Exclusive jurisdiction clauses give contracting parties the ability to oust the jurisdiction of domestic courts and instead entrust current or future contractual disputes to a foreign authority. Citing their unusual and distinctive nature, Justice Derek Guthrie of the Quebec Superior Court, speaking in Classé Audio inc. v. Linn Products Ltd., [2006] Q.J. No. 432 ("Classé Audio") has expressly queried whether such clauses should be subject to the same presumptions of tacit acceptance that have tradi­tionally been applied by Quebec courts to more commonplace con­tractual terms and conditions.

 

Clauses that ousted the jurisdic­tion of Quebec courts were illegal prior to the 1994 enactment of Article 3148 (par. 2) of the Civil Code of Quebec, which reads as follows:

 

"A Quebec authority has no jurisdiction where the parties, by agreement, have chosen to submit all existing or future disputes between themselves relating to a specified legal relationship to a foreign authority".

 

Speaking in GreCon Dimter Inc. v. J.R. Normand Inc. [2005] S.C.J. No. 46, the Supreme Court of Canada noted that while great deference must be given to exclu­sive jurisdiction clauses they are nonetheless subject to the fol­lowing limits: a) they cannot oust a Quebec authority from a sphere of jurisdiction that has been exclu­sively granted to it (e.g. employ­ment contracts and consumer contracts); b) they must be mandatory and must clearly and precisely confer exclusive jurisdic­tion on the foreign authority, and c) there must be a meeting of minds between the parties, other­wise the clause is invalid.

 

These last two limits on party autonomy were considered in Classé Audio. In this case, the plaintiff, a Quebec manufacturer of audio equipment, issued pur­chase orders for, and took delivery of, 230 audio disk engines made by the defendant, a Scottish manu­facturer of audio components, between March 2003 and May 2004.

 

The plaintiff's purchase order forms contained the following terms and conditions:

 

"I. INVOICES must bear exact same prices and terms or autho­rization for changes must be received from our company in writing, prior to shipping. [...]

5. By acceptance of this pur­chase order, or shipment of any part of it will constitute an agree­ment to all of its specifications as to terms, delivery and prices„

Upon receipt of the plaintiff's purchase orders in Scotland, the defendant shipped the disk engines

FOB Scotland, accompanied by the defendant's invoices.

 

The reverse side of the defen­dant's invoices contained the fol­lowing choice of forum/choice of law clause:

 

"11. Legal Construction:

(a) The construction, validity or performance of this contract shall be governed by the Law of Scot­land to the jurisdiction of whose courts the parties agree to submit"

 

The plaintiff was subsequently dissatisfied with the disk engines and sued the defendant in Quebec Superior Court in 2005. Invoking the jurisdiction clause contained in its invoices, the defendant filed a motion to have the suit dismissed for want of jurisdiction.

 

At the motion hearing the plaintiff led the following evidence to establish that the parties had not agreed to be bound by a jurisdic­tion clause: a) the plaintiff's repre­sentatives had never discussed forum selection issues with the defendant's representatives; b) the defendant's jurisdiction clause was never brought to the plaintiff's attention; c) the plaintiff's repre­sentatives did not look at the reverse side of the defendant's invoices until many months after all the disk engines had been delivered and d) the plaintiff had never authorized any changes in the terms of its purchase orders.

 

In response, relying principally upon "custom and usage" case law generally involving limitation of liability clauses found either in written agreements signed by both parties or terms and conditions on warehouse receipts, the defendant argued that since the identical jurisdiction clause was found in each of the 16 invoices it had sub­mitted to the plaintiff for other audio products purchased between April 1999 and August 2002, the plaintiff should be deemed to have agreed to the clause.

 

Justice Guthrie declined to follow the authorities relied upon by the defendant and rejected the motion to dismiss.

 

First, because forum selection clauses in international commer­cial transactions are given special treatment in the Civil Code of Quebec, Justice Guthrie con­cluded that they should not be treated in the same manner as other standard types of clauses often found in purchase orders, warehouse receipts, invoices, etc.

 

Second, while he recognized that usage can be established by the course of dealings between two parties, Justice Guthrie lim­ited its application to circum­stances in which the parties have in fact engaged in conduct consis­tent with the terms of the clauses they are to be deemed to have knowledge of. For example, if in their pre­vious dealings the parties in the present case had used the courts of Scotland to resolve a dispute, then the plaintiff could be deemed to have accepted such courts as the proper forum for disputes.

 

Alternatively, Justice Guthrie suggested that "if it were estab­lished that in their previous deal­ings, the plaintiff and the defen­dant had implemented any one of the provisions found on the back of the defendant's invoice form, the defendant might argue that this conduct implied a tacit agreement by the plaintiff on all of such pro­visions."

Justice Guthrie found that no proof of such conduct had been presented.

 

Finally, Justice Guthrie also accepted the plaintiff's alternative submission that the jurisdiction clause failed to satisfy the criteria established in GreCon Dimter because it was neither exclusive nor contained mandatory wording. The defendant's motion for per­mission to appeal was dismissed on March 23 by Justice André Rochon of the Quebec Court of Appeal because the issue of tacit consent was "essentially based on questions of fact and credibility".

 

Jon Robinson is the senior liti­gator at Robinson Sheppard Shapiro in Montreal. He repre­sented the plaintiff before the Quebec Superior Court and the Quebec Court of Appeal.

 

Nick Krnjevic is a partner with Robinson Sheppard Shapiro's Insurance Practice Group. He rep­resented GreCon Dimter before the Supreme Court of Canada.