Canada: Impact Of The New Code Of Civil Procedure On Class Actions, Part #1: Protection Of The Rights And Interests Of Québec Class Members In Multi-Jurisdictional Class Actions

On February 20, 2014, the Québec legislator amended the rules applicable to class action proceedings as part of its broader reform of the Code of Civil Procedure ("CCP"). The new CCP is to come into force on January 1, 2016. This series will examine the changes, or lack thereof, brought about by the new CCP to the class action landscape in Québec, starting with the new article 577 CCP which provides:

577. The court cannot refuse to authorize a class action on the sole grounds that the class members are part of a multi-jurisdictional class action already under way outside Québec.

If asked to decline jurisdiction, to stay an application for authorization to institute a class action or to stay a class action, the court is required to have regard for the protection of the rights and interests of Québec residents.

If a multi-jurisdictional class action has been instituted outside Québec, the court, in order to protect the rights and interests of class members resident in Québec, may disallow the discontinuance of an application for authorization, or authorize another plaintiff or representative plaintiff to institute a class action involving the same subject matter and the same class if it is convinced that the class members' interest would thus be better served.

The interpretation of this article, unprecedented in the country, should be followed closely by class action practitioners as it could lead to a multiplicity of proceedings or the exclusion of Québec class members from national and international class action proceedings instituted outside of Québec.

In his comments, the Minister of Justice states that this article is new law and establishes rules meant to protect the interest of Québec class members when a multi-jurisdictional class action exists outside of Québec. The Québec Bar opposed the adoption of article 577 CCP stating that it would only "codify powers that courts already possess" and expressed the concern that the article would be the "source of significant debate", while bringing forward constitutional and jurisdictional challenges.

What is new about article 577 CCQ?

First paragraph

Article 1003 of the current CCP provides that a court must authorize the bringing of a class action if the criteria listed therein are met. These criteria do not include the existence of a multi-jurisdictional class action pending outside of Québec. As such, the first paragraph of 577 CCP does not add anything to the authorization criteria as they exist today.

Second paragraph

Multi-jurisdictional class actions under way outside of Québec are taken into consideration in the three following circumstances:

  • Forum non conveniens: When a party asks the Court to decline jurisdiction because the authorities of another state are in a better position to decide the case (article 3135 Civil Code of Québec ("CCQ"));
  • Litispendence: When a party asks the Court to stay the proceedings due to the existence of parallel proceedings in another jurisdiction (article 3137 CCQ); or
  • Res judicata: When a party seeks the dismissal of the action because it has already been decided by another Court of competent jurisdiction, often accompanied by a request to enforce the foreign judgment (articles 2848 and 3155 CCQ).

Paragraph 2 of article 577 CCP does not change anything regarding res judicata. It purports, however, to add a new criteria relating to the protection of the rights and interests of Québec residents to the discretionary exercise of forum non convenience and litispendence.

The factors considered in the application of forum non conveniens, recently reiterated by the Supreme Court in Breeden v. Black, must be considered globally, as none of them are individually determinative. The forum non conveniens factors already include considerations related to the protection of the rights and interests of Québec residents, including the following:

  • the place of residence of the parties and witnesses;
  • the location of evidence;
  • the applicable law;
  • the advantage conferred on the plaintiff by the forum of his choice; and
  • the interest of the two parties.

With respect to litispendence, Québec judges have been even more explicit in holding that their discretion should be exercised with a view to protecting the interests of Québec class members. However, this is just one of the many factors that orient judges' discretion. In fact, the Consolidated Uniform Class Proceedings Act, of the Uniform Law Conference of Canada, which the Minister of Justice relied on, provides for several other factors, like the interests of all the parties and the ends of justice, including the risk of irreconcilable judgments and judicial economy.

Third paragraph

Article 1016 of the current CCP provides that the discontinuance or amendment of a class action is subject to the permission of the court on the "conditions it deems necessary". Thus, the courts already have an oversight role in allowing the discontinuance and will only allow it if they deem the interests of the Québec members are protected. The same holds true in application of article 1024 of the current CCP, where a representative can be substituted if it is no longer in a position, in the opinion of the court, to represent the members adequately.

Given the fact that Courts were already taking into consideration the protection of the rights and interests of Québec residents when faced with multi-jurisdictional class actions instituted outside of Québec, it will be interesting to see how this new article will be interpreted by the Courts. Will it be interpreted as giving precedence to the interest of Québec class members over other, well established, criteria? If so, this could be a step back in terms of private international law, leading to duplication of proceedings and contradictory judgments, which the rules of jurisdiction and recognition and enforcement of foreign judgments are meant to avoid.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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