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Private International Law - Forum Selection Clauses


Selection clauses are necessarily things of contract, commonly with a large, international corporation on one side and an Ontario or Canadian consumer on the other. They can arise as relevant in a tort case, where the relationship was initially contractual, but that would be incidental in a tort case.

They are also usually referred to as 'venue' or 'forum' selection clauses, even though they typically also purport to select not only the 'venue' (country of court) but also the governing law of any dispute, and even - in some cases - a non-court forum, such as arbitration.


Part 2

. Difederico v. Amazon.com, Inc.

In Difederico v. Amazon.com, Inc. (Fed CA, 2023) the Federal Court of Appeal considers (and dismisses) an appeal involving the application of an international arbitration forum selection clause, here in a context of Competition Act [s.45 and 46] allegations of price-fixing. The central issue is whether the transaction were consumer or commercial.

In these quotes the Federal Court of Appeal sets out it's forum selection analysis on the issue of contractual 'unconscionability':
(2) Did the Judge err in finding that there is an enforceable arbitration agreement between the parties?

[53] The issue of the enforceability of the arbitration agreement at issue raises firstly the question of whether it is void on the grounds of unconscionability.

[54] In this regard, Ms. Difederico contends that the Judge misapplied Article II(3) of the New York Convention and failed to apply the exception set out in Uber. Specifically, she alleges that the arbitration agreement is void by virtue of being unconscionable and that, as such, even if the dispute otherwise met the requirements of Article II(3) of the New York Convention, the Judge erred when she referred the matter to an arbitrator.

[55] More particularly, Ms. Difederico submits that the Judge should have found that the arbitration agreement is unconscionable because (i) Ms. Difederico did not have the bargaining power to protect her interests nor was she aware of the full import of the clauses and, (ii) the clauses unduly advantage Amazon and unduly disadvantage Ms. Difederico when assessed contextually, by making it practically impossible for her to obtain damages for violations of the Competition Act (Appellants’ Memorandum of Fact and Law at paras. 56-57). Ms. Difederico further alleges, again on the basis of Uber, that the choice of law provisions set forth in the dispute resolution clauses contribute to the unconscionability of the arbitration agreement because they do not “affirmatively provide” Ms. Difederico with the right to obtain damages from an American arbitrator in the event that her claims are made out (Appellants’ Memorandum of Fact and Law at paras. 63-66).

[56] Ms. Difederico’s arguments regarding unconscionability must fail. A fair reading of the Judge’s reasoning demonstrates a careful consideration of the evidence before her and a proper application of the jurisprudence on what amounts to being “unconscionable” (Judge’s decision at paras. 117-26). Indeed, the Judge determined that the inequality of bargaining power alleged by Ms. Difederico was not analogous to that found in Uber because Ms. Difederico was not dependent on Amazon for “important elements of everyday life” akin to employment that would make her particularly dependent or vulnerable (Judge’s decision at paras. 124-26). Ms. Difederico fails to point to evidence in the record that would establish any such vulnerability or dependence on her part relative to Amazon.

[57] In reality, Ms. Difederico appears to suggest that entering the arbitration agreement results in a denial of access to justice (Appellants’ Memorandum of Fact and Law at paras. 58-63). Yet, as noted by the Judge, this would only be the case if there were a clear reason to conclude that referral to arbitration would make it truly impossible for the claim to proceed. In the words of the Judge at paragraph 112 of her reasons: “[a] mere possibility, in my view, is not enough to overcome the competence-competence principle.”

[58] The Judge likewise properly considered the cost of arbitration in the circumstances and rejected Ms. Difederico’s contention that it would render the arbitration “illusory”, as was the case in Uber. Instead, The Judge found that here, the upfront cost to initiate arbitration was not disproportionate and that the arbitration procedure set out in the agreement was not prohibitive:
Ms. Difederico is only required to pay a relatively modest up-front administrative fee of $200 to initiate arbitration. Amazon is bound under the Arbitration Clauses to refund these fees for claims less than $10,000, unless the arbitrator determines the claim to be frivolous. The arbitration may be conducted by telephone, written submission, or in a mutually agreed upon location. A claimant has the option of proceeding in small claims court where the claims fall within the jurisdiction of that court.

