In our globalized world, parties enter into agreements across countries and continents every day. When disputes between those parties arise, does a Canadian court have jurisdiction over defendants if they are located outside Canada?
In Sinclair v. Venezia Turismo, the Supreme Court of Canada provided new guidance on when a Canadian court should take jurisdiction over a defendant located outside Canada where a contract with the party was allegedly entered in the province1. The decision provides foreign defendants with greater ammunition to resist Canadian courts' jurisdiction in contractual disputes where the connections to Canada are weak.
What you need to know
- Jurisdiction must be assessed for each defendant individually. The test for jurisdiction is intended to prevent judicial overreach and uphold the objectives of fairness, stability and efficiency in the larger conflict of laws system. As a result, the Court's focus will be on a particular defendant's connection to the jurisdiction, not the relationship to Canada of the dispute as a whole.
- Where a case involves multiple contracts, each contract must be assessed separately to determine whether it can individually ground jurisdiction. Multiple contracts that are each, on their own, insufficient to establish a Canadian court's jurisdiction cannot, together, ground jurisdiction.
- Forum non conveniens is only engaged where the court has jurisdiction. Jurisdiction and forum non conveniens are related, but separate analyses.The Supreme Court emphasized that forum non conveniens is a discretionary remedy that can only be invoked where a court already has jurisdiction over a case and the parties, and therefore cannot be raised until the question of jurisdiction is resolved.
Background
The underlying dispute
The appellants, Duncan and Michelle Sinclair, were injured during a vacation in Italy2. Mr. Sinclair booked the trip using a concierge service associated with his Amex Canada credit card3. When Mr. Sinclair arrived in Italy, he used the concierge service to book transportation to his hotel4. The concierge service then booked Mr. Sinclair a water taxi through a third-party travel service provider5. The Sinclairs were injured while riding the water taxi and commenced an action in Ontario seeking damages from multiple defendants, including the Italian companies that owned and dispatched the water taxi6.
Motion judge finds jurisdiction at first instance
The Italian defendants brought a motion to dismiss or stay the action on the basis that the Court in Ontario lacked jurisdiction over them. The motion judge dismissed the defendant's motion, finding that multiple contracts in the dispute were sufficiently connected to Ontario. The motion judge also invoked forum non conveniens, stating that the Italian defendants had not established that Italy was clearly a more convenient forum7.
Court of Appeal for Ontario reverses the motion judge
The Court of Appeal for Ontario allowed the appeal, holding that Ontario lacked jurisdiction over the Italian defendants8. In particular, the majority found that the contractual arrangements between the Sinclairs and Amex did not contemplate the Italian defendants' involvement, and therefore the water taxi arrangements were not sufficiently connected to the Ontario-based agreement.
Supreme Court of Canada confirms lack of jurisdiction
In a split 5-4 decision, the majority of the Supreme Court denied the appeal and held that Ontario courts lacked jurisdiction over the Italian defendants. While there was an Ontario contract connected with the dispute (i.e., the Amex agreement), that was insufficient on its own to ground jurisdiction because that contract had no real and substantial connection with the dispute.
The Court applied the two-stage "real and substantial connection" test for jurisdiction from Club Resorts Ltd. v. Van Breda9. At the first stage of the test, a plaintiff must establish a "connecting factor" that links the subject matter of the litigation to the forum, thereby creating a presumption of jurisdiction. At the second stage, the defendants have an opportunity to rebut the strength of that connection10. In this case, the Sinclairs sought to establish the fourth connecting factor listed in Van Breda: that a contract connected with the dispute was made in Ontario.
At the first stage of Van Breda, the majority found that the cardholder contract between Mr. Sinclair and Amex Canada was entered in Ontario, and thus that a presumptive connecting factor was established regarding that contract. The contract for water taxi services, however, was entered at the dock in Venice. A "constellation of contracts" cannot, together, ground a real and substantial connection if the contracts on their own were insufficient to ground a connection between a defendant and Ontario11.
At the second stage of Van Breda, however, the Italian defendants rebutted the presumption of jurisdiction and showed that this cardholder contract had no real and substantial connection to the accident that occurred on the water taxi in Italy. The only connection between the claim and credit agreement was the "non-binding reservation through [the third-party travel service] by way of an Amex Canada agent"12. To assume jurisdiction based on such a tenuous connection would be to "impose a heavy burden that is difficult to justify" for future litigants in jurisdictional disputes based on torts, according to the majority13.
Finally, the majority re-emphasized that forum non conveniens is not appropriately considered as part of the two-step Van Breda test. Rather, forum non conveniens is a discretionary remedy that comes into play only after a court's jurisdiction over a matter has been established.
A minority of the Supreme Court would have allowed the appeal, finding that Ontario had jurisdiction over the Italian defendants.
While the decision endorsed a robust standard, the Court failed to clarify the exact standard of proof necessary to ground a "real and substantial connection". The dissent endorsed the "low threshold" of a "good arguable case"14, but the majority found that it was "not the appropriate case to pronounce on the applicability of [that] standard"15. Until this standard is clarified, however, litigants are left with little guidance on how strong their "real and substantial connection" must be before the court will assume jurisdiction, thereby opening the door for forum non conveniens arguments.
Footnotes
1 2025 SCC 27 [Sinclair].
2 Ibid at para 3.
3 Ibid at para 4.
4 Ibid at para 5.
5 Ibid.
6 Ibid at para 19.
7 Ibid at para 23.
8 Ibid at paras 27–35.
9 2012 SCC 17 [Van Breda].
10 Ibid at paras. 90–95.
11 Sinclair, supra note 1 at para 55.
12 Ibid at para 135.
13 Ibid at para 136.
14 Ibid at para 224.
15 Ibid at para 59.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
