In the companion cases of Breeden v Black, 2012 SCC 19 (“Breeden”) and Éditions Écosociété Inc. et al. v Banro Corp., 2012 SCC 18 (“Banro”), the Supreme Court of Canada clarified the manner in which courts should determine whether to exercise jurisdiction over multijurisdictional defamation claims involving foreign defendants.

Although the decisions support the ability of plaintiffs to advance defamation claims in any Canadian jurisdiction in which allegedly defamatory material is published, the decisions also leave open the possibility that the law will evolve to reduce the potential for forum shopping.

Background

In Breeden, the plaintiff commenced defamation actions in Ontario against the defendants, who were certain directors, advisors, and a vice president of a corporation headquartered in the United States. The plaintiff alleged that statements issued by the defendants and posted on the internet were defamatory and were published in Ontario when they were downloaded, read, and republished in Ontario by Canadian newspapers. The defendants brought a motion to have the defamation actions stayed on the grounds that the Ontario court should not exercise jurisdiction because there was no real and substantial connection between the actions and Ontario or, alternatively, because an American court was the more appropriate forum.

The facts in Banro are similar. There, the defendants, who were based in Québec, published a book which commented on the international mining activities of certain corporations, including the plaintiff. Copies of the allegedly defamatory book were available to be purchased or read in Ontario. The plaintiff brought an action in Ontario against the defendants alleging that the book was defamatory. The defendants moved to stay the Ontario action on the basis that there was no real and substantial connection between the action and Ontario, and that a Québec court was the more appropriate forum.

Decisions

In both cases, Justice LeBel, writing for the Court, applied a new analytical framework for determining whether a court should exercise its jurisdiction. That analytical framework was established in the companion case of Club Resorts Ltd. v Van Breda, 2012 SCC 17 (“Club Resorts”), reasons of which were issued at the same time as those in Breeden and Banro.

The analytical framework involves a two-stage analysis. In the first stage, which depends on the application of the real and substantial connection test, the plaintiff must demonstrate a “presumptive connecting factor” that links the subject matter of the litigation with the jurisdiction. If the plaintiff demonstrates a presumptive connecting factor, then there will be a presumption of jurisdiction unless the defendant rebuts the presumption. In Club Resorts, the Court identified a non-exhaustive list of presumptive connecting factors. The most important of those presumptive connecting factors, for the purposes of Breeden and Banro, is the commission of a tort in the jurisdiction.

The defendant may rebut a presumption of jurisdiction by establishing “facts which demonstrate that the presumptive connecting factor does not point to any real relationship between the subject matter of the litigation and the forum or points only to a weak relationship between them.” For example, where the presumptive connecting factor is the commission of a tort in the jurisdiction, rebutting the presumption may be possible “where only a relatively minor element of the tort has occurred in the province.” If no presumptive connecting factor applies in the circumstances of the case, or if the presumption of jurisdiction resulting from such a factor is rebutted, the court cannot assume jurisdiction.

If the plaintiff establishes jurisdiction, the court will proceed to the second stage of the analysis, which involves application of the doctrine of forum non conveniens. At this stage, the burden shifts to the defendant to demonstrate that the court should not exercise jurisdiction because the court of another jurisdiction is the more appropriate forum for the hearing of the action. To succeed, a defendant must show that the other forum is “clearly more appropriate” because it is better suited to “fairly and efficiently” resolve the dispute. The defendant may point to a variety of factors, including the locations of the parties and witnesses, the possibility of conflicting judgments, and the substantive law that should apply to determine the claims.

In Breeden and Banro, the Court concluded that jurisdiction had been properly assumed. There was a real and substantial connection between Ontario and the defamation actions based on the fact that the alleged torts had been committed in Ontario. The Court was not convinced that the defendants in either case had rebutted the presumption of a real and substantial connection.

Significantly, the Court recognized that the analytical framework raises concerns about libel tourism, which is a variety of forum shopping in which a plaintiff brings a defamation action in the jurisdiction most likely to provide a favorable result. The prospect of libel tourism arises because the tort of defamation “crystalizes” upon publication of defamatory material.

Defamatory material is “published” whenever it is viewed or read by a third party, and is presumed to be “published” when it is printed in a book. As a result, where allegedly defamatory material is published in multiple jurisdictions – a feat easily achievable, even inadvertently, due to the ubiquity, universality, and accessibly of the internet – the courts of multiple jurisdictions will generally be able to exercise jurisdiction over the same claim.

