SCC to Consider the Relevance of Attornment to the Analysis of an Ontario Court's Jurisdiction
Should an Ontario court refuse to assume jurisdiction over the plaintiffs’ claims in the face of choice of (foreign) forum and arbitration clauses, even though the non-Ontario defendants attorned to the jurisdiction of the Ontario court? The Supreme Court of Canada will examine this issue when it hears the appeal in Momentous.ca Corporation v. Canadian American Association of Professional Baseball Ltd.
In this case, Rapidz Baseball operated a team in the Can-Am League during the 2008 season, but lost over $1 million and applied under the League’s by-laws to withdraw voluntarily because of financial hardship. The League’s Board of Directors dismissed Rapidz Baseball’s application and terminated its membership. The League then called on a $200,000 line of credit that Rapidz Baseball had been required to post under the by-laws. Rapidz Baseball and related companies sued the League and its principals, and the City of Ottawa, claiming that the League illegally terminated Rapidz Baseball’s membership and had no right to draw down the line of credit.
The League and its principals brought a motion to stay or dismiss the action under Rule 21.01(3)(a) of the Rules of Civil Procedure, on the basis that the Ontario court did not have jurisdiction over the subject matter of the action. Pursuant to choice of forum and arbitration provisions in the League’s by-laws and in agreements signed by the plaintiffs, the plaintiffs had agreed that all disputes with the League would be resolved in North Carolina and would be subject to arbitration.
The motion judge granted the defendants’ motion and dismissed the action, and a unanimous Ontario Court of Appeal affirmed this decision. The Court of Appeal wrote that jurisdiction raises two separate issues:
- To which attornment is relevant — does the Ontario court have or can it assume jurisdiction? As the Court of Appeal explained, “[a]n Ontario court has jurisdiction if the defendant consents to its jurisdiction or is present in Ontario, and can assume jurisdiction on being satisfied of ‘a real and substantial connection’ to Ontario.”
- To which attornment “has little or no relevance” — should the Ontario court take jurisdiction? This is a discretionary decision. Where there is a choice of forum provision, the plaintiff must show “strong cause” why the clause should not prevail. In this regard, the Court of Appeal indicated that, “in exercising its discretion, the court is guided by the rationale that ordinarily parties should be held to the bargain they have made.”
The Court of Appeal held that the plaintiffs had not shown strong cause. Indeed, the sole ground on which the plaintiffs were relying to show strong cause was the defendants’ attornment, which (as mentioned above) has little or no relevance to this second issue, according to the Court of Appeal. In addition, the Court of Appeal held that the arbitration provisions buttressed its conclusion that the plaintiffs should be precluded from suing in Ontario.
The Supreme Court of Canada’s ruling in this case will provide helpful guidance regarding choice of forum and arbitration clauses and, in particular, the relevance of attornment to the analysis of jurisdiction.
Momentous.ca Corporation v. Canadian American Association of Professional Baseball Ltd., 2011 CanLII 28467 (SCC)
SCC Docket Number: 33999
Date Leave Granted: May 19, 2011
arbitration arbitration clauses attornment choice of forum jurisdiction leave to appeal subject matter Supreme Court of Canada