Case with simultaneous actions in Belgium and Quebec could impact commercial cases as well, says lawyer
A Quebec trial judge was correct to agree that a wife’s divorce proceedings in Quebec should not be stayed because they were also in the Belgian courts, the Supreme Court ruled today in a 6/1 decision that sets guidelines for the settlement of private international law cases.
In R.S. v. P.R., the Supreme Court found that the separation of assets and other support and custody matters between a Belgian couple who were living in Quebec when they filed parallel divorce proceedings could proceed in Quebec as well as in Belgium.
The decision “goes way beyond family cases,” says Martin Poulin, a partner at Dentons Canada LLP in Montreal who represented the appellant wife in the case. “The analysis grid put forward by the Supreme Court with respect to international lis pendens will also apply to numerous commercial cases as well.
“This judgement will apply to any type of case where there are parallel proceedings, in Quebec or in a foreign jurisdiction.”
The case concerned the exercise of discretion on the ground of lis pendens provided for in article 3137 of the Civil Code of Quebec, which authorizes a court to stay its ruling where an action between the same parties, based on the same facts and having the same subject, is pending before a foreign authority, provided that that action might result in a decision which may be recognized in Quebec.
The focus of the case was the possible recognition in Quebec of a decision applying article 1096 of the Code civil belge (the Belgian Civil Code), which provides for the revocation ad nutum (at will) of gifts between spouses. The parties had assets, including a family home, in Quebec when they commenced parallel divorce proceedings, the husband in Belgium and the wife, three days later, in Quebec. Under Belgian law, the husband revoked all the gifts he had given his wife during their marriage, valued at over $33 million.
Under article 3137 of Quebec’s Civil Code, three conditions must be met before a Quebec court may stay its ruling in an action on the application of a party to it. The first is that the action must have been filed with the foreign forum first. Second, the parties, facts and subject must be the same in the two actions. And third, it must be possible for the foreign action to result in a decision that would be “susceptible of recognition” in Quebec.
The wife appellant argued that the analysis of the third condition in this case was whether article 1096 of the Belgian Civil Code is inconsistent with public order as understood in international relations, which is one of the exceptions to the recognition of foreign judgments that are provided for in article 3155 of Quebec’s civil code.
The trial judge agreed that this legislative provision was discriminatory, and so inconsistent with public order and not recognizable in Quebec. She thus allowed the wife’s action in Quebec to proceed, a decision overturned on appeal. (Justice Nicholas Kasirer, now on the Supreme Court of Canada, sat on the Quebec Court of Appeal panel; he did not rule on the case decided today.)
Five of the six judges on the Supreme Court panel, including Justice Rosalie Abella, who concurred in the result, concluded that the party that has the burden of demonstrating that the eventual foreign judgment might be recognized by a foreign court does not bear an onerous burden. Justice Abella differed from the majority in finding that the Belgian law allowing for the revoking of gifts by one spouse was discriminatory and posed a potential barrier to having the Belgian judgement recognized in Quebec.
Justice Russell Brown, who dissented, concluded that the trial judge erred sufficiently that her exercise of discretion could be reviewed by an appellate court. “Justice Brown gave a lot of weight to fact that … litigating in two different forums might lead to a contradictory judgment at the end of the day,” says Poulin.
But “in the end, it is clear that the possible recognition of the Quebec judgment in the other country is the only criterion on which the Court of Appeal relied to intervene in the trial judge’s exercise of her discretion and to justify substituting its own analysis for hers,” wrote Justice Clément Gascon, with Chief Justice Richard Wagner and Justices Michael Moldaver, Andromache Karakatsanis and Sheilah Martin concurring.
“Its comments on the applicable law and on forum shopping do not suggest that the trial judge had … erred in principle or misapprehended material evidence or that this had caused her decision to be unreasonable … On the contrary, the Court of Appeal’s analysis on them seems to support that of the Superior Court [of Quebec]. Quebec law will apply, except as regards the liquidation of the matrimonial regime and the revocation of gifts given while the parties were resident in Belgium.”
The case will now proceed in Quebec as well as in Belgium, where it has already reached Belgium’s highest court, says Poulin.
As for the decision’s application in common law jurisdictions, “We put materials before the Supreme Court coming from common law jurisdictions,” says Poulin, “and the ruling seems to indicate that the criteria to be considered when there’s an application on the basis of international lis pendens are very similar in nature to the ones that are considered under the doctrine of forum non conveniens,” a mostly common law doctrine whereby a court acknowledges that another forum or court is more appropriate and sends the case to that forum.
“This is to some extent what the Supreme Court tells us in this judgment: that these criteria from the forum non conveniens [criteria] can be used by a trial judge when they're dealing with an application to stay based on international lis pendens.”