Law Times

Law Times • January 12, 2009 FOCUS PAGE 11 Forum shopping, the downside of working foreign judgment enforcement regime SCC to rule on rubber-stamp approach to comity F BY JULIUS MELNITZER For Law Times or the most part, comity has been the name of the game when it comes to cross-border issues. Canadian courts have repeatedly cited the principle, for example, in enforc- ing U.S. judgments and approv- ing U.S. class action settlements. But the embrace of comity has a downside: because Canadian and U.S. courts are so friendly to each other's rulings, forum shop- ping can be advantageous where there is an arguable connection with a jurisdiction whose laws favour one party or another. "There are more choices about where to sue because the foreign judgment enforcement regime in Canada has become liberalized, which in turn gives people more where to sue because of Ninth Circuit denied Teck's application to dismiss the action. Teck had in place general and choices about the increased confidence that their judgment will be enforceable in Canada," says Lisa Peters, a partner at Lawson Lundell LLP. "And when you give people more choices, they will exercise those choices and that will lead to a growth spurt in parallel proceedings." But what has been an increas- ingly rubber-stamp approach to comity may be attracting some backlash. We'll know for sure when the Supreme Court of Canada gives judgment in Teck Cominco Metals Ltd. v. Lombard General Insurance Co. of Canada, argued in November 2008 and currently on reserve. "The key issue before excess liability insurance policies with several insurers. The poli- cies were negotiated in B.C. and paid in Canadian funds. But the insurers denied coverage for the environmental claim that was the subject of the U.S. action. In November 2005, Teck sued the insurers in the State of Washington. Nine hours later, the insurers sued in B.C. Both actions sought declarations from the courts regarding the insurers' obligations under the policies. "You can see both sides of the jurisdictional argument here," says Malcolm Ruby, a partner at Gowling Lafleur Henderson LLP's Toronto office. "It's natural for Teck to want the coverage question decided in the U.S., where the company's liability lies. But from the insurers' point of view, B.C. is the appropriate place for the litigation because Teck is a B.C. company to whom they issued coverage through their brokers or branches in the province and where the policies would interpreted under B.C. certainly be law. There's also a forum-shop- ping element here because it makes sense that the insurers wouldn't want the courts [that] determine Teck's liability to be the ones [that] decide whether they are responsible for indem- nifying Teck." However that may be, the insurers moved in the U.S. courts to dismiss Teck's claim against them for want of jurisdiction and because Washington was not the conve- nient forum for the litigation. But the district court denied the application in May 2006 and allowed the Washington action to proceed. Teck then moved to dismiss the insurers' action in B.C. "Our position was that because the Washington court applied a test similar to our own, U.S. courts that and convenience,'" 'When you give people more choices, they will exercise those choices and that will lead to a growth spurt in parallel proceedings,' says Lisa Peters. the B.C. court should decline jurisdiction over the coverage action in favour of the Washington court," says Gordon Weatherill, a partner at Lawson Lundell who, with partner Craig Ferris and Peters, represented Teck. But in August 2006, the B.C. Supreme Court dis- missed the application, allow- ing the B.C. action to pro- ceed as well. In April 2007, the Court of Appeal upheld the ruling, refusing to apply a "simple rule of deference" to have asserted jurisdiction. "I do not regard such a conclusion as 'disrespectful' to the foreign court, or as negat- ing the principle of comity — a principle based on mutual respect and on 'justice, neces- sity, the court stated. While it was true, the court went on, that it was preferable to avoid parallel proceedings with the possibility of con- flicting results, that consider- ation was not determinative. "It's rare that you see courts the tolerating possibility of LT the Supreme Court is whether there is an automatic rule that Canadian courts should auto- matically defer to U.S. courts [that] have accepted jurisdic- tion over a parallel dispute," says partner Graeme Mew of Nicholl Paskell-Mede LLP, who represents Lloyd's Underwriters, one of the defendants in the litigation. "The big difficulty in doing that is that there is such a wide range of judicial approaches to taking jurisdiction in the U.S., and that's compounded by the fact that some U.S. courts and legislatures have a very long arm view of what jurisdiction is all about." The case involves a dispute between Teck Cominco, a main- stay of the B.C. mining indus- try since 1906, and its insurers over coverage for alleged damages arising from Teck's discharge of waste into the Columbia River near its smelter in Trail, B.C. The Columbia River runs south from Trail into Washington State. When waste emanat- ing from Teck's Trail operations showed up in Roosevelt Lake just south of the U.S.-Canada bor- der, the Confederated Tribes of the Colville reservation in Washington asserted claims in the Washington courts for environmental property damages in and around the lake. Teck objected to the juris- diction on grounds that there was not a sufficient connection between Teck and the State of Washington to enable the court to take jurisdiction. But both the U.S. District Court and the U.S. Court of Appeals for the Untitled-5 1 With The McKellar Structured Settlement™ The McKellar Structured Settlement is a sure thing. Tax-free. Guaranteed. Billions of dollars invested, not a penny lost. www.mckellar.com 1-800-265-8381 www.lawtimesnews.com 12/23/08 11:14:55 AM

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