Recent Alberta Court of Appeal Decision on Service Ex Juris and the Hague Convention

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On July 31, 2012, the Alberta Court of Appeal released Metcalfe Estate v Yamaha Motor Powered Products Co., Ltd., 2012 ABCA 240. The case has important implications for the service of documents from Alberta into international jurisdictions which are signatories to the Hague Convention on the Service Abroad of Judicial and Extra-judicial Documents in Civil or Commercial Matters, such as the US, UK, China, Germany, France and Norway.

Facts

In Metcalfe, the Plaintiffs had filed a statement of claim that named a number of Japanese companies as defendants. In June 2010, under the former Rules of Court, the Plaintiffs obtained an order for service ex juris on those Japanese companies (an order allowing an Alberta court document to be served in a foreign jurisdiction). The order mandated that service was to be made in Japan pursuant to the Hague Convention.

The Plaintiffs engaged a Japanese attorney who attempted to serve the statement of claim on the Japanese companies by registered mail. The Hague Convention generally requires that court documents be sent to a specified Central Authority, which is then charged with serving defendants. The Plaintiffs bypassed service through the Central Authority, apparently because the Central Authority would not have effected service until after the expiry of the statement of claim.

The Plaintiffs subsequently obtained an Alberta court order validating this service, but the Japanese companies appealed and won. The Court of Appeal of Alberta set aside the order validating the service, holding that service under the Hague Convention was mandatory and had not been followed.

Outcome

The Court of Appeal decided that the purported service had been effected in contravention of the order for service ex juris, which expressly required compliance with the Hague Convention. It seems to have been common ground that the service by registered mail in Japan in this case did not comply with the Hague Convention (there was no discussion by the Court of the controversy regarding whether service by registered mail in Japan is sufficient under the Hague Convention). While the majority of the Court of Appeal could have decided the case on that basis alone, they instead went further and undertook a broader discussion as to the application of the Hague Convention.

The majority of the Court of Appeal concluded that since Japan is a signatory to the Hague Convention, principles of comity mandate that service in Japan is to be exclusively effected in accordance with the Hague Convention. That is likely a surprise to many Alberta practitioners, who formerly believed that the Hague Convention was one but not the exclusive method of effecting service ex juris in signatory states. The concurring Justice, while agreeing with the majority's result, explicitly chose not to comment on this larger issue.

Decision Appears to Bring Alberta in Line with Ontario

These far reaching comments from the majority adopt and approve the current Ontario position on this issue. In a successive line of cases, the Ontario Courts have confirmed that service of documents internationally in Hague Convention signatory states must comply with the requirements of the Convention (Khan Resources Inc v Atomredmetzoloto JSC, 2012 ONSC 1522; Pharm Canada Inc v 1449828 Ontario Ltd. (cob) TrinityWorldwide Services Inc, 2011 ONSC 4808; Zhang v Jiang (2006), 82 OR (3d) 306 (SCJ); Samina North America v H3 Environmental II LLC, [2004] OJ No 6229 (SCJ), aff’d [2005] OJ No 4644 (CA); Campeau v Campeau, [2004] OJ No 4788 (SCJ); Dofasco Inc v Ucar Carbon Canada Inc (1999), 79 OTC 377 (Gen Div)).

Under the Ontario Rules of Civil Procedure, RRO 1990, Reg 194, Rule 17.05(3) specifically provides that service of an originating document outside of Ontario in a Hague Convention contracting state “shall be served” through the Convention. The Ontario rule is much clearer in this respect than Alberta Rule 11.26. Interpreting the Ontario rule with the broader purposes of the Convention, the Ontario Courts have consistently held that when service abroad in a signatory state is necessary, no relief is available under Ontario civil procedure to otherwise substitute or validate a different method of service.

Implications for International Commercial Contracts

In commercial contracts involving international parties, parties often contractually agree to methods of service that are quicker or more efficient than formal Court processes. The Alberta Rules of Court expressly allow for service in accordance with these types of contractual service arrangements when the service is effected in Alberta.

However, for international service, the agreed contractual method of service must also comply with the Alberta Rules for international service. Because of Metcalfe, it would appear that the practical effect in Alberta is that the only allowable contractual method of service ex juris in jurisdictions that are signatories to the Hague Convention is service in accordance with the Hague Convention.

This has important implications for existing contracts. The agreed method for service in any existing contract may be unenforceable, and it will at least be controversial, unless it is in accordance with the Hague Convention. For new contracts, parties and their counsel may want to ensure that international service provisions comply with the Hague Convention.