(Judge’s decision at para. 118)
[59] In addressing Ms. Difederico’s various contentions, the Judge also took care to draw the following distinction between the present case and Uber at paragraph 126:
Here, Ms. Difederico’s argument arises not from the Arbitration Clauses, but from the type of claim she now seeks to raise. This means that rather than the bargain being improvident at the time it was made, as was the case in Uber (at para 74), the Plaintiff’s argument is that the Arbitration Clauses are now unconscionable in light of her particular claims. In my view, this argument is not supported by the law of unconscionability.
[60] Finally, the Judge, in rejecting the Ms. Difederico’s choice of law argument, considered the conflicting expert evidence adduced by the parties as to whether a referral to arbitration and the choice of U.S. law would preclude Ms. Difederico from asserting her claims under the Competition Act in the United States. On the basis of the record before her and given the fact that Amazon made an undertaking that it would not argue that the choice of law operates to exclude the Competition Act before an arbitrator, the Judge properly concluded that Ms. Difederico’s contention remained hypothetical (Judge’s decision at paras. 104, 116). The impact of foreign law is an issue of mixed fact and law that is seldom easy to resolve on the face of the record and, following the competence-competence principle, is indeed best left to the arbitrator to determine.

[61] As illustrated by the foregoing, the Judge fully considered each of Ms. Difederico’s unconscionability arguments. Ms. Difederico has failed to point to any palpable and overriding error on the part of the Judge in finding, on the basis of the evidence, that the arbitration agreement at issue is not, on its face, an improvident bargain for her or otherwise likely to deny her access to justice. In light of both the principle of competence-competence and the framework established by the Supreme Court of Canada in Dell and Uber, the Judge was correct to refuse to analyse this issue any further.
. Difederico v. Amazon.com, Inc.

In Difederico v. Amazon.com, Inc. (Fed CA, 2023) the Federal Court of Appeal considers (and dismisses) an appeal involving the application of an international arbitration forum selection clause in a class action, here in a context of Competition Act [s.45 and 46] allegations of price-fixing. The central issue is whether the transaction were consumer or commercial:
[1] Is an arbitration agreement set forth in the terms and conditions of use for an online purchasing service binding in the context of consumer claims of a commercial nature? The Federal Court answered yes. For the reasons that follow, I agree.

[2] This appeal arises out of a proposed class action brought by Stephanie Difederico (Ms. Difederico)[1] in the Federal Court against Amazon.com, Inc. (Amazon.com), Amazon.com.ca, Inc. (Amazon.ca), Amazon.com Services LLC, Amazon Services International, Inc., and Amazon Services Contracts, Inc. (together, Amazon). In bringing her proposed class claims, Ms. Difederico alleges that Amazon has entered into price-fixing agreements with third-party sellers contrary to sections 45 and 46 of the Competition Act, R.S.C., 1985, c. C-34 (Competition Act) and seeks damages under section 36 of the same Act.

[3] In response to Ms. Difederico’s proposed class action, Amazon brought a motion seeking a stay of proceedings on the grounds that the parties are subject to an arbitration agreement. In the decision of the Federal Court, per Furlanetto J. (the Judge), dated September 6, 2022 (2022 FC 1256 (Judge’s decision)), the Judge granted the requested stay in favour of arbitration pursuant to the United Nations Foreign Arbitral Awards Convention Act, R.S.C., 1985, c. 16 (2nd Supp.) (UNFAACA). In so doing, the Judge determined that Ms. Difederico entered into a valid arbitration agreement with Amazon covering her purchases on Amazon.ca and there were no overriding public policy or unconscionability grounds to justify refusing to give effect to that agreement.
In these quotes the court sets out the basis of the (supported on appeal) Federal Court stay ruling:
IV. The Judge’s Decision

