In the Vale Canada Limited v Insurance Company Royal & Sun Alliance of Canada, 2022 ONCA 862, Court of Appeals of Ontario refined its 70-page decision on multi-jurisdictional insurance coverage disputes to one immediate conclusion: “Comprehensive general liability insurer, primary or excess insurance coverage for Ontario risks, attributing himself to Ontario for purposes of jurisdiction” In addition to a clear statement of jurisdiction over insurance companies that issue policies to Ontario businesses and residents, the decision affirms that the jurisdictional framework established by the Supreme Court of Canada in Club Resorts Ltd vs Van Breda, PKS 2012 17 [Van Breda] applies equally to contract disputes and torts.
Background
Vale Canada Limited (Vale) is a mining company based in Ontario. It is facing a class action in Ontario related to environmental claims related to mines at Port Colborne and Sudbury.
Over the decades, Vale obtained 92 insurance policies from 24 main and additional insurance companies. Vale is seeking damages for damages it incurs in its environmental class action and for defense costs from its insurer.
Disputes over coverage led to lawsuits in New York and Ontario. In Ontario, some Vale insurers tried to delay the trial, arguing that the Ontario courts lacked jurisdiction, and that Ontario was not the most comfortable forum. In New York, Vale and other insurance companies asked the court to cancel Vale’s excess insurance action because of New York the forum is not appropriate.
The Ontario and New York courts both held that their respective cases could proceed. in Ontario (Vale Canada Limited vs Royal & Sun Alliance2022 ONSC 12), the Court found its jurisdiction based on an actual and substantial relationship between Ontario and all but one of the insurers and that Ontario did not the forum is not appropriate. In parallel American proceedings, a New York court ruled that New York was not the forum is not appropriate.
The excess insurer appealed in Ontario, pointing to ongoing proceedings in New York as reasons to consider Ontario the forum is not appropriate.
Appeal Decision
The Court of Appeal rejected the appeal based on the framework set out in From Breda. This framework is centered on establishing a “real and substantial connection” between the forum and the subject matter of the dispute; the forum and the defendants; or both. From Breda establish four factors connecting the allegations: (1) whether the defendant is domiciled or resides in the province; (2) whether the defendant runs a business in the area; (3) whether the unlawful act was committed in the province; or (4) whether the contract relating to the dispute was made in the province.
Insurance companies oppose the implementation From Breda factor of contract disputes, stating that without consent or presence-based jurisdiction, courts should assume jurisdiction over foreign defendants only if the relevant contract was concluded in Ontario. The court rejected this view, finding that the rationale for applying the “continuing in business” factor applies to contractual disputes, although what constitutes going on business may differ in tort and contract cases.
The court also rejected the insurer’s filing that the defendant must be conducting business in Ontario when the action commences into basic jurisdiction. As part of this, the Court found that imposing this temporary limit would allow the factor to be redundant with presence-based jurisdictions. The court also noted that the insurance company’s arguments contradicted From Bredainvolving foreign defendants who had conducted business in Ontario at some point prior to the lawsuit in question—not when the claim was launched.
The Court of Appeals ultimately concluded that the insurers were conducting business in Ontario when they issued their respective policies to Vale and that this was sufficient to satisfy the allegation. From Breda factor.
Running a Business (Insurance Related) in Ontario
The Court of Appeal has also investigated what it means to do business in the context of insurance. In the Valleythe disputed policy was not drawn up in Ontario, and the insurer maintained that they could not be deemed to be carrying on business in Ontario because the activity giving rise to the contract occurred elsewhere.
The court held that determining what it meant to run a business was contextual, with the answer depending on the nature of the business. In this case, the Court of Appeal accepted that registration and licensing relating to the activities of an Ontario-based insurance company were relevant, but not decisive. In the view of the Court, a more important consideration for determining the location is the subject of the insurance contract, particularly the location of the object of insurance.
In the Valley, all policies related to the obligations of Ontario. The subject of the claim at issue relates to the liability and the Court finds that this is sufficient to warrant jurisdiction.
Having concluded that there is jurisdiction simply of all insurance companies, the Court of Appeal considers whether Ontario the forum is not appropriate. As part of this analysis, the Court bluntly rejected the argument that no action should proceed in Ontario because at that time New York proceedings were still ongoing. The court stated that this would have “adverse effects” that would prevent Vale, an Ontario entity, from using an Ontario court to sue the Ontario-based liability under the Ontario-based insurance policy. The Court of Appeal is not interested in removing this “reasonable” claim from Ontario, even though a New York court has also taken jurisdiction.
The Court of Appeal lives with the problems inherent in multiplicity. Nonetheless, the Court maintains that the assumption of jurisdiction by foreign courts does not mean that Canadian courts should automatically suspend and refuse to assert their own jurisdiction. While courts are generally reluctant to allow multiple proceedings, they are Valley the decision supports the assumption of jurisdiction over disputes with strong links to the forum, even when foreign courts also assert jurisdiction.
Takeaways
Affirmation that From Breda applies to contract disputes is a useful clarification. That Valley the decree also explains what it means to do business in the jurisdiction in the context of insurance companies and insurance policies. Finally, the decision opens up the possibility that other new contributing factors may be considered, as long as those new factors allow the court to assume jurisdiction.