A FORUM SELECTION CLAUSE IN A COMMERCIAL CONTRACT SHOULD BE GIVEN EFFECT UNLESS PARTY CAN SHOWS STRONG CAUSE THAT THE CASE IS EXCEPTIONAL.
Expedition Helicopters Inc. v. Honeywell Inc. 2010 ONCA 351
Significant deference and full weight will be given to forum selection clauses, particularly in the commercial context. The onus is on the the party arguing for a different forum to show “strong cause” as to why the forum selection clause should not be enforced. The court listed a number of factors that may justify departure from a forum selection clause in a commercial agreement: (i) fraud or improper inducement; (ii) the Court in the designated forum refuses to accept jurisdiction or is unable to deal with the claim; (iii) the claim or the circumstances are outside what was reasonably contemplated by the parties; (iv) a fair trial is no longer expected in the selected forum due to subsequent, unanticipated events; or (v) public policy considerations.
Drafters should beware of a number of factors that may justify departure from the governing law clause.
In Expedition Helicopters Inc. v. Honeywell Inc. (2010 ONCA), the defendant, Honeywell Inc., appealed a decision to uphold its forum selection clause in an agreement with the plaintiff, Expedition Helicopters Inc. The Court of Appeal for Ontario reversed the trial judge’s decision and held that the plaintiff failed to discharge its burden to show “strong cause” as to why Ontario would be the more appropriate forum. The Court stated that strong cause requires more than the fact that Ontario is the more convenient forum. The court listed a number of considerations that could justify a departure form the forum selection clause.
To read the full case on CanLII, click here.