The Supreme Court of Canada has recognized the impact of the “globalization of commerce” and recently ruled for the first time that foreign non-monetary judgments – including those providing injunctive relief – can be enforced in Canada. However, in a split decision in Pro Swing Inc. v. Elta Golf Inc. (2006 SCC 52), the Court has created uncertainty for foreign litigants as to when such judgments will actually be enforced.
In Pro Swing, the Plaintiff owned a U.S. registration for the mark TRIDENT for golf clubs and related accessories. The Defendant, a Canadian company, was sued in Ohio for trademark infringement in connection with the sale of RIDENT brand golf clubs on its web site. The U.S. action was resolved by means of a consent decree and a settlement agreement. Subsequently, Pro Swing brought contempt proceedings in the same U.S. Court on the basis that Elta had violated the consent decree. Elta was held in contempt. Both the consent decree and the contempt order granted injunctive relief against Elta, and ordered the recall and delivery up of all infringing goods, as well as the production of all accounting records.
When Elta failed to comply with the contempt order, Pro Swing successfully applied to the Ontario Superior Court of Justice to have the consent decree and contempt order recognized and enforced in Canada. The Ontario Court of Appeal reversed the decision on the basis that the orders were not sufficiently precise to be enforced in Canada.
On appeal, the Supreme Court of Canada unanimously held that, in principle, non-monetary foreign judgments can be enforced in Canada. However, the majority of the Supreme Court refused to enforce these orders as the intended territorial scope of the injunctive relief granted by the Ohio Court was uncertain. The Supreme Court also ruled that contempt orders issued by a non-Canadian Court should not be enforced due to their criminal or quasi-criminal nature.
The Supreme Court did not provide an exhaustive list of factors that a Court should consider when deciding whether to enforce foreign non-money judgments. Nevertheless, the Court outlined the following general conditions for enforcement:
- the order must be rendered by a Court of competent jurisdiction;
- the order must be final; and
- the order must be of such a nature requiring enforcement by a Canadian Court.
While it remains unclear when Canadian Courts will recognize or enforce a foreign injunction, the Supreme Court has provided some guidance for the future. Foreign counsel seeking to have a foreign injunction or other equitable relief recognized or enforced in Canada should obtain advice from Canadian counsel at an early stage in order to increase the likelihood of success.
Mark K. Evans, Toronto