[16] The Judge carefully addressed and responded to each of Ms. Difederico’s arguments. She summarized her findings as follows at paragraph 2 of her decision:
For the reasons that follow, I find that a stay in favour of arbitration should be ordered, as there is an arbitration agreement in place that would cover Ms. Difederico’s purchases on the Amazon.ca stores. Ms. Difederico has not made out any exceptional grounds on which to deny a stay, including on the basis of public policy or unconscionability and any challenge to the jurisdiction of the arbitrator or the validity of the arbitration clauses should be referred to the arbitrator.
[17] As part of her analysis, the Judge recalled from the outset that it is well-settled in Canada that commercial arbitration agreements are complied with and are enforced by courts unless they are found to be null, void, inoperative, or incapable of performance. The Judge referred to the decision of this Court in Murphy v. Amway Canada Corporation, 2013 FCA 38, [2014] 3 F.C.R. 478 (Murphy) to further recall that this extends to arbitration agreements relating to claims under the Competition Act. Hence, absent legislative intervention, the Judge observed, consistent with the Supreme Court of Canada’s jurisprudence, courts should give effect to arbitration agreements (Judge’s decision at paras. 42-43).

[18] The Judge pursued her analysis by considering the impact of Article II(3) of the United Nations’ Convention on the Recognition and Enforcement of Foreign Arbitral Awards, Can. T.S. 1986 No. 43 (the New York Convention), incorporated into Canadian law by the UNFAACA, in the context of a motion for a stay of proceedings. Before the Judge, Amazon argued that the New York Convention applied to require the court to enter a stay, while Ms. Difederico submitted that the New York Convention did not apply. Further, Ms. Difederico argued that, at most, paragraph 50(1)(b) of the Federal Courts Act provides a highly discretionary power to enter a stay, if the interest of justice so requires and faulted the Judge for not considering or applying paragraph 50(1)(b) (Appellants’ Memorandum of Fact and Law at para. 37).

[19] The Judge rejected Ms. Difederico’s contention. She noted that subsection 4(1) of the UNFAACA states that “the [New York] Convention applies only to differences arising out of commercial legal relationships, whether contractual or not” and that Ms. Difederico contended her legal relationship with Amazon.ca was not “commercial” (Judge’s decision at paras. 50-52). She observed that neither the UNFAACA nor the New York Convention provides a definition of “commercial relationship” and that none had been developed in the Federal Court’s jurisprudence on arbitration. To resolve this issue, the Judge referred to the modern approach to statutory interpretation in considering the definition of the word “commercial” in the context of the UNFAACA (Judge’s decision at paras. 56-67).

[20] The Judge determined that, although Ms. Difederico is a consumer, the nature of her claims “have a commercial foundation” (Judge’s decision at para. 66). It follows, according to the Judge, that the UNFAACA—and not paragraph 50(1)(b) of the Federal Courts Act—is applicable in the circumstances. Having analysed the relationship between the parties and found that their dispute was commercial and that the UNFAACA accordingly applied, the Judge then turned to the question as to whether the stay requested by Amazon should be granted.

[21] In this regard, the Judge found that there is “no serious debate” that an arbitration agreement is in place between the parties. The Judge also rejected the contention that Ms. Difederico did not have adequate notice of the dispute resolution clause encompassing the arbitration agreement. More particularly, the Judge noted, “Ms. Difederico made an account with Amazon.ca and made numerous purchases through the Amazon.ca online stores. In doing so, she was notified that clicking through to make an account or to complete a purchase constitutes acceptance of the [Conditions] of Use” (Judge’s decision at para. 76). The Judge further observed that Ms. Difederico continued to make purchases through Amazon.ca even after instituting her proposed class action in which she challenges the same Conditions of Use.

