Canada: Attornment Is A Shield, Not A Sword: The Court Of Appeal Disallows Plaintiff's Attempt To Bypass Service Ex Juris Rule

On June 12, 2019, the Court of Appeal of Alberta released its decision in Acciona Infrastructure Canada Inc v Posco Daewoo Corporation, 2019 ABCA 2411, determining issues surrounding the court's jurisdiction to cure irregularities in service ex juris.

In this matter, two parties have a contractual agreement providing that: (1) any dispute arising from the contract will be heard in Calgary, Alberta, and (2) both parties attorn to the exclusive jurisdiction of the Province of Alberta to determine those issues. A dispute arose and the Plaintiff served its originating process document on the Defendant outside of Canada. The Defendant acknowledged receipt of those documents, but at a later date, resisted the jurisdiction of the Alberta Courts to decide the issue. These were the facts the Court of Appeal grappled with in this case.

The Plaintiff had not applied for an order for service ex juris and had not followed the procedure under Rule 11.25(2) of the Alberta Rules of Court (the "Rules") to secure judicial permission for the service of a commencement document outside Canada. As a result, the Court of Appeal held that the importance of compliance with the Hague Convention and the significance of the deficiencies in service precluded retroactive correction in this case.

This case has important implications concerning the service of documents outside one's jurisdiction. Failure to obtain an order for service ex juris is not a mere irregularity that courts will overlook. According to the Court of Appeal, attornment, by contractual agreement or conduct, to a particular jurisdiction does not override the service ex juris requirements set out in legislation, particularly in cases where the Defendant later challenges the court's jurisdiction.

Background:

Acciona Infrastructure Canada Inc. and Mastec Canada Inc., operating as Acciona/Pacer Joint Venture ("APJV"), Canadian corporations, contracted with the City of Edmonton for the construction of a bridge. APJV subcontracted with Posco Daewoo ("Daewoo"), a Korean corporation, to secure the supply of structural steel required for the bridge. The parties agreed that all disputes would be referred to arbitration in, and resolved according to the laws of, Alberta.

A dispute arose and APJV served its Notice to Arbitrate on both Daewoo's Canadian and Korean legal counsels. When it became apparent to APJV that Daewoo was purposely hindering the path to arbitration, APJV issued an Originating Application seeking the appointment of arbitrators under the International Commercial Arbitration Act, and served the Originating Application on Daewoo's Korean and Canadian counsels. Daewoo's counsels took the position that they were not authorized to accept service. Accordingly, APJV commenced the process for serving the Originating Application under the Hague Convention, but did not obtain an order for service ex juris under Rule 11.25(2)(b).

Of note, prior to receiving confirmation of actual service of the Originating Application on Daewoo in Korea under the Hague Convention, APJV applied for three orders that sought: (1) validation of service of the originating application; (2) the appointment of arbitrators; and (3) consolidation of the arbitrations. In light of Daewoo's position (i.e., its absence and refusal to engage in the process), the applications proceeded ex parte and were granted. Once the originating application was actually served on Daewoo in Korea under the Hague Convention, Daewoo applied to the Alberta Court of Queen's Bench ("ABQB") to have the three orders set aside.

Motion Judge's Decision:

Daewoo argued that the three orders should be set aside on jurisdictional grounds. Daewoo argued that the ABQB lacked jurisdiction over both the dispute and Daewoo because APJV's service of the Originating Application did not comply with Rule 11.25(2) of the Rules. Rule 11.25(2) provides that "a commencement document may be served outside Canada only if a real and substantial connection exists between Alberta and the facts on which a claim in an action is based."

