Written By Ranjan K. Agarwal, Emrys Davis, Gannon G. Beaulne and Ethan Z. Schiff

Companies in Canada or doing business with Canadians beware. The Ontario Court of Appeal has held that Ontario courts can take jurisdiction in class actions over plaintiffs who are not Canadian, do not live or work here, and who have not consented to a Canadian court’s jurisdiction (also known as “absent foreign claimants”), even at the risk of the judgment being unenforceable outside Canada. In our view, multinational companies whose businesses have some connection, even a modest one, to Canada are at risk of facing a global class action in Canada.

In Airia Brands Inc v Air Canada (the air cargo class action), the plaintiffs sued several airlines alleging a conspiracy to fix air freight shipping prices. The class included anyone who bought airfreight cargo shipping services to or from Canada between 2000 and 2006. This class definition captured many people who were not present in Canada and had not consented to a Canadian court’s jurisdiction (the traditional grounds on which courts around the world take jurisdiction).

On a motion challenging the Ontario court’s jurisdiction over absent foreign claimants, Justice Leitch agreed with the defendants that jurisdiction in the circumstances required that foreign class members be present in Ontario or consent or attorn to Ontario’s jurisdiction. In jurisdiction motions in Canada, the motion judge asks whether there is a “real and substantial connection” between the action and the defendant (because, usually, the plaintiff has attorned to Canada by commencing the claim here), and whether a Canadian court is the most convenient forum. The motion judge did not apply this test here because the plaintiffs were absent foreign claimants. The plaintiffs appealed.

Justice Pepall of the Court of Appeal wholly disagreed with the motion judge. She concluded that Justice Leitch had erroneously elevated the principles of order, fairness, and comity to a legal test, instead of applying the “real and substantial connection” test that governs jurisdiction motions in Canada.

Justice Pepall held that a court can take jurisdiction over a proposed class action involving absent foreign claimants if three conditions are met:

1. a real and substantial connection must exist between the subject-matter of the dispute and Ontario (and the court must have jurisdiction over the representative plaintiff(s) and the defendants);
2. there must be common issues between the claims of the representative plaintiff(s) and the absent foreign plaintiffs; and
3. the procedural safeguards of adequacy of representation, adequacy of notice, and the right to opt out must be provided, “enhancing” the real and substantial connection.

In this case, the representative plaintiffs were in Ontario or had consented to Ontario’s jurisdiction. The defendants carried on business in Ontario. The plaintiffs had properly pleaded conspiracy and had alleged that relevant activity to further the conspiracy had occurred in Ontario. Issues related to the alleged conspiracy were common to all class members, including absent foreign claimants. Adequate procedural safeguards existed because of settlements with other defendants (though, we note, compliance with the procedural requirements under the Class Proceedings Act, 1992 would likely satisfy the third criterion).

Justice Pepall also disagreed with the motion judge’s forum non conveniens analysis. She noted the motion judge had failed to consider the requirement of a “clearly” more appropriate forum where the claim could be litigated. Class members were from countries around the world, so no single jurisdiction would be more appropriate than Ontario.

Justice Pepall’s decision marks the first time the Ontario Court of Appeal has directly considered the test for taking jurisdiction over absent foreign claimants. In overturning Justice Leitch’s decision, the Court removed what could have become a meaningful barrier to plaintiffs seeking to certify global class actions. Because Justice Pepall did not consider the significance of the class being limited to people who purchased air freight cargo shipping services to or from Canada, the decision could also embolden class action plaintiffs to seek to certify truly global classes where only some class members have a claim with a Canadian component. The decision will also affect a defendant’s ability to preclude absent foreign claimants from seeking recovery in multiple jurisdictions. We anticipate the defendants in the air cargo class action will seek leave to appeal this decision to the Supreme Court of Canada given the Court of Appeal decision’s novelty and importance.

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