[22] As mentioned above, the Judge also addressed the 2014 Conditions of Use compared to the 2022 Conditions of Use. She concluded that the operative portion of the 2014 arbitration agreement and the 2022 arbitration agreement remained the same. The Judge found that the 2022 version merely sets out in express terms the legal principles as they would apply, regardless of whether they were included in the agreement itself. Consequently, the Judge found that the 2022 arbitration agreement was binding and enforceable (Judge’s decision at para. 91). Given the broad scope of the arbitration agreement (whether it be the 2014 or 2022 version) that covered matters in relation to purchases made on Amazon.ca, the Judge found that Ms. Difederico’s claims against Amazon.ca were indeed covered (Judge’s decision at para. 95).

[23] The Judge went on to examine whether there were grounds to otherwise refuse the requested stay. She recalled in this regard the general principle of competence-competence; that is, when an arbitration agreement or the jurisdiction of the arbitrator is challenged, the rule is to refer the issue to the arbitrator, subject to limited exceptions.

[24] In particular, the Judge rejected Ms. Difederico’s argument that she would be barred from seeking remedies under the Competition Act because of the choice of U.S. law in the Conditions of Use. The Judge considered the expert evidence adduced by the parties and concluded that it was “not clear that there would be no relief available to Ms. Difederico if the matter were to proceed to arbitration or that the choice of law clause would deny Ms. Difederico access to justice” (Judge’s decision at para. 116). She also found that the cost of arbitration was not prohibitive and that the law did not support Ms. Difederico’s arguments that the 2014 and 2022 arbitration agreements were inoperative or unconscionable. Thus, the Judge found that there was no basis to displace the competence-competence principle in the circumstances (Judge’s decision at paras. 128-29).
. Black & McDonald Limited v. Eiffage Innovative Canada Inc.

In Black & McDonald Limited v. Eiffage Innovative Canada Inc. (Ont CA, 2023) the Court of Appeal clarifies that an 'exclusive jurisdiction' venue clause would (normally, but not always) override a forum non conveniens approach, if advanced:
[12] It is entirely unclear how Eiffage reconciles its concession that the Ontario court has jurisdiction simpliciter with its contention that the courts of British Columbia have exclusive jurisdiction. It is possible that an exclusive jurisdiction clause could be seen as rebutting the jurisdiction of the Ontario court as that result is explained in Club Resorts Ltd. v. Van Breda, 2012 SCC 17, [2012] 1 S.C.R. 572, but that was not the argument advanced before us. Further, assuming one can get to that result, an exclusive jurisdiction clause would oust the jurisdiction of the Ontario court and there would then be no need to engage in a forum non conveniens analysis. However, the forum non conveniens analysis forms the entire basis for the orders below and none of the parties suggested that the matter should have been decided on any other basis.


[34] Even if s. 3(c) of the payment bond is an applicable forum selection clause, it is recognized that a court can relieve against the application of a forum selection clause, if the enforcement of that clause “would frustrate some clear public policy”: Expedition Helicopters Inc. v. Honeywell Inc., 2010 ONCA 351, 100 O.R. (3d) 241, at para. 24. There is a clear and well-established public policy against allowing multiple proceedings that risk the prospect of inconsistent findings. That would be the result if the Liberty Mutual action proceeds in British Columbia while the Eiffage action proceeds in Ontario. Therefore, if the forum selection clause applies in this case, we would relieve against its effect.
. Sleep Number Corporation v. Maher Sign

In Sleep Number Corporation v. Maher Sign (Ont CA, 2020) the Court of Appeal commented on the law of foreign judgments, with the specific issue being the exclusivity of a forum selection clause. The clause plainly intends for Ontario law and forum, but still the court finds it 'permissive':
[5] It is well-established that a permissive forum selection clause does not deprive another forum of jurisdiction simpliciter, but is relevant to whether that other forum should exercise its jurisdiction: 2249659 Ontario Ltd. v. Sparkasse Siegen, 2013 ONCA 354, 115 O.R. (3d) 241, at para. 25. Before us, the appellant concedes that if the clause in the quotation does not amount to an exclusive jurisdiction clause, the appeal fails.


