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Foreign parties often assume that if their contract points to a foreign jurisdiction or applies a foreign law, then any dispute should be dealt with there. But the Court of Appeal for Ontario has recently reminded litigants that challenging jurisdiction isn't just about pointing to a clause. You need to back it up with evidence and real legal argument.
In Integrated Team Solutions PCH Partnership v. Mitsubishi Heavy Industries, Ltd., 2025 ONCA 297, the plaintiffs sued several defendants over the failure of emergency generators at a hospital. Two foreign defendants, S.D.M.O. Industries and Kohler Co., tried to stay the proceeding, arguing Ontario didn't have jurisdiction.
The motion judge dismissed the motion, and the Court of Appeal upheld that decision. The Court's analysis offers a few reminders on the legal hurdles for anyone trying to avoid Ontario's jurisdiction:
- Ontario can presumptively assume jurisdiction in a tort case if the claim shows that a defendant is domiciled or resident in Ontario, carries on business in Ontario, committed a tort in Ontario, or made a contract connected to the dispute in Ontario.
- The plaintiff's burden is low unless challenged. They only need to show a good arguable case for one of these factors based on the pleadings or evidence. The pleadings are taken to be true unless the defendant brings evidence to challenge them, the claim appears devoid of merit, or the claim fails to establish an air of reality to one of the presumptive factors.
- Forum selection clauses aren't applied automatically. Defendants can rely on them, but they must prove that the clause is valid, clear, and enforceable, and that it applies to the dispute. Only then does the plaintiff have to show "strong cause" not to enforce it.
In this case, the moving parties relied on the pleadings and failed to properly put forward the contract with the forum selection as part of the evidentiary record. The Court of Appeal effectively concluded that the moving parties had not met the burdens placed on them by the legal tests:
- Ontario presumptively had jurisdiction because the claim pleaded the elements of the tort claim (negligence) sufficiently for the court to characterize the claim and properly assess the connection to Ontario.
- The moving parties challenged the presumption by arguing that the pleadings were deficient, but the pleadings weren't, and the moving parties failed to put forward evidence to support the challenge.
- The moving parties failed to prove that the forum selection clause applied. The contract wasn't referenced in the pleadings, the moving parties didn't put it into evidence, the clause was ambiguous on its face, and the moving parties had not adduced evidence showing that most of the parties (including one of the moving parties) had agreed to be bound by it.
The Court of Appeal's decision is an important reminder that jurisdictional challenges are substantive. If a litigant wants to argue that Ontario isn't the right forum, they cannot simply point to their contract. Just like any substantive relief, they need to gather their evidence and make their case.
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.
