Multijurisdictional disputes in law require a nuanced understanding of legal systems across different jurisdictions. These disputes often arise in cases involving international transactions, cross-border contracts, or family law matters, where parties may find themselves subject to laws and regulations from multiple jurisdictions simultaneously. From conflicting court rulings to challenges enforcing judgments across borders, multijurisdictional disputes present a unique set of challenges.
This blog post will explore the challenges that multijurisdictional disputes can raise and how courts might address them.
What is a Multijurisdictional Dispute?
Whenever a dispute involves persons or entities such as companies who reside and operate in different Canadian provinces, or different countries such as in the U.S.A., China, or U.A.E., there is a serious question for the BC Court to answer, which is whether the BC Court has the power to adjudicate the dispute – this power is called jurisdiction.
Are the Court’s Powers Limitless?
The court’s power is not limitless. In Unifund Assurance Co. v. Insurance Corp. of British Columbia, 2003 SCC 40, as one of the limitations, Justice Binnie elucidated that “a province has no legislative competence to legislate extraterritorially” (para. 50), that this restriction is “fundamental to our system of federalism” (para. 51). In the Unifund case, the Supreme Court of Canada ruled that the Ontario Insurance Act does not apply to the BC Insurer for indemnification.
How is Jurisdiction Determined?
In Sharp v. Autorité des marchés financiers, 2023 SCC 29, the latest Supreme Court of Canada decision on multijurisdictional disputes released in November 2023, 4 BC residents challenged the Quebec securities regulator’s power over them, claiming that the regulator over-reached its powers under the Quebec Securities Act.
The Quebec securities regulator, (the equivalent of the BC Securities Commission), alleged that Mr. Sharp and 3 BC other residents defrauded Quebec investors using a pump-and-dump stocks scheme (paras. 17-20): they promoted the value of stocks in and outside Quebec using false press releases, then sold the stocks for a profit.
Mr. Sharp specifically contested that he only bought and sold stocks outside Quebec (para. 130); the Supreme Court of Canada however found that the pump-and-dump scheme caused injuries to Quebec investors, thus, Mr. Sharp and the other 3 not only do not fall within the reach of the Quebec Securities Act, their activities also had a real and substantial connection with that province, despite the fact that their shell company was incorporated in Nevada, U.S.A.
Further, the Supreme Court of Canada’s key reasoning on whether the Quebec regulator has jurisdiction over the BC residents is whether the BC residents’ activities closely connected with Quebec (paras. 105-110): the company had a place of business and a director who were in Quebec; the pump-and-dump were accessible to Quebecers and Quebec investors suffered losses (paras. 18-20). Once these activities connect with Quebec, the Quebec Securities Act applies as it is not being used to overreach to BC.
What Constitutes a Real and Substantial Connection?
In BC, the Legislature enacted the Court Jurisdiction and Proceeding Transfer Act, which defined what is a real and substantial connection with BC. In Section 10, the law enumerates these connections, such as a contract dispute bearing on a property in BC (Sections 10 c (1) and e (1)), or it concerns a business carried on in BC (h), or an injunction that is to be carried out in BC (i).
In essence, this Act codified the criteria which the Supreme Court of Canada set out in a family of cases that dealt with different aspects of the real and substantial connections test.
If the Court has Jurisdiction, What Law Applies?
Logically, if, like the facts in the Sharp case which brought it under the governance of a particular provincial jurisdiction, then the legislation in the particular area applies.
However, what happens if there is a close connection between the parties and BC, but BC law does not apply? This type of issue appears in almost every case we handle and the scenarios present themselves regularly. For example, if part of the disputing parties’ properties was located overseas, e.g. in Dubai, U.A.E., while the parties reside in BC, can then the BC Courts determine the Dubai property’s ownership? What if in a family dispute, both parents have properties in BC, used to be BC residents and one of the parents started a lawsuit in BC, but they live with their children in China – can the BC Court determine guardianship over the children?
In Sharp, the Supreme Court of Canada recognized the frequent occurrence of the multijurisdictional disputes (para. 116) and the law to be applied should be determined by the rules resolving conflict of laws. In the case we acted for a party involving properties in Dubai, the BC Court deferred to the U.A.E. courts to resolve the dispute. In the guardianship case, the Section 74 of the Family Law Act provided the rare circumstances when the court should exercise its power, such as when the child was brought to BC. The Family Law Act also provided specific rules on whether the BC Courts have jurisdiction over properties located outside BC, and if yes, which law applies (Sections 105-109).
It goes without saying that for the BC courts to apply foreign law, the difficulties are numerous. This difficulty is not limited to the legal systems that are drastically different from the Canadian common law system, another significant difficulty is to apply the law to the facts: the BC courts may not be in the best position to find the facts that happened in a different state.
Why Do Parties Commence Lawsuits in BC if They Lack a Real and Substantial Connection?
Multijurisdictional disputes, especially property disputes, involve “anchor” properties in BC that one of the other parties own. Although the litigating party lacks the requisite connection to BC, BC is a preferred jurisdiction since that party wants to obtain security if it can secure a judgment, or the BC law may have a perceived advantage afforded to that party.
This line of thinking is flawed: one of the first issues that the courts need to determine is whether it has power to adjudicate a particular matter, in law and in fact. In Wang v. Sigouin, 2017 BCCA 372, the chambers judge was misled in facts by Wang’s counsel (paras. 2 and 5-6, 10) as to the BC Court’s jurisdiction – he then, without considering the jurisdictional issue, dismissed Sigouin’s jurisdictional response.
Justice Bennett of the BC Court of Appeal reasoned that the jurisdictional issue must be properly addressed, and the series of orders made were all set aside. (paras. 17-18 and 23).
What Do I Do if I am Involved in a Multijurisdictional Matter?
Because of mobility, investment and interstate commerce, one often faces the dilemma as to where to start a lawsuit. The examples can be infinite: two companies intended to do business in BC, but the initial negotiations were in Ontario; the business was mainly in BC, but the profit-sharing arrangements were in Ontario; siblings in BC disagree on how to deal with properties in New York which are held under a trust that was established in BC.
As such, it is important to consult with an experienced litigation lawyer who can explain your options.
Contact Commercial Litigation Lawyer Roland Luo in Vancouver For Trusted Advice on Multijurisdictional Disputes
Multijurisdictional disputes are a complex area of law that require unique considerations. The information provided above should not be read as legal advice as each scenario is distinct. Roland Luo helps clients navigate the legal nuances that accompany multijurisdictional disputes and provides services in French, English and Chinese. Call Roland Law at (604) 800-4628 or complete our online form to learn how we can assist you.