[7] The clause bears striking similarity to clauses that other courts have refused to characterize as conferring exclusive jurisdiction. It provides that the respondent “attorns” (in other words, accepts, submits or yields) to Ontario jurisdiction and says nothing that excludes the jurisdiction of another possible forum. We do not agree that the words in the clause applying it to the pursuit of “any legal remedies” amount to a conferral of exclusive jurisdiction. The word “any” refers to “legal remedies” and has no bearing on choice of forum. In Old North State Brewing Company Inc. v. Newlands Services Inc. (1998), 1998 CanLII 6512 (BC CA), 58 B.C.L.R. (3d) 144, at para. 35, the B.C. Court of Appeal held that an agreement that “the parties will attorn to the jurisdiction of the Courts of the Province of British Columbia” did not meet the standard of “clear and express language … required to confer exclusive jurisdiction” and that it would have been a simple matter to add the word “exclusive” if that was what was intended. See also Hollinger International v. Hollinger Inc., 2005 CanLII 4582 (Ont. Div. Ct.), to the same effect with regard to an agreement that each of the parties “hereby irrevocably attorns to the jurisdiction of the courts [of Ontario]”.

[8] Accordingly, the forum selection clause does not rule out Minnesota jurisdiction. ...
. Forbes Energy Group Inc. v. Parsian Energy Rad Gas

In Forbes Energy Group Inc. v. Parsian Energy Rad Gas (Ont CA, 2019) the Court of Appeal considered the doctrine of forum non conveniens in the presence of an express attornment provision re both law and venue:
[2] The Term Sheet contains the following clause: “This term sheet shall be governed by and construed in accordance with the laws of England and the Parties agree to attorn to the courts of England” (hereafter the “Clause”).

[3] In December 2016, DMCC and Parsian demanded that Forbes make certain payments under the Term Sheet. Forbes disputed its obligation to do so and commenced this action in Ontario for a declaration that it was under no obligation to make the payments, together with other relief.

[4] Relying on the Clause, DMCC and Frontier moved to stay the action in favour of the courts of England. The motion judge granted a stay. Although she found that Ontario courts had jurisdiction over the subject-matter of the dispute, she declined jurisdiction on the basis that Forbes had failed to demonstrate strong cause that the Clause should not be enforced: Douez v. Facebook, Inc., 2017 SCC 33 (CanLII), [2017] 1 S.C.R. 751, at para. 29; Novatrax International Inc. v. Hägele Landtechnick GmbH, 2016 ONCA 771 (CanLII), 132 O.R. (3d) 481, at para. 5. Applying the strong cause test and the factors relevant to the forum non conveniens analysis, she held that England is the more appropriate forum than Ontario. The motion judge stayed the action. Forbes appeals.

[5] On this appeal, the parties agree that the strong cause test only applies to forum selection clauses that by their terms grant exclusive jurisdiction to a foreign jurisdiction. Forbes submits that the motion judge made no finding that the Clause was an exclusive jurisdiction clause. The respondents counter that she did.

[6] We are unable to read the reasons of the motion judge as containing any finding that the Clause amounted to an exclusive jurisdiction clause. In light of the jurisprudence referred to by the parties, we are not persuaded that the language used in the Clause amounts to an exclusive jurisdiction clause. That being the case, in light of the parties’ consensus on the applicable legal principles, we conclude that the motion judge erred in using the strong cause test.

[7] Given that conclusion, we accept Forbes’ submission that this court should conduct a fresh forum non conveniens analysis in which the respondents must demonstrate that England clearly is the more appropriate forum: Club Resorts Ltd. v. Van Breda, 2012 SCC 17 (CanLII), [2012] 1 S.C.R. 572, at para. 108.

