Extraterritorial Sittings in Cross Border Disputes

Recently, in Kalma v. African Minerals Ltd & Ors the English High Court sat temporarily in a makeshift courtroom at a Freetown, Sierra Leone hotel to hear evidence from witnesses and victims suing mining subsidiary Tonkolili Iron Ore Ltd. alleging, inter alia, mistreatment of local residents and workers. 

Mr. Justice Turner ruled it was necessary to hold a portion of the trial in Sierra Leone as many of the witnesses and claimants were denied visas and barred from travelling to London for trial. He declined to obtain the witness and claimant testimony via video-link. 

The UK is not the first court to adopt a pragmatic approach to the geographical principles of jurisdiction to protect the substantive rights of parties in multijurisdictional actions. US-based counsel retained in cross-border disputes with Canadian parties should be aware of recent decisions in the Ontario Superior Court (SCJ) and the Supreme Court of Canada (SCC) permitting a pragmatic approach to issues of geographical jurisdiction.  

Borrelli v. Chan 2016 ONSC 4953 (“Chan”) was a civil fraud case involving allegations of breach of fiduciary duty against the former CEO related to C$2.4 billion raised in Canadian capital markets. The subject was a Canadian registered corporation, but physically located and operating in Hong Kong and the People’s Republic of China. The trial was lengthy, complex and witness credibility a critical issue, particularly given the cultural distinctions in Hong Kong finance and business practices. 

To obtain a fair trial for their client, Rueters LLP, as defense counsel, successfully applied to the trial judge to appoint himself commissioner to take commissioned evidence from a number of important defense witnesses in Hong Kong. This procedure was required where the non-party witnesses stated they were unwilling to attend trial in Toronto. Commissioned evidence is not unusual. A trial judge acting as commissioner in a foreign jurisdiction is rare.

The court granted the application sought for the taking of evidence of the non-party witnesses as they were not compellable. However, the defendant (who also resided in Hong Kong, but who had attorned to the jurisdiction) was required to testify in Toronto. Accordingly, the court signalled a strong view this was not an order to be granted for the mere sake of convenience. Counsel must provide a necessity-based argument.

The trial judge disposed of opposing counsel’s jurisdictional and principles of law objections by holding that the taking of commissioned evidence was materially distinct from trial proceedings. Rule 36 of the Superior Court Rules did not permit him to exercise any coercive powers without reliance on the host jurisdiction or the in personam jurisdiction of the Ontario court, where it existed. To address policy concerns, he stated the evidence would be recorded, added to the trial exhibits and viewable at the public’s request. In practice, the Hong Kong proceedings were physically open to the public, including the media. 

Soon after Chan, the SCC published its decision in the joined cases of Parsons v. Ontario and Endean v. British Columbia [2016] 2 SCR 162 (“Parsons/Endean”). The SCC found superior court judges of separate provinces could sit together extraterritorially and dispose of matters under the national Hepatitis C settlement agreement. However, instead of restricting its decision to parallel, provincial class proceedings of the type before the Court, the SCC established broad principles as to when extraterritorial sittings may be permitted, generally.

The SCC set out that counsel making such an application should show specific authority for the contended exercise of jurisdiction; or in its absence, show that there is no prohibition to the contended exercise of jurisdiction. The court must then undertake a balancing exercise, applying specified criteria to determine whether the extraterritorial sitting is appropriate in the particular circumstances. A video link to the home jurisdiction is not necessarily required, though the court must ensure the general public and the media can “[enter] the courtroom and [observe] or [report] on the proceedings.” 

Interestingly, the SCC declined to determine whether a superior court judge’s ability to sit outside provincial territorial limits is restricted to matters not requiring exercise of the court’s coercive powers as this issue was irrelevant on the facts before the Court.

Regardless, Chan and Parsons/Endean provides an indication to counsel handling cross-border disputes as to the potential success in an application for an extraterritorial sitting, with the possibility of having a portion of the trial itself conducted extraterritorially as in Kalma.