Update: When does a defendant submit to a foreign court’s jurisdiction?

Written on February 18, 2015.

There are indeed perils when a defendant ignores a lawsuit brought in a foreign jurisdiction, but a recent decision from the Court of Appeal of New Brunswick highlights what steps must a foreign plaintiff take to enforce a judgment from abroad and what factors must be considered to determine whether a defendant submitted to the foreign court’s jurisdiction. A plaintiff cannot simply register a foreign judgment by way of application. If the plaintiff wishes to enforce a foreign judgment in New Brunswick, he or she can bring an action for the debt that arises from the foreign judgment. If, moreover, there is a dispute as to whether a defendant submitted to the jurisdiction of a foreign court, the core question is whether the defendant invited the court to consider the merits of the action.

In Nackawic Mechanical Ltd. v. Ward, Robert Ward sustained personal injuries when he fell from an aircraft de-icer. He claimed that Nackawic Mechanical Ltd., a company located in New Brunswick, manufactured the de-icer. Both Mr. Ward and his wife brought an action against Nackawic Mechanical via a complaint filed in Ohio in August 2009, alleging product liability and negligence.

In September 2009, a Nackawic Mechanical officer submitted an answer to the Ohio court with respect to the Wards’ complaint, but the court struck the answer because the officer was not a lawyer approved to practice law in Ohio. The court gave Nackawic Mechanical until April 2010 to file an answer through a lawyer, but the company failed to do so. The court then noted Nackawic Mechanical in default. Following which, the court awarded judgment in Ohio against the company for $1,000,000. Nackawic Mechanical never appealed the noting in default, the judgment, or the assessment of damages.

After no payment was received, the Wards filed a Notice of Application in New Brunswick to have the Ohio judgment entered with the province’s Court of the Queen’s Bench. In September 2013, the application judge issued an order allowing the Ohio judgment to be entered in New Brunswick for $965,980.

A review of the Queen’s Bench decision can be found here.

Nackawic Mechanical appealed the application judge’s decision. It argued, among other things, that it was not proper for the Wards to bring the proceedings by way of a Notice of Application and that the company did not submit to the jurisdiction of the Ohio court.

Justice Larlee, writing for the Court, held that the application judge granted a remedy that she was not able to grant because it did not come within the legislative authority available to her. The Reciprocal Enforcement of Judgments Act did not apply because Ohio was not a signatory. For the province’s Foreign Judgment Act to apply — which governs circumstances where a party seeks to enforce a judgment obtained from a foreign court — the Wards should have brought the proceedings either on the foreign judgment or on the original cause of action.

If a party chooses to bring the proceedings on the foreign judgment, the cause of action must be for the debt that arises from the foreign judgment. The basis for judgment is regarded as creating a debt between the parties. There is no authority under the Foreign Judgment Act for the registration of a foreign judgment.

Justice Larlee noted that a proceeding initiated by Notice of Application is appropriate where the relevant facts are not in dispute. In this case, however, relevant facts were still in dispute as Nackawic Mechanical claimed that it did not submit to the jurisdiction of the Ohio court.

On whether Nackawic Mechanical submitted to the jurisdiction of the Ohio court, Justice Larlee noted that the issue was whether the defendant had submitted to the foreign court’s jurisdiction by virtue of voluntarily appearing as a defendant in the action without protest. The core question was whether the defendant invited the foreign court to consider the merits of the action. Since the defendant would undoubtedly accept a judgment in his or her favour by the foreign court, he or she must therefore also accept judgment against him or her. As a result, a court must consider two ends to a factually based scale. On one end, if a defendant appears merely to protest jurisdiction, he or she has not submitted to the jurisdiction of the foreign court. On the other, if a defendant files a defence in which he or she invites the foreign court to make a decision on the merits, he or she has submitted to the foreign court’s jurisdiction. Actions by defendants that fall somewhere in between must be determined on a case-by-case basis. The test for attornment goes beyond challenging the jurisdiction of the court based on jurisdiction simpliciter or forum non coveniens. The determination examines whether the defendant has consented to the court exercising jurisdiction by virtue of his or her conduct.

In this case, Justice Larlee held that it would not be appropriate for the Court of Appeal to decide the issue of submission to jurisdiction. What the Nackawic Mechanical officer did in Ohio was crucial to the determination of whether the corporation submitted to the jurisdiction of the Ohio court. The facts relating to jurisdiction are very much in dispute. The issue should not be decided on the basis of affidavits.

This decision was by no means an end to this matter. Although the Court of Appeal set aside the application judge’s decision, the Court remitted the case to the Queen’s Bench to consider whether the Notice of Application should be amended to claim relief that is allowable under the Foreign Judgments Act and whether the application should then be converted to an ordinary action.

Ignoring a lawsuit brought in a foreign jurisdiction is still quite perilous.