[8] While the Clause remains a factor in the forum non conveniens analysis, it does not have determinative weight but must be considered together with all the other factors set out in para. 26 of Young v. Tyco International of Canada Ltd., 2008 ONCA 709 (CanLII), 92 O.R. (3d) 161. Examining those factors:
(i) there was no evidence that the Term Sheet was signed in either England or Ontario;

(ii) we agree with the motion judge that: (a) there does not appear to be a strong connection between the subject matter of the Term Sheet and England; and (b) since the witnesses are scattered around the world, there is no one location that would be more convenient for all of the witnesses;

(iii) although the Term Sheet provides that the law of England is the governing law, it is a common occurrence for an Ontario court to apply foreign law: A1 Pressure Sensitive Products Inc. v. Bostik, Inc., 2009 ONCA 206 (CanLII), at para. 4;

(iv) there is no suggestion of the loss of a legitimate juridical advantage; and

(v) on the record before us, there is nothing to suggest that the respondents contemplate bringing an action concerning the Term Sheet in England, thereby triggering Forbes’ obligation under the Clause to attorn to the jurisdiction of the English courts.
. Douez v Facebook, Inc.

In the BC case of Douez v. Facebook, Inc. (SCC, 2017) the Supreme Court of Canada reviewed the law respecting the enforceability of venue selection clauses, particularly with respect to commercial versus consumer contracts (the latter commonly known as 'contracts of adhesion'). The badly-split court held against Facebook's clause requiring litigation in California courts, largely in light of the gross inequality of bargaining power between the parties, and the practical problems that consumers faced in conducting such litigation:
[27] Of course, parties are generally held to their bargain and are bound by the enforceable terms of their contract. However, because forum selection clauses encroach on the public sphere of adjudication, Canadian courts do not simply enforce them like any other clause. In common law provinces, a forum selection clause cannot bind a court or interfere with a court’s jurisdiction. As the English Court of Appeal recognized long ago, “no one by his private stipulation can oust these courts of their jurisdiction in a matter that properly belongs to them” (The Fehmarn, [1958] 1 All E.R. 333, at p. 335).

[28] Instead, where no legislation overrides the clause, courts apply a two-step approach to determine whether to enforce a forum selection clause and stay an action brought contrary to it (Pompey, at para. 39). At the first step, the party seeking a stay based on the forum selection clause must establish that the clause is “valid, clear and enforceable and that it applies to the cause of action before the court” (Preymann v. Ayus Technology Corp., 2012 BCCA 30 (CanLII), 32 B.C.L.R. (5th) 391, at para. 43; see also Hudye Farms, at para. 12 and Pompey, at para. 39). At this step of the analysis, the court applies the principles of contract law to determine the validity of the forum selection clause. As with any contract claim, the plaintiff may resist the enforceability of the contract by raising defences such as, for example, unconscionability, undue influence, and fraud.

[29] Once the party seeking the stay establishes the validity of the forum selection clause, the onus shifts to the plaintiff. At this second step of the test, the plaintiff must show strong reasons why the court should not enforce the forum selection clause and stay the action. In Pompey, this Court adopted the “strong cause” test from the English court’s decision in The “Eleftheria”, [1969] 1 Lloyd’s Rep. 237 (Adm. Div.). In exercising its discretion at this step of the analysis, a court must consider “all the circumstances”, including the “convenience of the parties, fairness between the parties and the interests of justice” (Pompey, at paras. 19, 30 and 31). Public policy may also be a relevant factor at this step (Holt Cargo Systems Inc. v. ABC Containerline N.V. (Trustees of), 2001 SCC 90 (CanLII), [2001] 3 S.C.R. 907, at para. 91, referred to in Pompey, at para. 39; Frey, at para. 115).

[30] The strong cause factors were meant to provide some flexibility. Importantly, Pompey did not set out a closed list of factors governing the court’s discretion to decline to enforce a forum selection clause. Both Pompey and The “Eleftheria” acknowledged that courts should consider “all the circumstances” of the particular case (Pompey, at para. 30; The “Eleftheria”, at p. 242). And the leading authority in England continues to recognize that the court in The “Eleftheria” did not intend its list of factors to be comprehensive (Donohue v. Armco Inc, [2001] UKHL 64, [2002] 1 All E.R. 749, at para. 24).