The motion judge determined that one of the main purposes of Rule 11.25(2) was that the court, prior to service, could make a preliminary determination as to whether it could appropriately take jurisdiction over the proposed defendant and satisfy itself that there was a real and substantial connection. However, in this case, APJV did not require an order for service ex juris because the parties had already contractually attorned to the jurisdiction of Alberta, which rendered any "preliminary determination" as to whether Alberta should take jurisdiction over the dispute unnecessary.2 As such, the motion judge held that APJV's failure to comply with Rule 11.25(2) was not a reason to invalidate the three orders. Daewoo's application was dismissed. Daewoo appealed the decision to the Court of Appeal ("ABCA").

Court of Appeal Decision:

The ABCA overturned the motion judge's decision, finding that the lower court erred in refusing to set aside the Orders on the basis that "attornment or consent to jurisdiction does not override Rule 11.25(2)."3 In the ABCA's view, although Daewoo contractually attorned to the jurisdiction of the Alberta courts, APJV still required an order for service ex juris because Daewoo was now resisting Alberta's jurisdiction.

The ABCA's ruling and reasoning turned on the distinction between "jurisdiction" and "service." Any party may attorn to the jurisdiction of the Alberta courts, regardless of how the party was served. However, where that party resists the jurisdiction of the Alberta courts, "then proper service ex juris is the platform on which the court decides if it has and should exercise jurisdiction over the parties and the dispute."4 APJV's assertion that the Alberta courts had jurisdiction over Daewoo could not justify non-compliance with the threshold requirements in the Rules on service ex juris. The ABCA held that APJV required an order for service ex juris, and because APJV did not obtain this order, the ABQB's subsequent orders should not have been granted and cannot stand.5 The ABCA also refused to retroactively correct and validate service because of "the importance of compliance with the Hague Convention and the significance of the deficiencies in service." 6

Implications for International Commercial Contracts:

This case has important implications concerning the service of documents outside of one's jurisdiction, which is often the case in international commercial arbitrations. Most Canadian jurisdictions, including Alberta, have clear rules of civil procedure for service of commencement documents and other documents in arbitral proceedings.

The Court of Appeal in this case offered some guidance by stating that (1) parties are entitled to insist on proper service under the Rules and the Hague Convention, and (2) deficiencies in service can be substantive enough to preclude the court from exercising its discretion to retroactively correct deficiencies in service.

Of note, Wakeling J.A., in his concurring decision for the Court of Appeal noted that there are curative provisions in the Rules that specifically focus on non-compliance methods or manners of service. However, none applied in this case: (1) APJV had not attempted to serve Daewoo "in accordance with the law of the jurisdiction in which the party to be served is located", in this case Korean Law, which would have been permitted under Rule 11.26(c) of the Rules;7 (2) the parties had not included a mode-of-service term in their contract, and without such agreement on the mode of service, Rule 11.3(1) of the Rules, which allows parties to agree on the mode of service could not assist APJV;8 and (3) Rule 11.27, the irregular service cure-all provision could not be used to short-circuit Rule 11.25(2)9 and failure to comply with Rule 11.25(2) was a "substantive" irregularity that simply could not be remedied under Rule 11.27.

It is important for contracting parties to consider including provisions stipulating the mode of service, in addition to including provisions concerning attornment or consent to jurisdiction in international commercial contracts. Further, it is advisable that arbitration practitioners review all applicable rules concerning service from the onset and when considering commencing proceedings, to avoid having domestic courts dismiss their claim for failure to follow service rules.

Footnotes

1 Acciona Infrastructure Canada Inc v Posco Daewoo Corporation, 2019 ABCA 241 at para 14 [Acciona ABCA].

2 Acciona Infrastructure Canada Inc v Posco Daewoo Corporation, 2017 ABQB 707 at paras 14 and 19.

3 Acciona ABCA, supra note 1 at para 15.

4 Ibid at para 14.

5 Ibid at paras 22 and 24.

6 Ibid at para 23.

7 Ibid at para 142.

8 Ibid at para 134.

9 Ibid at paras 22, 94, 144-172.

To view the original article click here.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Similar Articles
Relevancy Powered by MondaqAI
 
In association with
Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions