Executive Summary: Key Legal and Evidentiary Issues

• Dispute over Meta’s reliance on a termination clause allowing it to end a “News Innovation Agreement” when, in its reasonable determination, new legislation may adversely impact its activities in Canada.
• Contest over whether Meta’s online Commercial Terms and Terms of Service, including their forum selection language, were validly incorporated and clearly applicable to this bespoke content-licensing agreement with Torstar.
• Interpretation of the contractual framework using modern principles of contract construction, including the factual matrix, to distinguish Torstar as a “partner” licensing content rather than a typical user or advertiser buying access to Meta’s products.
• Determination that the Commercial Terms and the TOS, aimed at users of Meta products, did not clearly govern this innovative licensing arrangement and therefore did not oust the jurisdiction of the Ontario Superior Court of Justice.
• Assessment of whether strong cause existed not to enforce any alleged forum selection clause, given the Online News Act’s connection to freedom of the press, democratic discourse, and Canadian public policy.
• Consideration of public interest and constitutional values as a basis for keeping the dispute in Canada, including the role of fair compensation for news content and the democratic importance of a free and sustainable press sector.

Background and factual setting

In September 2021, Meta Platforms, Inc. (then operating as Facebook) entered into a “News Innovation Agreement” with Torstar Corporation, a major Canadian newspaper owner. Under this agreement, Torstar granted Meta a licence to use Torstar’s news content through a “Content Feed” across Meta’s platforms, in exchange for a fee over an initial term of three years. The structure and language of the agreement reflected an innovative, pilot-style commercial arrangement, treating Torstar as a “Partner” rather than a typical platform “user” or advertiser. The parties’ evident intention was that Meta would be allowed to distribute Torstar’s news articles on a variety of Meta products while paying Torstar for that use.

In June 2023, Canada enacted the federal Online News Act, S.C. 2023, c. 23. After this legislation came into force, Meta invoked a termination clause in the News Innovation Agreement and ended the arrangement, ceasing payments as of December 19, 2023. Torstar’s position in the underlying application is that Meta had no contractual grounds to terminate because the Online News Act did not create the sort of adverse impact on Meta’s Canadian activities that the contract required. Torstar seeks payment of the fees it says are owed from December 19, 2023 to the end of the initial term on September 2, 2024, and also alleges that Meta continued to host and make Torstar’s digital news content available on its platforms after termination.

The contractual framework and the policy terms at issue

The News Innovation Agreement was organized into nine articles, supported by recitals. The recitals noted that Facebook wanted Torstar to make its Content Feed available on Facebook Company Products such as information centres, news surfaces, and recommendation surfaces, and that Torstar was willing to do so on the terms described.

Article 1 provided key definitions. “Content” referred to material owned and published by Torstar; the “Content Feed” was the feed of that content supplied to Meta; and “Sponsored Content” covered content with sponsorship and commercial enhancements (for example, “brought to you by” or “sponsored by” labels). The Agreement also defined “TOS” as Meta’s Terms of Service available on its website, which included a hyperlink to separate “Commercial Terms” and to any online policies incorporated there for the relevant Facebook Company Products. Critically, “Facebook Company Products” were said to have the meaning given in the TOS, thereby tethering the scope of licensed platforms to Meta’s broader and evolving product ecosystem.

Article 2, the core operational provision, granted Meta a non-exclusive, royalty-free, worldwide licence to hold, distribute, display, and communicate the Content Feed across all Facebook Company Products for a three-year term, while Torstar retained ownership and intellectual property rights. Torstar undertook to provide the Content Feed in line with Meta’s news indexing guidelines, with equivalent timing and quality to the content shown on Torstar’s own sites, and to maintain editorial, legal, and fact-checking review comparable to its normal practice. Torstar also agreed that Meta could monitor, report, or disable uses of content inconsistent with the Agreement, while Torstar preserved editorial control and Meta retained control over placement, non-editorial display features, and the right not to display particular content. Meta kept full control over advertising on its products but agreed not to place ads within the content itself.

Article 3 covered payment of the fee and tax remittances, including monthly or pro-rated payments, while Article 4 required Torstar to maintain a media liability insurance policy of a specified amount for the term. Article 5 dealt with trademarks, marketing, publicity, and confidentiality, granting each party a limited licence to use the other’s name and marks only in connection with display and distribution of the Content Feed, and restricting public announcements about the Agreement without prior written approval. The parties could announce the existence of the partnership, but not commercial details, again with mutual written consent and subject to confidentiality obligations.

Article 6 contained the term and termination provisions central to the dispute. It set an initial three-year term with a possible two-year renewal, authorized termination for uncured breaches around content availability, and crucially granted Meta the right to terminate if any law “in Facebook’s reasonable determination … may have any adverse impact upon its activities in Canada.” It was this termination trigger, tied to Meta’s reasonable determination of adverse impact, that Meta invoked following the passage of the Online News Act.

Article 7 set out representations and warranties, including that Torstar had rights to the Content, was not acting at the behest of government officials, and was not subject to international sanctions in the United States, the United Kingdom, or the European Union. Article 9 addressed miscellaneous matters: confirming the parties were independent contractors, stating the Agreement constituted the entire agreement between them, and adding various interpretive provisions.

Article 8, however, lay at the heart of Meta’s procedural motion. It was titled “Incorporation of Terms” and declared that the Agreement consisted of the provisions in the written document, its exhibits, and the TOS. It stated that the document “supplements” and forms an “addendum” to the TOS, incorporating the TOS and all online documents referenced in them by reference, while also providing that any direct conflict between the Agreement and the TOS would be resolved in favour of the Agreement as between these parties. Meta relied heavily on this incorporation language to argue that the TOS and Commercial Terms—including their forum selection provisions—governed where Torstar’s dispute had to be brought.

Meta’s motion and the forum selection argument

Instead of immediately answering the merits of Torstar’s application about wrongful termination and unpaid fees, Meta brought a preliminary motion in the Ontario Superior Court of Justice. Meta asked the Court to dismiss or permanently stay Torstar’s Ontario application on the basis that the Agreement’s incorporation of the TOS and Commercial Terms meant the parties had agreed to litigate in California, not Ontario.

Under Canadian law, where a forum selection clause is invoked, the moving party must first demonstrate that the clause is valid, clear, enforceable, and covers the dispute in question. Only once that threshold is met does the burden shift to the resisting party to show there is a “strong cause” why the clause should not be enforced, often rooted in public policy, inequality of bargaining power, or broader interests of justice. Meta argued that this framework had effectively already been applied in the Ontario Court of Appeal’s decision in Loan Away Inc. v. Facebook Canada Ltd., which enforced a similar forum selection clause in Meta’s online Terms of Service for a commercial advertiser. In that earlier case, Loan Away’s ability to advertise on Facebook had been suspended, and the Court of Appeal upheld a forum clause sending commercial claims to California.

Meta contended that the same logic should govern here: Torstar was a sophisticated commercial party; the Commercial Terms and TOS were incorporated by reference; and those online terms contained clear forum selection language sending “Commercial Claims” by non-U.S. businesses to the U.S. District Court for the Northern District of California or a California state court in San Mateo County. On that view, Torstar’s application about the termination of a commercial arrangement involving Meta’s products fell squarely within the Commercial Terms’ definition of a commercial claim.

Torstar’s response to the forum and contract arguments

Torstar resisted the motion on several fronts. First, it argued that Loan Away was not determinative because in that case Loan Away had conceded that the forum selection clause was valid, clear, and applicable, and the dispute in the Court of Appeal centred on whether there was strong cause not to enforce it. By contrast, Torstar directly challenged the applicability and clarity of the forum selection clauses themselves. Thus, the first step of the test—whether the clause clearly covered this dispute—was still very much in issue.

Second, Torstar characterized the News Innovation Agreement as fundamentally different from the standard relationships governed by Meta’s TOS and Commercial Terms. Those online terms regulate the use of Meta’s products and services by “users” and “customers,” especially those who access free accounts or purchase advertising and related services. Torstar, by contrast, was not seeking to buy ads or to use Meta products as an ordinary user. Rather, Torstar was licensing its own content to Meta for distribution on Meta’s platforms, with Meta paying Torstar for that use. In Torstar’s view, the contract was about Meta’s access to Torstar’s content, not Torstar’s access to Meta’s products.

Third, Torstar argued that the online terms were unclear and confusing when applied to this bespoke paper agreement. Torstar pointed out that neither the TOS nor the Commercial Terms clearly defined “customer” in a way that obviously captured a content-licensing partner; that the Agreement’s incorporation by reference required parties to wade through multiple evolving online documents without pointing to any specific dispute resolution clause; and that Meta itself advanced alternative theories as to which forum clause applied—commercial or general—which, in Torstar’s submission, underscored the lack of clarity.