Because the law of defamation varies between jurisdictions such that it is easier or more difficult for plaintiffs to establish their claims depending on their choice of jurisdiction, plaintiffs can strategically advance their actions in the jurisdictions in which they have the greatest juridical advantage. For example, American defamation law may require some plaintiffs to demonstrate malice on the part of the defendant as a pre-requisite to establishing liability. Because no such requirement exists in Canada, plaintiffs may enjoy a juridical advantage by pursuing their defamation claims in Canada rather than in the United States.

The Court’s reasons in Banro may provide courts in future cases with a way to restrain libel tourism. After concluding that jurisdiction had been properly assumed, the Court turned to determine whether the court of another jurisdiction was a more appropriate forum for the hearing of the action. In the course of applying the doctrine of forum non conveniens, the Court considered the question of which substantive law should be applied to determine the claim. Courts have traditionally applied the lex loci delicti rule (“the place where the tort occurred”) to decide which law applies to determine tort claims. The rationale for the application of the lex loci delicti rule is that, in the case of most torts, the occurrence of the wrong constituting the tort occurs in the same jurisdiction in which the consequences of the wrong are suffered.

The Court recognized that the lex loci delicti rule may not be appropriate in all defamation cases. In certain cases, the reputational harm caused by the publication of defamatory material may be suffered in a jurisdiction other than the one in which the defamatory material was published. The Court suggested that in those circumstances it may be more appropriate to apply a rule based on the “place of most substantial harm to reputation.” According to that rule, the applicable law would be that of the jurisdiction most closely connected to the harm occasioned by the publication. Such an approach could eliminate the strategic advantage to libel tourism by providing that the same law would apply regardless of where the matter was heard.

The Court concluded that it did not need to decide whether the lex loci delicti rule ought to be abandoned as the choice of law rule in multijurisdictional defamation cases in favour of an approach based on the location of the most substantial harm to reputation. The Court observed that, on the facts of both cases, application of either rule had the same effect. Under a rule based on the location of the most substantial harm to reputation, Ontario law would apply. Alternatively, under the lex loci delicti rule, Ontario law would also apply because the alleged torts were committed in Ontario.

Implications

Breeden and Banro challenged the Court to consider the appropriate balance between the protection of reputation, freedom of expression, and jurisdictional restraint. The decisions clarify that Canadian courts will have presumptive jurisdiction over defamation cases involving foreign defendants if the defamatory statements are published to at least one person in the jurisdiction. For example, if a person in Hong Kong were to create an allegedly defamatory website, an Ontario court would have presumptive jurisdiction over an action brought by the plaintiff against the person in Hong Kong if the plaintiff demonstrated that at least one other person in Ontario viewed the website.

This precedent will likely have significant consequences, particularly given the ubiquity, universality, and accessibility of the internet. As Lebel J. recognized, with a “globalized world comes the sometimes poisonous gift of ubiquity.” Statements published in one location may, with the aid of the internet, be widely disseminated and viewed in a multitude of jurisdictions all over the world. Given the ease by which allegedly defamatory material may be published in Canadian jurisdictions through the use of the internet, plaintiffs in cases involving internet defamation will likely face little difficulty establishing a presumption of jurisdiction.

As a result, litigation involving jurisdictional disputes in defamation cases will likely turn on whether the foreign defendant is able to rebut a presumption of jurisdiction or demonstrate that another jurisdiction is a more appropriate forum. Foreign defendants may succeed in rebutting a presumption of jurisdiction by demonstrating that only a relatively minor element of the tort of defamation, such as publication, occurred in the jurisdiction.

Although the analytical framework applied in Breeden and Banro may create a heightened risk of libel tourism in future cases, the Court’s remarks with respect to the appropriateness of a choice of law rule based on the location of most substantial harm to reputation may provide lower courts with a legal foundation to curb libel tourism.

Finally, it must be recognized that the analytical framework applied in Breeden and Banro is subject to legislation in certain provinces that governs the assumption of jurisdiction and the doctrine of forum non conveniens: see e.g. Court Jurisdiction and Proceedings Transfer Act, S.B.C. 2003, c. 28. However, because those statutes contemplate an approach similar to the analytical framework applied in Breeden and Banro, the reasoning in those cases is likely to influence the manner in which courts in those provinces determine whether to exercise jurisdiction over defamation cases involving foreign defendants.

This article was originally published at The Court (Osgoode Hall Law School).

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