By Keith Edmund White
Note: The following is a summary of Mr. Giacomelli’s Sept. 8 presentation to the Cleveland Metropolitan Bar Association’s International Law Section. I would be remiss if I did not thank Jon P. Yormick, Section Chair, for organizing the event and his insightful comments, not to mention the Section’s other officers, Mark J. Sundahl and Kristopher O. Justice. Finally, many thanks to Mr. Giacomelli for his presentation; naturally, this article is my work product and does not intend to speak for Mr. Giacomelli or the Cleveland Metro Bar Association.
Thursday afternoon I attended a presentation by Jon-David Giacomelli on U..S.-Canadian commercial disputes sponsored by the Cleveland Metropolitan Bar Association’s International Law Section. Giacomelli focused on the Canadian judicial system’s “revolutionary” change towards enforcing U.S. court decisions within Canada. He did so by discussing three topics: (1) the dramatic liberalization of Canadian jurisdictional barriers to enforcing U.S. orders in Canada since 1990, (2) the value of American clients knowing what novel Canadian legal actions they can now use in Canadian litigation, and (3) the pros and cons of litigating commercial disputes in both nations.
While technical, these subjects are critical to any attorney representing a U.S. client considering an action against a Canadian individual, affiliate, or separate Canadian organization. And, for those interested or engaged in international commercial law in the United States, this situation will happen: the Canadian-U.S. trading relationship constitutes the world’s largest trading relationship. While some may imagine Canadian international commercial lawyers phoning New Delhi or Moscow, it’s important to remember—as Giacomelli noted—that Canada derives more trade dollars from Kentucky “than [with] most of the BRIC countries.” And, on the American side, 2010 saw over twice as many U.S. export-dollars flowing into Canada than China. And, remember, today there are more Californians than Canadians.
Naturally, any barrier to trade costs money—and legal barriers, while admittedly abstract, are no different. Before 1990, American plaintiffs with U.S. judgments who sought enforcement in Canada were forced to initiate a new Canadian judicial proceeding. Whether from litigation delay or simply incentivizing legally problematic cross-border behavior, Canada’s jurisdictional nationalism dampened cross-border trade.
But, according to Giacomelli, the last twenty years have pushed Canada’s “jurisdictional pendulum” firmly towards jurisdictional liberalization. Morguard v. De Savoye, while dealing with interprovincial jurisdictional issues, showed the Canadian Supreme Court’s embrace of the “real and substantial connection” test in determining how Canadian courts decide to enforce other jurisdiction’s legal judgments. And Giacommelli made clear this term of arc has been interpreted liberally: “the hurdle…is extremely low” and “courts bending [are] bending over backwards” to enforce U.S. judgments.
Of course, this radical change has not come without its critics—but Giacomelli does not place himself or the Canadian Supreme Court within this group of liberalization naysayers. As he pointed out, in Beals v. Saldanha (2001) the Canadian Supreme Court enforced a U.S. court order where the defendant showed “newly discovered proof of fraud which was not before the U.S. court.” The Canadian Supreme Court’s response: since the fraud could have been reasonably discovered at the American proceeding the judgment is enforceable in Canada.
While Giacomelli acknowledges the dangers of such “liberalization gone awry,” he does not see the Canadian legal system—in regard to American legal judgments—changing its tune anytime soon. “[T]hose who thought the newly constituted Supreme Court would pull back were solely disappointed,” Giacomelli concluded. And, in Pro Swing Inc. v. Elta Golf Inc. (2006), the Canadian Supreme Court went even further by making clear American injunctive orders could also be enforced in Canada.
In sum, the liberal swing of Canada’s jurisdictional pendulum isn’t changing anytime soon.
And how does this liberalization burst impact U.S. practitioners? American lawyers, when enforcing U.S. judgments in Canada, can now avail themselves of novel Canadian legal claims. But, Giacomelli noted that many American lawyers are still playing catch-up when it comes to executing these tools properly, at their client’s possible detriment. Standing out in Canada’s commonwealth tool box are (1) Mareva injunctions that freeze a defendant’s assests at the onset of a case and (2) Anton Piller orders that permit civil search warrants to be executed by the plaintiff. Both require U.S. attorneys to not only spell-check their bill, but become acquainted with these legal tools’ procedural and substantive aspects.
But, even clearing those hurdles does little if the U.S. legal practitioner cannot appreciate the differences between Canadian and American-style litigation. Giacomelli uses 400 factors when advising clients, but—thankfully—boiled these down to a handful of core American and Canadian litigation benefits. America (1) offers more avenues for accruing damages and (2) greater discovery access. On the other hand, Canada offers (1) less expensive litigation, (2) legal costs to the winner, and (3) the natural advantages of both counsels settling the matter in the same jurisdiction.
An American international commercial must know these three topics—Canada’s liberalizing jurisdictional barriers, novel legal tools, and overall litigation benefits—before advising a U.S. client on what forum-shopping. And, perhaps even more important, it allows the prepared international commercial lawyer to take advantage of their adversary’s (possible) lazy lawyering.
In short, understanding Canada’s jurisdictional liberalization not only makes for good parlor-room conversation, it’s need-to-know information for international commercial lawyers who suspect they may run into world’s greatest trading relationship.
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