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Why this Decision Matters
In Hilmer Motorsport GmbH v. Mason, the Ontario Court of Appeal reaffirmed a pragmatic approach to the recognition and enforcement of foreign judgments — even where the underlying contract contains an arbitration clause. The decision is a clear reminder: Ontario courts will not refuse enforcement simply because the parties agreed to arbitrate, unless the party resisting enforcement took timely steps in the foreign jurisdiction to invoke that right.
This short but instructive decision is essential reading for counsel handling cross-border disputes, contract drafting, and enforcement strategy. It confirms that arbitration agreements are not self-enforcing in recognition and enforcement proceedings. The bottom line is clear: absent a proactive effort to pursue arbitration in the foreign court, Ontario courts will enforce the resulting judgment.
Background and Factual Overview
The Driver Agreement
The dispute arose from a 2014 Driver Agreement between Hilmer Motorsport GmbH, a German racing team, and Nelson Mason, a professional race car driver residing in Ontario. Under the Agreement, Mason was to drive for Hilmer's team in the European GP3 Series, in exchange for payment of €460,000. The contract was governed by German law, designated Munich the jurisdictional venue, and included a broad arbitration clause requiring disputes to be settled under the Rules of Arbitration of the International Chamber of Commerce.1
Nelson's father and manager, Jay Mason, guaranteed much of the debt. The guarantee was also governed by German law and named Munich as the venue, but did not include an arbitration clause.2 Although both appellants resided in Ontario, the races were to take place in Europe.3
The German Judgment
In October 2015, Hilmer commenced proceedings in the Regional Court Munich I, asserting a claim against the Masons for breach of contract and for payment of the amount due under the Agreement and the guarantee. The Masons were served but did not defend, taking the position that the dispute was subject to arbitration. Hilmer obtained a default judgment for €409,512.13 plus interest and costs. The Masons did not move to set aside or appeal the judgment in Germany.4
Decision of the Superior Court
Hilmer then brought an action in Ontario to recognize and enforce the German judgment. The motion judge granted summary judgment in Hilmer's favour.5
The Masons opposed enforcement on two grounds: (1) lack of real and substantial connection between the German court and the dispute or parties; and (2) public policy, arguing that the arbitration clause rendered the German judgment unenforceable in Ontario.6
The motion judge rejected both arguments. He found the German proceedings were properly commenced and served, and that the parties had expressly chosen German law and Munich as their venue — even for interpretation of the arbitration clause. The funds were to be paid to a German entity, and the races were to take place in Europe.7
On the arbitration issue, the judge acknowledged that Canadian courts generally stay proceedings in the face of arbitration clauses, but held that this issue was for the German court to determine. The Masons' remedy was to raise arbitration in Munich, not Ontario. Having bargained for German jurisdiction, the parties were bound by that choice.8
The Appeal
The Parties' Positions and Key Issues
On appeal, the Masons argued that the motion judge erred by enforcing a judgment arising from a contract subject to arbitration. They submitted that the guarantee should be read together with the Agreement and was therefore also subject to arbitration.9 They further argued that no court had jurisdiction over a dispute subject to arbitration, and that their failure to defend in Germany could not confer jurisdiction. They relied on the United Nations' Convention on the Recognition and Enforcement of Foreign Arbitration Awards (the "Convention"), and Ontario's International Commercial Arbitration Act, 2017.10
The appeal raised two issues: (1) did the German court lack jurisdiction?; and, (2) did the defences of natural justice and public policy bar enforcement?11
The Court of Appeal determined that the answer to both questions was "no", and dismissed the appeal.