Finally, Torstar argued that even if a forum selection clause were considered arguably applicable, there was a strong cause not to enforce it. The case involved the interpretation and application of Canada’s Online News Act—legislation designed to ensure fair compensation for news content and to sustain the news media’s role in a democratic society. Torstar contended that the public interest in Canadian courts interpreting and applying such a statute, closely tied to freedom of the press and access to information, militated strongly in favour of keeping the proceeding in Ontario rather than sending it to California.

The Court’s approach to interpreting the agreement and Meta’s online terms

The Court began by setting out the modern Canadian approach to contract interpretation: reading the contract as a whole, giving the words their ordinary and grammatical meaning in light of the surrounding circumstances known to the parties when they contracted, and avoiding interpretations that render terms ineffective or lead to commercial absurdity. It emphasized that the Agreement was short and structured, clearly tailored to a novel content-licensing arrangement rather than a standard click-through user relationship.

Applying these principles, the Court examined the Commercial Terms, which state that if a person or entity accesses or uses Meta products for business or commercial purposes—such as buying ads, selling products, developing apps, managing business-related pages or groups, or using measurement services—they must agree to the Commercial Terms. Those terms define “Commercial Claims” as disputes arising out of or relating to such business use of Meta products and dictate that where the business is located outside the United States, any such claim must be resolved exclusively in California.

The judge concluded that these Commercial Terms were designed to govern relationships like those in Loan Away and in the Federal Court’s decision in Gorenstein v. Meta Platforms—situations where a business or individual accesses Meta’s network to advertise products or otherwise commercially exploit Meta’s services. By contrast, the News Innovation Agreement did not concern Torstar’s purchase or use of Meta’s products; it concerned Meta’s use of Torstar’s content. The essence of the deal was the licence and compensation structure, not Torstar’s access to Meta’s network as a user or advertiser. As such, the Court held that the Commercial Terms did not clearly apply to this Agreement or to the dispute over the termination clause.

Turning to the general TOS, the Court observed that they are directed at users of Meta products, outlining the services Meta provides—for example, personalized experiences, connections with people and organizations, tools for self-expression, discovery of content and services, and safety-oriented technologies—and the rules for using those services. The dispute resolution provision (section 4.4) appears in the context of possible suspension of user accounts and limits on liability for use of Meta products. It provides that, for consumers or where required by law, claims against Meta may be brought in the courts of the consumer’s home country, but otherwise certain disputes must be resolved exclusively in California.

The judge accepted Meta’s reading that the distinction in section 4.4 turned on whether a claimant was a consumer, but held that this did not resolve the core problem: the TOS are fundamentally about the use of Meta’s products by ordinary users and paying customers. For a fact pattern that does not involve such use—like a licence for Meta to distribute Torstar’s news content—the TOS’ forum selection clause simply does not fit. The Court found it “impossible” to apply section 4.4 to a dispute that does not involve a user of a Facebook product and reasoned that stretching the clause to reach this specialized agreement would “do violence” to the context in which the section operates.

The Court also emphasized that the purpose of incorporating the TOS through Article 1 and Article 8 of the News Innovation Agreement was to ensure that all current and future Meta products were covered by Torstar’s content licence, not to rewrite the allocation of dispute-resolution forums for this bespoke arrangement in an unclear way. Given the differences between Meta’s typical user relationships and this partner-level agreement, and the absence of a straightforward, clearly worded forum selection clause that explicitly covered this type of content-licensing dispute, Meta had not discharged its burden of showing that the forum clauses clearly applied.

Clarity, burden of proof, and the first step of the forum selection test

The Court underscored that a party seeking to rely on a forum selection clause bears the burden of proving that the clause is valid, clear, and applies to the specific dispute. Forum selection clauses are treated with caution because they purport to oust the jurisdiction of courts that would otherwise be competent to hear the case. To respect party autonomy while preserving the public interest in access to local courts, Canadian jurisprudence insists that such clauses be clear and that their scope match the actual bargain struck.

Here, the Court accepted several of Torstar’s criticisms about clarity. The undefined “customer” language, the need to chase through multiple online documents without a precise cross-reference to any particular forum clause, and Meta’s dual reliance in argument on both the Commercial Terms’ dispute provisions and the TOS’ section 4.4 all supported an inference that the parties had not plainly and mutually committed this bespoke content-licensing dispute to California courts. A sophisticated company like Meta could have drafted a straightforward forum clause in the written Agreement itself, tailored to this relationship, but did not.

