January 21, 2018

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Update On Enforcing Foreign Judgments in Canada

The Supreme Court of Canada recently decided that foreign judgment creditors can enforce judgments without proving any connection between Canada and either the judgment debtor or the foreign legal proceedings. Also, enforcement proceedings can be instituted without establishing that the judgment debtor has any assets in Canada.

In Chevron Corp v. Yaiguaje, 2015 SCC 42, plaintiffs obtained a judgment against Chevron in Ecuador. Plaintiffs later sued Chevron and its seventh-tier Canadian subsidiary, Chevron Canada who was not a defendant in Ecuador, contending its shares were available to satisfy the judgment. The Supreme Court allowed the claim to proceed, despite Chevron Canada not having any "real and substantial connection" to Ecuador. The fact that Chevron Canada was a subsidiary of Chevron Corp and had an office in Ontario was sufficient to establish jurisdiction over it.

The court affirmed the prior approach by Canadian courts that recognition and enforcement actions should be "generous and liberal". But, the judgment a) must be final and conclusive, b) must be for a definite sum of money, and c) there must be a "real and substantial connection" between the foreign court and the litigants or there is traditional "presence-based jurisdiction".

Thus, it is not necessary for a judgment debtor to have existing assets in Canada. In today's mobilized economy and with the advent of electronic banking, assets move in and out of jurisdictions with great frequency and ease. A judgment creditor can gain a powerful advantage by limiting a judgment debtor's ability to transfer assets in and out of Canada through the ability to have its judgments recognized and enforced there against a Canadian party.

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About this Author

Eric (Rick) S. Rein, Creditor's Rights Attorney, Horwood Marcus & Berk Law Firm

Rick Rein focuses his practice on creditor's rights, loan enforcement and creditor bankruptcy representation. He regularly advises secured creditors in workout and restructuring transactions, including forbearance agreements. He also assists secured creditors in recovering pledged collateral through Uniform Commercial Code sales and commercial mortgage foreclosures, in prosecuting claims based on fraud, non-performing loans, intercreditor disputes and loan commitment litigation and in defending creditors against whom claims have been asserted. Additionally, Rick has...