Analysis: Jurisdiction and the Role of Arbitration Clauses
The Court of Appeal began by restating the test for enforcing foreign judgments: the foreign court must have had a real and substantial connection to the parties or the subject matter, or satisfy traditional bases of jurisdiction (Chevron Corp. v. Yaiguaje, 2015 SCC 42). Once jurisdiction is established, the defendant must prove a defence — breach of natural justice, public policy, or fraud (Beals v. Saldanha, 2003 SCC 72).12These principles are grounded in comity which promotes order, fairness, and reciprocity.13
Applying this framework, the Court found the German court had jurisdiction. The judgment was final, for a definite sum, and there was a real and substantial connection: the parties had chosen Munich and German law, and the money was to be paid to a German entity. While not all races took place in Germany, this did not undermine the connection.14
Crucially, the arbitration clause did not automatically deprive the German court of jurisdiction. German law was neither pleaded nor proved so Ontario law applied. Under Ontario law, an arbitration agreement is not self-enforcing; a party must seek a stay of court proceedings. If neither party does so, the court may proceed.15 The Masons took no steps in Germany to seek a stay or referral to arbitration. The presence of the arbitration clause did not deprive the German court of jurisdiction.16
Defences: Natural Justice and Public Policy
The Court rejected the natural justice defence. The Masons were properly served with the German proceedings and judgment, and with the Ontario enforcement motion. There was no violation of natural justice.17
The public policy defence also failed. The Court reiterated that enforcement will be refused only where a foreign judgment is contrary to Canadian concepts of justice or basic morality.18 Although the Masons relied on the Convention and the International Commercial Arbitration Act to argue that courts must refer parties to arbitration when presented with an agreement to arbitrate, the Court disagreed. Under both regimes, referral to arbitration must be requested. The Masons did not do so in Germany.19
The Court emphasized that the Masons could have appeared in Munich and sought a stay and referral to arbitration under the Agreement and guarantee. It was not for the Ontario court to presume the German court improperly assumed jurisdiction. In these circumstances, enforcement was not contrary to public policy.20
Key Takeaways and Concluding Thoughts
This decision provides several lessons for Ontario litigators and parties to cross-border contracts:
- Arbitration Clauses Are Not Self-Enforcing: The mere existence of an arbitration clause does not prevent a foreign court from assuming jurisdiction. Parties must actively invoke arbitration in the foreign forum. Where they fail to do so, Ontario courts will not second-guess the foreign court's exercise of jurisdiction.
- Comity and Party Autonomy: Where parties have expressly chosen a foreign jurisdiction and law, Ontario courts will respect that choice — particularly where the resisting party did not challenge jurisdiction abroad.
- Defences to Enforcement Are Narrow: Natural justice and public policy defences require clear and compelling evidence. Proper service and opportunity to participate can be sufficient to defeat a natural justice claim. Public policy will bar enforcement only where the foreign judgment is fundamentally offensive to Canadian justice or morality — not simply because an arbitration clause exists.
Hilmer Motorsport GmbH v. Mason is am instructive endorsement of Ontario's approach to enforcing foreign judgments in the face of arbitration clauses. The decision underscores the need for procedural discipline: parties must take timely steps in the foreign jurisdiction to invoke arbitration, or risk enforcement in Ontario, consistent with the principles of comity and party autonomy.
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Footnotes
1. Hilmer Motorsport GmbH v Mason, 2025 ONCA 875 at para 5.
2. Hilmer Motorsport GmbH v Mason, 2025 ONCA 875 at para 6.
3. Hilmer Motorsport GmbH v Mason, 2025 ONCA 875 at para 7.
4. Hilmer Motorsport GmbH v Mason, 2025 ONCA 875 at paras 8-9.
5. Hilmer Motorsport GmbH v Mason, 2025 ONCA 875 at para 10.
6. Hilmer Motorsport GmbH v Mason, 2025 ONCA 875 at para 11.
7. Hilmer Motorsport GmbH v Mason, 2025 ONCA 875 at para 12.
8. Hilmer Motorsport GmbH v Mason, 2025 ONCA 875 at para 13.
9. Hilmer Motorsport GmbH v Mason, 2025 ONCA 875 at para 14.
10. Hilmer Motorsport GmbH v Mason, 2025 ONCA 875 at para 15.
11. Hilmer Motorsport GmbH v Mason, 2025 ONCA 875 at para 16.
12. Hilmer Motorsport GmbH v Mason, 2025 ONCA 875 at para 17.
13. Hilmer Motorsport GmbH v Mason, 2025 ONCA 875 at para 19.
14. Hilmer Motorsport GmbH v Mason, 2025 ONCA 875 at para 20.
15. Hilmer Motorsport GmbH v Mason, 2025 ONCA 875 at para 21.
16. Hilmer Motorsport GmbH v Mason, 2025 ONCA 875 at para 21.
17. Hilmer Motorsport GmbH v Mason, 2025 ONCA 875 at para 22.
18. Hilmer Motorsport GmbH v Mason, 2025 ONCA 875 at para 23.
19. Hilmer Motorsport GmbH v Mason, 2025 ONCA 875 at para 24.
20. Hilmer Motorsport GmbH v Mason, 2025 ONCA 875 at para 25.
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