On that basis, the Court held that Meta had failed to satisfy the first part of the test: it had not shown that any forum selection clause clearly covered Torstar’s application about the termination of the News Innovation Agreement and claimed unpaid fees. That finding alone was sufficient to dismiss Meta’s motion.

Public policy, the Online News Act, and strong cause (second step of the test)

For the sake of completeness, the judge went on to consider the second step of the Douez framework: whether, even if a forum clause arguably applied, Torstar had shown a strong cause why it should not be enforced. The Court turned to the Supreme Court of Canada’s reasoning in Douez v. Facebook Inc., which recognized that public policy and constitutional or quasi-constitutional rights can justify refusing to enforce a forum selection clause, especially where Canadian courts have a heightened interest in adjudicating such claims.

Torstar argued that the Online News Act is legislation aimed at ensuring compensation for news content distributed online, enhancing fairness in the digital news market, and sustaining news media as a pillar of democratic society. The Court accepted that this statute raises democratic issues tied to freedom of the press and freedom of expression, including the public’s right to receive information necessary for meaningful participation in political debate and elections.

In reviewing academic commentary and prior case law, the judge noted the longstanding recognition in Canadian jurisprudence of the vital role of the press and access to government information in a free and democratic society. The judgment referred to the idea that when media are weak, public responsiveness to policy suffers, and canvassed constitutional decisions affirming that freedom of the press and open public debate are central to the guarantees of the Canadian Charter of Rights and Freedoms. Against that backdrop, the Online News Act’s objective of ensuring fair compensation for news content was seen as closely linked to protecting the viability and independence of news outlets.

The Court also highlighted an important choice-of-law and public-policy dimension: while a Canadian court is obliged to give effect to fundamental imperatives and public policies of the Canadian state, a foreign court—such as one in California—has no corresponding obligation to enforce Canadian public policy or to prioritize the Canadian statutory purposes underlying the Online News Act. That asymmetry reinforced the conclusion that Canadian courts have a strong interest in determining how the Online News Act interacts with private commercial arrangements involving news content.

In addition, the Court considered the discretionary factors historically used to assess whether to stay proceedings in favour of a foreign forum, such as those set out in The “Eleftheria” and adopted in Canadian cases like Z.I. Pompey. Among other things, these factors look at where relevant evidence is located and overall fairness and convenience. Meta argued that Torstar had not demonstrated substantial inconvenience or unfairness in litigating in California and that American courts are well able to interpret contracts and foreign statutes. Torstar, by contrast, stressed that the core question is about the impact of a Canadian statute on Meta’s Canadian operations, a question that lies at the heart of Canadian public policy.

Balancing these considerations, the Court concluded that constitutional values and public-interest concerns were sufficiently engaged to constitute a strong cause not to enforce any alleged forum selection clause. The principal issue—whether Meta could rely on the Online News Act as an “adverse impact” justifying termination of a Canadian news-licensing arrangement—was closely bound up with Canadian democratic and constitutional values.

Outcome of the motion and status of the parties

On the basis of its analysis, the Court found that the Ontario Court of Appeal’s Loan Away decision did not control the result in this case, because that case did not address the threshold question of clarity and applicability of the forum selection clause to a bespoke content-licensing agreement. It further held that Meta had not proven the forum clauses in its online Commercial Terms or general TOS were clearly applicable to Torstar’s application about the News Innovation Agreement.

Even if a forum selection clause had arguably applied, the Court determined that Torstar had shown a strong public policy reason not to enforce it, grounded in the Online News Act’s role in supporting freedom of the press, access to reliable information, and democratic discourse in Canada. The constitutional and quasi-constitutional dimensions of those issues provided strong cause to retain jurisdiction in Ontario.

As a result, the Court dismissed Meta’s motion to stay or dismiss the proceeding. Torstar, as the responding party on the motion, was therefore successful at this stage, and its substantive application regarding alleged wrongful termination and unpaid fees will proceed in the Ontario Superior Court of Justice.

On costs, each side filed a bill of costs, but the judge did not fix or award a specific amount in this decision. Instead, the Court directed that if the parties were unable to agree on costs, they could schedule an appointment to address the matter. Accordingly, no definitive monetary award, damages figure, or quantified costs order was made in this ruling, and the total amount ultimately recoverable in Torstar’s favour cannot yet be determined from this decision alone.