011
appropriation confidential information contract convenient forum corporate opportunity jurisdiction Ontario Court of Appeal real and substantial connection