This question can be a vexing one. Will disputes be resolved
in the employee's country of origin? In the country in
which the employee is now working? In the country in which your
head office is located? In the country in which the employment
contract was executed? All of the above? And how will you
You can be forgiven for being confused about this. The
courts have been too. What's more, a Canadian
court's answer will not necessarily be the same as that
of a foreign court's. Fortunately, we can at least
provide a brief outline of how a Canadian court will look at
First, one must recognize that this question is different
from the issue of what country's laws apply to the
contract of employment. The applicable law is not the same as
the selection of the appropriate forum for dispute resolution.
A Canadian court may enforce foreign laws, and a foreign court
may enforce Canadian laws.
Failing a binding agreement on where and by whom a dispute
will be resolved, how will this be decided? To answer this,
Canadian courts will look at two distinct issues:
Do they have jurisdiction to consider the dispute?
Are they a convenient forum for considering the
Somewhat different, but related, factors apply to each
question. Therefore, even though a Canadian court concludes it
could entertain a dispute insofar as it has
jurisdiction to do so, it may still decide it should
not do so, if it is not the most convenient forum.
In general, the factors determining whether a Canadian court
has jurisdiction may include some or all of the following:
Is one or both parties present in the province or
territory in which the court is located?
Have the parties consented, implicitly or explicitly, to
have disputes resolved by that court?
Is there a real and substantial connection between the
claim and the province or territory in which the court is
located? For example:
Was the contract carried out in the province?
Did the alleged breach of contract occur in the
Were the damages suffered in the province?
Did the employee embark from or will he return to the
Does either party reside or do business in the
Would any unfairness befall either party if the court
Would the party's claim
or defence be significantly prejudiced? Would the difficulty
or expense of fighting the case be materially increased for
one of the parties?
Would the judgment of the Canadian court be recognized
abroad, to the extent that this may be important? For
example, must the judgment be enforced in another country and
is that feasible?
Convenient Forum Factors
The factors for determining whether the dispute should
be heard by the Canadian court may include some or all of
the following (some of which overlap with the jurisdiction
factors outlined above):
the location where the contract was signed;
the applicable law of the contract, which may be stated
explicitly or may be implied in the terms of the deal;
the location where the majority of witnesses
the location where the bulk of the evidence is
the place where the dispute actually arose; and
the residence or place of business of the parties.
What This Means For You
It is important to think through these and related issues
before you send executives abroad, or before you temporarily
bring foreign employees into Canada. We can advise you on how
Canadian law will apply, help you find foreign legal advisors
if necessary, and advise you on drafting appropriate employment
contracts or appointment letters.
For example, your company and an executive placed abroad
might attempt to agree on:
recognizing the jurisdiction of a specific
stipulating which court has exclusive
ousting the jurisdiction of the courts in favour of the
exclusive jurisdiction of arbitrators and defining
the nature, process and location of an arbitration
Stating these kinds of measures in a well-drafted
appointment letter or employment contract can save you many
headaches and potential liabilities in the future.
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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