[31] That said, the strong cause factors have been interpreted and applied restrictively in the commercial context. In commercial interactions, it will usually be desirable for parties to determine at the outset of a business relationship where disputes will be settled. Sophisticated parties are justifiably “. . . deemed to have informed themselves about the risks of foreign legal systems and are deemed to have accepted those risks in agreeing to a forum selection clause” (Aldo Group Inc. v. Moneris Solutions Corp., 2013 ONCA 725 (CanLII), 118 O.R. (3d) 81, at para. 47). In this setting, our Court recognized that forum selection clauses are generally enforced and to be encouraged “because they provide international commercial relations with the stability and foreseeability required for purposes of the critical components of private international law, namely order and fairness” (GreCon Dimter inc. v. J.R. Normand inc., 2005 SCC 46 (CanLII), [2005] 2 S.C.R. 401, at para. 22).

[32] In Pompey, for example, our Court enforced a forum selection clause contained in a bill of lading concluded between two sophisticated shipping companies. The parties were of similar bargaining power and sophistication, since they were “corporations with significant experience in international maritime commerce . . . [that] were aware of industry practices” (para. 29). The Court held that the “forum selection clause could very well have been negotiated” between the parties (ibid.). This context manifestly informed the Court’s application of the strong cause test.

[33] But commercial and consumer relationships are very different. Irrespective of the formal validity of the contract, the consumer context may provide strong reasons not to enforce forum selection clauses. For example, the unequal bargaining power of the parties and the rights that a consumer relinquishes under the contract, without any opportunity to negotiate, may provide compelling reasons for a court to exercise its discretion to deny a stay of proceedings, depending on the other circumstances of the case (see e.g. Straus v. Decaire, 2007 ONCA 854, at para. 5 (CanLII)). And as one of the interveners argues, instead of supporting certainty and security, forum selection clauses in consumer contracts may do “the opposite for the millions of ordinary people who would not foresee or expect its implications and cannot be deemed to have undertaken sophisticated analysis of foreign legal systems prior to opening an online account” (Samuelson-Glushko Canadian Internet Policy and Public Interest Clinic Factum, at para. 7).

[34] Canadian courts have recognized that the test may apply differently, depending on the contractual context (see Expedition Helicopters Inc. v. Honeywell Inc., 2010 ONCA 351 (CanLII), 100 O.R. (3d) 241, at para. 24; Stubbs v. ATS Applied Tech Systems Inc., 2010 ONCA 879 (CanLII), 272 O.A.C. 386, at para. 58). The English courts have also recognized that not all forum selection clauses are created equally. The underpinning of the transaction is relevant to the exercise of discretion under the strong cause test: “ . . . a defendant who cynically flouts a jurisdiction clause which he has freely negotiated is more likely to be enjoined than one who has had the clause imposed upon him . . . ” (Welex A.G. v. Rosa Maritime Limited (The “Epsilon Rosa”), [2003] EWCA Civ 938, [2003] 2 Lloyd’s Rep. 509, at para. 48; see also The “Bergen” (No. 2), [1997] 2 Lloyd’s Rep. 710, at p. 715 (Q.B. (Adm. Ct.)); D. Joseph, Jurisdiction and Arbitration Agreements and their Enforcement (2nd ed. 2010), at para. 10.13). Similarly, Australian courts have found “that in a consumer situation [courts] should not place as much weight on an exclusive jurisdiction clause in determining a stay application as would be placed on such a clause where there was negotiation between business people” (Quinlan v. Safe International Försäkrings AB, [2005] FCA 1362, at para. 46 (AustLII); see also Incitec Ltd v. Alkimos Shipping Corp., [2004] FCA 698, 206 A.L.R. 558, at para. 50).

