MONTREAL, June 4 /CNW Telbec/ - On May 25, 2007, the Supreme Court of
Canada rendered a unanimous decision in favour of Transat Tours Canada Inc., a
client of Lavery, de Billy and a subsidiary of the Transat A.T. Inc. group,
which ranks among the ten largest tourism businesses in the world. This
precedent is of crucial importance for Canadian firms carrying on business
The Supreme Court of Canada ruled that when a superior court in Canada
has jurisdiction under the rules of private international law, it has the
power to issue injunctive orders against a foreign (non-resident) firm or
individual, even if it or he does not have assets or activities in Canada.
This is the first time the Supreme Court of Canada has ruled on the
possibility of issuing purely extra-territorial injunctions.
This decision emphasizes the importance of including, in contracts
entered into with foreign individuals or firms, a clause that grants exclusive
jurisdiction to Canadian courts (choice of forum clause).
A Lavery, de Billy team composed of Richard A. Hinse, Odette
Jobin-Laberge, Elise Poisson and Bruno Verdon represented Transat Tours Canada
Inc. in this matter.
Summary of the facts
In 2004, Tescor, S.A. de C.V. ("Tescor"), a Mexican corporation, signed
an exclusivity contract with Transat Tours Canada Inc. ("Transat") for the
sale, in Canada, of rooms at the Qualton hotel in Puerto Vallarta. The
contract contained a choice of forum clause that conferred exclusive
jurisdiction on the courts of Quebec.
In 2005, Transat learned that its competitor, MyTravel Canada
Holidays Inc., which also carries on business under the name Vacances Sunquest
("MyTravel"), was offering its clients rooms at the same Mexican hotel.
MyTravel defended itself by maintaining that it had entered into a contract
with another company, which then controlled the hotel. Transat replied that on
the basis of the close links existing between Tescor and the other Mexican
corporations involved, including the one that allegedly contracted with
MyTravel, these corporations could not hide behind their separate corporate
identities to avoid compliance with the contract entered into with Transat.
In order to enforce its exclusivity contract, Transat filed a motion for
a permanent injunction and a motion for an interim injunction against Tescor,
the Mexican corporation with which it contracted, as well as MyTravel and the
other Mexican corporations related to Tescor and involved in the ownership,
rental or management of the Mexican hotel, namely Impulsora Turistica de
Occidente, S.A. de C.V. ("Impulsora"), Vision Corporativa Y Fiscal, S.A. de
C.V. ("Vision") and Hotelera Qualton, S.A. de C.V. ("Hotelera").
Impulsora, Vision and Hotelera petitioned the Superior Court to decline
jurisdiction, alleging that it lacked the power to issue an injunction having
purely extraterritorial effects against a person having neither assets nor
activities in Quebec, and it was this that ultimately led to the proceedings
before the Supreme Court.
The impact of the Supreme Court of Canada's judgment
The Supreme Court of Canada clearly confirmed that a court having
jurisdiction has all the powers necessary for the exercise of its
jurisdiction, including the power to issue injunctive orders, even those
having extraterritorial effects. It also confirmed that the fact that a
superior court may have difficulty imposing punishment for any failure to
comply with its orders does not affect its power to issue such an injunctive
If the position of the Mexican corporations and MyTravel had been
endorsed, it would no longer have been possible to apply to the Superior Court
to demand the specific performance of and compliance with any contract entered
into with a foreign party having neither assets nor activities in Quebec, even
though such party had voluntarily agreed to the jurisdiction of the Quebec
courts in a choice of forum clause.
In the context of market globalization, it would have been inappropriate
to restrict the rights of the parties to a commercial contract containing a
choice of forum clause only to an action in damages where specific performance
is the remedy that appears to be the most appropriate to the party who wishes
to claim it.
In this respect, the decision is of crucial importance for Transat. It
regularly carries on its business abroad and, given the uncertainties that may
result from doing so, Transat can, by using its choice of forum clause, seek
as much as possible to enforce compliance with and specific performance of its
clauses entitling it to exclusive distribution rights in Quebec.
This victory obtained by Lavery, de Billy on behalf of Transat also has a
positive impact for any Canadian business developing its markets abroad. By
taking care to insert a choice of forum clause granting jurisdiction to
Canadian courts in their contracts, Canadian firms will be able to seek
injunctive orders from Canadian courts in order to enforce their rights.
Lavery, de Billy LLP ("Lavery, de Billy") (www.laverydebilly.com)
With nearly 150 barristers and solicitors, Lavery, de Billy ranks among
the leading law firms in Canada. Offering a full range of essential business
law, administrative law, labour law and litigation services to our business
clients, our lawyers devise practical and lasting business solutions from our
offices located in Montréal, Québec City, Laval and Ottawa. Lavery, de Billy
is a member of World Services Group Group (www.worldservicesgroup.com), an
international group of service firms, including law firms, in over
For further information:
For further information: Patrick Préville, Communications Adviser,
Lavery, de Billy, (514) 878-5434, firstname.lastname@example.org