Can a party that has not signed an agreement containing a forum
selection clause nevertheless be bound by it? The Ontario Court of
Appeal addressed this question in Aldo Group Inc. v. Moneris Solutions
Corporation, 2013 ONCA 725. The Court in Aldo contemplated
the application of forum selection clauses to third parties in
The salient facts of the decision in Aldo are as follows.
MasterCard entered into a license agreement with a Bank, allowing
the Bank to issue credit cards (the "License Agreement").
The License Agreement contained a forum selection clause
identifying New York as the chosen forum for adjudicating disputes.
The Bank entered into an agreement with Moneris Solutions
Corporation ("Moneris") to allow Moneris to process the
Bank's credit credit transactions (the "Processing
Agreement"). The Processing Agreement also contained a forum
selection clause in favour of New York. Moneris then entered into a
Merchant Agreement with Aldo Group Inc. ("Aldo"). The
Merchant Agreement had a forum selection clause in favour of
Aldo was a victim of hacking, resulting in a number of allegedly
fraudulent transactions. MasterCard debited the Bank for these
transactions. The Bank, in turn, passed on its liability to Aldo,
as it was alleged that Aldo had breached a number of its security
obligations. Aldo then commenced an action in Ontario against both
MasterCard and Moneris. Its claims sounded in tort and in
restitution, but not in contract. MasterCard sought to stay the
Ontario proceeding in favour of New York, relying upon the
contractual forum selection clauses to which Aldo was not a party.
The motion judge dismissed the stay motion.
On appeal, the Court of Appeal ruled that Aldo's claims were
not "essentially" contractual in nature. Nor had Aldo
artificially manipulated its causes of action in order to
circumvent the forum selection clauses. Moreover, the Court ruled
that Aldo was not pursuing a subrogation claim – it was
alleging harm "in its own right". The Court then went on
to canvass U.S. jurisprudence which has extended the application of
forum clauses to non-parties that are "closely related"
to a dispute:
The 'closely related' doctrine operates to bind
non-signatories to a forum selection clause where they are so
closely related to the dispute that it is foreseeable that they
would become bound by the clause. A non-party is 'closely
related to a dispute if its interests are completely derivative of
and directly related to, if not predicated upon, the signatory
party's interests or conduct.
The Court ultimately concluded that Aldo did not meet this test.
Although the Court stated that it was "unnecessary" to
determine whether the "close related" doctrine should be
imported into Canadian law, it nevertheless acknowledged that the
doctrine had been "sensibly applied" in the U.S. and that
"the U.S. experience suggests that there may well be
circumstances in which an Ontario court would seek to apply the
'closely related' doctrine to a non-signatory".
These comments may signal a judicial willingness to extend the
reach of forum selection clauses beyond parties and their privies
to "strangers" who are entangled in a multi-party
The McCarthy Tétrault Opinions Group consists of members
of the firm's litigation department whose practices focus on
written advocacy and the provision of strategic advice and opinions
in the context of complex business disputes and transactions. The
members of the Opinions Group are Anthony Alexander, Martin
Boodman, Brandon Kain, Hovsep Afarian and Kirsten Thompson.
In Irwin v. Alberta Veterinary Medical Association, 2015 ABCA 396, the Alberta Court of Appeal found that the "ABVMA" failed to afford procedural fairness to a veterinarian undergoing an incapacity assessment.
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