[35] As these cases recognize, different concerns animate the consumer context than those that this Court considered in Pompey, where a sophisticated commercial transaction was at issue. Because of these concerns, we agree with Ms. Douez and several interveners that the strong cause test must account for the different considerations relevant to this context.

[36] In our view, recognizing the importance of factors beyond those specifically listed in The “Eleftheria” is an appropriate incremental response of the common law to a different context (Bhasin v. Hrynew, 2014 SCC 71 (CanLII), [2014] 3 S.C.R. 494, at paras. 33-34 and 40). Such a development is especially important since online consumer contracts are ubiquitous, and the global reach of the Internet allows for instantaneous cross-border consumer transactions. It is necessary to keep private international law “in step with the dynamic and evolving fabric of our society” (R. v. Salituro, 1991 CanLII 17 (SCC), [1991] 3 S.C.R. 654, at p. 670).

[37] After all, the strong cause test must ensure that a court’s plenary jurisdiction only yields to private contracts where appropriate. A superior court’s general jurisdiction includes “all the powers that are necessary to do justice between the parties” (80 Wellesley St. East Ltd. v. Fundy Bay Builders Ltd., 1972 CanLII 535 (ON CA), [1972] 2 O.R. 280, at p. 282 (C.A.); TCR Holding Corp. v. Ontario, 2010 ONCA 233 (CanLII), 69 B.L.R. (4th) 175, at para. 26; Kelly v. Human Rights Commission (P.E.I.), 2008 PESCAD 9 (CanLII), 276 Nfld. & P.E.I.R. 336, at para. 8).

[38] Therefore, we would modify the Pompey strong cause factors in the consumer context. When considering whether it is reasonable and just to enforce an otherwise binding forum selection clause in a consumer contract, courts should take account of all the circumstances of the particular case, including public policy considerations relating to the gross inequality of bargaining power between the parties and the nature of the rights at stake. The burden remains on the party wishing to avoid the clause to establish strong cause.

[39] Although the steps are distinct, some considerations may be relevant to both steps of the test. For example, a court may consider gross inequality of bargaining power at the second step of the analysis, even if the circumstances of the bargain do not render the contract unconscionable at the first step. Taking into account the fact that the parties did not negotiate on an even playing field recognizes that the reasons for holding parties to their bargain carry less weight when there is no opportunity to negotiate a forum selection clause. This is not to say that the gross inequality of bargaining power will be sufficient, on its own, to show strong cause. However, it is a relevant circumstance that may be taken into account in the analysis.

[40] The two steps governing the enforcement of forum selection clauses ultimately play conceptually distinct roles. Professor Pavlović explains that at the first step, where the court determines the validity of the forum selection clause, “[c]ontract rules provide a core legal basis for the enforcement of jurisdiction agreements” (p. 402). On the other hand, the strong cause test at the second step “limits contractual autonomy in order to protect the authority (jurisdiction) of otherwise competent courts” (ibid.). This second step recognizes that there may be strong reasons to retain jurisdiction over a matter in the province.
. Trade Finance Solutions Inc. v. Equinox Global Limited

In Trade Finance Solutions Inc. v. Equinox Global Limited (Ont CA, 2018) the Court of Appeal commented on 'forum selection clauses' generally (here an arbitration clause or contract):
[50] For context, it should be kept in mind that alternative dispute resolution mechanisms, including arbitration, are among the means the international community has adopted to increase efficiency in economic relationships: Dell Computer Corp. v. Union des consommateurs, 2007 SCC 34, [2007] 2 S.C.R. 801, at para. 1. And, unless there is legislative intervention, the courts will generally give effect to the terms of a commercial contract freely entered into, including an arbitration clause: Seidel v. TELUS Communications Inc., 2011 SCC 15, [2011] 1 S.C.R. 531, at para. 2. It is a well-settled policy in Canada to enforce arbitration agreements and forum selection clauses.


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Last modified: 04-05-24
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