This article describes when British Columbia courts will recognize and enforce a foreign (i.e. non-B.C.) judgment.
The first step is to determine whether the foreign judgment is from a reciprocating jurisdiction.
A judgment obtained in a reciprocating jurisdiction will be enforceable in B.C. upon registration, in the B.C. Supreme Court, of a certified copy of that judgment. In North America, reciprocating jurisdictions include all Canadian provinces and territories minus Quebec, and the U.S. states of Washington, Alaska, California, Oregon, Colorado, and Idaho (Court Order Enforcement Act—Jurisdictions Declared to be Reciprocating States for the Purposes of this Act; International Commercial Debt Collection, by David Franklin, pg 174).
However, if the foreign judgment sought to be enforced in B.C. is from a non-reciprocating jurisdiction, then a lawsuit must be initiated in B.C. to facilitate enforcement of the judgment. This situation is the primary concern of this article.
Beals v. Sandanha 2003 SCC 72 is the leading case on the enforcement, in Canada, of judgments from non-reciprocating jurisdictions.
In Beals, the Supreme Court of Canada set out the “real and substantial connection” test, stating that “subject to legislatures adopting a different approach by statute, the ‘real and substantial connection’ test should apply to the law with respect to the enforcement and recognition of foreign judgments” (Beals, para 28).
This test is not only applicable to judgments after trial, but will also apply to default judgments where there is no unfairness or other compelling reason not to apply the test to default judgments (Beals, para 31, 53).
The ‘real and substantial connection’ test states that, subject to statutes saying otherwise, a Canadian court should recognize and enforce a judgment from a foreign court, if that foreign court had a real and substantial connection with either the subject matter of the action or the defendant in the action (Beals, para 23, 28).
A foreign court’s judgment will not be enforced where such court did not properly establish jurisdiction (Beals, para 38).
The level of “connection” required to pass the “real and substantial connection” test is substantial. Specifically, a significant connection must exist between the cause of action and the foreign court. If the defendant has participated in something of significance or was actively involved in the foreign jurisdiction, then he may be brought within the embrace of that jurisdiction’s law. However, a fleeting or relatively unimportant connection will be insufficient for a foreign court to establish jurisdiction (Beals, para 32).
There are relevant factors to be consulted in the jurisdictional analysis. Indeed, a potential real and substantial connection will be bolstered by the presence of traditional indicia of jurisdiction, such as attornment, agreement to submit, and residence and presence in the foreign jurisdiction (Beals, para 37).
One situation that will pass the test is a situation in which the foreign court assumed jurisdiction on the same basis as the B.C. court would have, for example, on the basis of a “real and substantial connection” test (Beals, para 29).
A discussion of the enforcement, in B.C., of judgments from non-reciprocating jurisdictions would not be complete without mention of the defences to such enforcement.
The most common defences to the enforcement of foreign (non-reciprocating) judgments are (1) lack of natural justice; (2) public policy; and (3) fraud. However, these defences are narrowly applied (Beals, para 41).
Lack of Natural Justice
The enforcement of a foreign judgment can be challenged on the basis of a denial of natural justice (Beals, para 59). This defence will only apply where the defendant in the foreign action proves, on a civil standard, that the foreign proceedings were contrary to Canadian fundamental justice (Beals, para 59, 61).
If the defendant in the foreign action was not granted fair process, then that foreign judgment will not be recognized or enforced in Canadian courts (Beals, para 61).
A “fair process” is “one that, in a system from which the judgment originates, reasonably guarantees basic procedural safeguards such as judicial independence and fair ethical rules governing the participants in the judicial system” (Beals, para 62).
As mentioned above, the defence is applied narrowly, and is restricted to examining the form or due process of the foreign procedure rather than the merits of the case. In other words, the focus is on the procedure by which the foreign court arrived at its judgment (Beals, para 64).
Even if the procedure is valid in the foreign jurisdiction, the foreign judgment will not be enforced in Canada if that procedure conflicts with Canadian natural justice (Beals, para 64).
Canadian “natural justice” includes (but is not limited to) the necessity that a defendant be given adequate notice of the claim, and be granted an opportunity to defend (Beals, para 65).
The defence of public policy prevents the enforcement of a foreign judgment that is contrary to the Canadian concept of justice (Beals, para 71). For instance, this defence guards against the enforcement, in Canada, of a judgment rendered by a foreign court shown to be corrupt or biased (Beals, para 72).
The object of inquiry is repugnant laws, and not repugnant facts. Said differently, it is the foreign law itself that must be contrary to the Canadian concept of justice in order for the defence of public policy to apply (Beals, para 71).
This defence, like the others, has a narrow application, and should not be used lightly, since the defence requires impeachment of a foreign judgment via the condemnation of the foreign law informing the judgment (Beals, para 75).
If obtained by fraud, a foreign judgment will not be recognized and enforced in B.C. (Beals, para 43).
There are two types of fraud relevant to this defence: (1) fraud going to the merits of the foreign judgment, and (2) fraud going to jurisdiction.
Unlike fraud going to jurisdiction, fraud relating to the merits of the foreign judgment can be raised “only where the allegations [of fraud] are new and not the subject of prior adjudication” (Beals, para 51). Where material facts not previously discoverable arise to potentially challenge the evidence in the foreign court, then the B.C. court may decline recognition of the foreign judgment (Beals, para 51).
For the defence of fraud on the merits to apply, the defendant in the foreign action must demonstrate that the facts sought to be raised could not have been discovered by the exercise of due diligence prior to the obtaining of the foreign judgment (Beals, para 52).
In contrast to fraud on the merits, fraud going to jurisdiction can always be raised as a defence before a domestic court to challenge a foreign judgment (Beals, para 51).
Thus, fraud going to jurisdiction is actually an exception to the requirement (present in the analysis of fraud on the merits) that new evidence is required in order to successfully argue the defence (Lang v. Lapp 2010 BCCA 517, para 20).
In attempting to enforce, in B.C. courts, a judgment from a foreign jurisdiction, there are three general steps to undertake. First, one must determine whether the foreign judgment is from a reciprocating or non-reciprocating jurisdiction. This is important because the enforcement procedures will be significantly simpler for judgments from reciprocating jurisdictions. Second, for judgments from non-reciprocating jurisdictions, one must analyse whether the “real and substantial connection” test is satisfied. Third, one must consider any applicable defences to the enforcement of the foreign judgment. The three most common defences are (1) the lack of natural justice defence, (2) the public policy defence, and (3) the fraud defence (either going to jurisdiction or to the merits).
A foreign judgment from a non-reciprocating jurisdiction will be enforceable in B.C. only if the “real and substantial connection” test is passed and none of the defences apply.