Recognition and Enforcement of Foreign Judgments
Overview
In keeping with principles of international cooperation, Canadian courts, including those in Ontario, take a “generous and liberal” approach to the recognition and enforcement of foreign monetary and equitable judgments.
A legal proceeding to recognize a foreign judgment in Ontario is not based upon the original claim that a plaintiff brought against a defendant in a foreign court. Instead, it is based on the legal obligation created by the foreign judgment itself. For this reason, the underlying facts of the original foreign judgment are generally irrelevant when a plaintiff seeks to recognize and enforce it in Ontario unless they relate to any potential defences to enforcement.
The legal test
In order for an Ontario court to recognize (and enforce) a foreign judgment in Ontario, a plaintiff (the judgment creditor) must (1) establish that there was a real and substantial connection between the foreign court and the underlying dispute (the jurisdiction test) and (2) that the judgment sought to be enforced against the defendant (the judgment debtor) in Ontario is final and conclusive (the finality test). Ontario courts will not recognize a foreign judgment if the court that issued it had no jurisdiction over the parties or the underlying dispute. Generally, Ontario courts will delay the recognition of a foreign judgment if it is under appeal in the foreign legal system that issued it or if there is some other procedural step that needs to be completed before the foreign judgment is considered final in the foreign court. In this regard, it is often very beneficial to work closely with the lawyer or other legal practitioner who helped obtain the foreign judgment sought to be enforced in Ontario to determine whether the above requirements have been met.
Once both have been established, the burden shifts to a defendant to make out any applicable defences. These defences are often difficult to make out. They include fraud, denial of natural justice, or public policy grounds for refusing recognition and enforcement. These aspects of the legal test for recognition and enforcement of a foreign judgment are addressed below.
Fraud
The fraud defence is narrow in scope. It is not intended to provide an avenue to re-litigate in Ontario the merits of a foreign judgment. That is not the proper role of the Ontario courts at the recognition and enforcement stage. Fraud going to whether the foreign court had jurisdiction can always be raised. However, the merits of a foreign judgment can only be challenged for fraud where the allegations are new, not subject to prior adjudication, and based upon circumstances not previously discoverable through the exercise of due diligence prior to the issuance of the foreign judgment.
Denial of natural justice
Natural justice involves being given notice of a legal proceeding and the opportunity to be heard. It includes basic procedural safeguards such as judicial independence and fair and ethical rules governing the participants in the judicial system.
Public policy
This is a narrow defence. To establish this defence, an Ontario court must be satisfied that the law underlying the foreign judgment offends domestic conceptions of justice and morality. For example, if a foreign judgment was obtained on the basis of a foreign law that discriminated against a certain group in the foreign jurisdiction on the basis of ethnicity, sexual orientation, etc., an Ontario court would not recognize it on the basis that the foreign law offends Canadian notions of public policy and anti-discrimination.
Foreign Injunctions
In addition to the above factors, the recognition of foreign injunctions in Ontario present unique challenges. Ontario courts will generally scrutinize the impact of a foreign injunction or other equitable order to ensure that it does not place an undue burden on the Canadian justice system or create any unforeseen obligations on a defendant. Foreign injunctions that are simple, clear and specific are generally easier to enforce in Ontario. As explained by the Supreme Court of Canada in Pro Swing Inc. v. Elta Golf Inc., 2006 SCC 52 at para. 30:
Relevant considerations may thus include the criteria that guide Canadian courts in crafting domestic orders, such as: Are the terms of the order clear and specific enough to ensure that the defendant will know what is expected from him or her? Is the order limited in its scope and did the originating court retain power to issue further orders? Is the enforcement the least burdensome remedy for the Canadian justice system? Is the Canadian litigant exposed to unforeseen obligations? Are any third parties affected by the order? Will the use of judicial resources be consistent with what would be allowed for domestic litigants?
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