Spar Aerospace Ltd. v. American Mobile Satellite Corp.

Spar Aerospace Ltd. v. American Mobile Satellite Corp.
Collection
Supreme Court Judgments
Date
2002-12-06
Neutral citation
2002 SCC 78
Report
[2002] 4 SCR 205
Case number
28070
Judges
Gonthier, Charles Doherty; Iacobucci, Frank; Major, John C.; Bastarache, Michel; Binnie, William Ian Corneil; Arbour, Louise; LeBel, Louis
On appeal from
Quebec
Subjects
International law
Notes
SCC Case Information: 28070
Decision Content
Spar Aerospace Ltd. v. American Mobile Satellite Corp., [2002] 4 S.C.R. 205, 2002 SCC 78
Hughes Communications Inc. Appellant
v.
Spar Aerospace Limited Respondent
and between
Viacom Inc. (formerly “Westinghouse Electric Corporation”) Appellant
v.
Spar Aerospace Limited Respondent
and between
Motient Corporation (formerly “American Mobile
Satellite Corporation”) Appellant
v.
Spar Aerospace Limited Respondent
and between
Adaptative Broadband Corporation (formerly “Satellite
Transmissions Systems Inc.”) Appellant
v.
Spar Aerospace Limited Respondent
Indexed as: Spar Aerospace Ltd. v. American Mobile Satellite Corp.
Neutral citation: 2002 SCC 78.
File No.: 28070.
Hearing and judgment: June 11, 2002.
Reasons delivered: December 6, 2002.
Present: Gonthier, Iacobucci, Major, Bastarache, Binnie, Arbour and LeBel JJ.
on appeal from the court of appeal for quebec
Conflict of laws — Jurisdiction of Quebec courts — Personal action of a patrimonial nature — Business venture between multi‑jurisdictional parties — Plaintiff bringing action in Quebec courts — Whether Quebec courts can assert jurisdiction — Whether damage to plaintiff’s reputation meets “damage” ground under art. 3148(3) C.C.Q. — Whether such damage constitutes “injurious act” within meaning of art. 3148(3) — Whether “real and substantial connection” requirement must be satisfied in determining jurisdiction of Quebec courts.
Conflict of laws — Jurisdiction of Quebec courts — Doctrine of forum non conveniens — Personal action of a patrimonial nature — Business venture between multi‑jurisdictional parties — Plaintiff bringing action in Quebec courts — If Quebec courts have jurisdiction, whether jurisdiction should be declined on basis of doctrine of forum non conveniens pursuant to art. 3135 C.C.Q.
The appellant and respondent companies are involved in various aspects of the manufacture and operation of satellites. One of the appellants, M, entered into a contract with HA for the construction of a satellite. HA entered into a subcontract with the respondent for the manufacture of the communication payload of the satellite at its Ste‑Anne‑de‑Bellevue facility in the province of Quebec. The satellite was launched into orbit and the in‑orbit testing that followed was successful and M accepted the spacecraft. M then contracted with three American companies, who are the other appellants, to conduct ground station testing and to monitor and control the satellite’s performance. During the testing, serious damage was caused to the satellite and HA refused to pay the respondent performance incentive payments provided for in the subcontract. The respondent commenced an action in Quebec alleging that signals from the ground station to the satellite pushed the latter into overdrive, causing severe damage. It claimed loss of performance incentives, loss of future profits caused by loss of reputation and expenses incurred in investigating the damages to the satellite. The respondent’s head office is located in Ontario and all the appellants are domiciled in the U.S. where the alleged negligence occurred. The appellants brought declinatory motions challenging the jurisdiction of the Quebec courts, pursuant to art. 163 of the Code of Civil Procedure (“C.C.P.”) and art. 3148 of the Civil Code of Québec (“C.C.Q.”). In addition, two of them sought to have the action dismissed on the basis of the doctrine of forum non conveniens pursuant to art. 3135 C.C.Q. The Quebec Superior Court dismissed both motions, confirming the jurisdiction of the Quebec courts. The Court of Appeal upheld the decision.
Held: The appeal should be dismissed.
The three principles of comity, order and fairness serve to guide the determination of the principal private international law issues: jurisdiction simpliciter, forum non conveniens, choice of law, and recognition of foreign judgments. The rules governing the private international law order of Quebec are codified and cover a broad range of interrelated topics, including the jurisdiction of the court and the discretionary powers of the court to eliminate inappropriate fora. They also allow Quebec courts to recognize and enforce foreign decisions. Courts must interpret those rules by first examining the specific wording of the provisions of the C.C.Q. and then inquiring whether or not their interpretation is consistent with the principles which underlie the rules. Given that the provisions of the C.C.Q. and of the C.C.P. do not refer directly to the principles of comity, order and fairness, and that the principles are, at best, vaguely defined, it is important to emphasize that these principles are not binding rules in themselves. Instead, they inspire the interpretation of the various private international law rules and reinforce the interconnected nature of the issues.
Under art. 3148(3) C.C.Q., Quebec courts can assume jurisdiction where (1) a fault was committed in Quebec; (2) damage was suffered in Quebec; (3) an injurious act occurred in Quebec; or (4) one of the obligations arising from a contract was to be performed in Quebec. Here, the respondent made a prima facie case that it suffered damage in Quebec. The evidence demonstrated that the operation in the Quebec facility had established its own reputation independently of the national reputation the respondent enjoyed. The evidence also showed that the Quebec facility suffered injuries as a result of the withholding of the incentive payments, even though these were to be made to the corporate headquarters in Toronto. In addition, the subcontract between the respondent and HA for the manufacture of the payload identifies the respondent as being located at Ste‑Anne‑de‑Bellevue, a fact that tends to strengthen its argument that its reputation was in fact associated with its Quebec operation. Taking the facts as alleged, it seems that any damage to reputation suffered by the respondent was suffered by its establishment in the province of Quebec, and not at its corporate offices in Ontario. Further, nothing in the wording of art. 3148(3) suggests that only direct damage can be used to link the action to the jurisdiction. Lastly, the nominal amount of damages that the respondent is claiming for loss of reputation is not a concern for the jurisdiction question but may be one of the many factors to be considered in a forum non conveniens application. The Superior Court properly found in this case that the damage to the respondent’s reputation sufficiently meets the “damage” requirement of art. 3148(3).
The Court of Appeal erred in finding that the damage to reputation allegedly suffered by the respondent at its Quebec operation constituted an “injurious act”. In order to interpret “injurious act” in a manner that reflects the development of the rule and that will not render redundant the three other grounds set out in art. 3148(3), it must refer to a damage‑causing event that attracts no‑fault liability. No such claim is advanced in this case.
The “real and substantial connection” requirement set out in Morguard and Hunt is not an additional criterion that must be satisfied in determining the jurisdiction of the Quebec courts in this case. First, these cases were decided in the context of interprovincial jurisdictional disputes and their specific findings cannot easily be extended beyond this context. Second, it is apparent from the explicit wording of art. 3148 as well as the other provisions of Book Ten of the C.C.Q. that the system of private international law is designed to ensure that there is a “real and substantial connection” between the action and the province of Quebec and to guard against the improper seizing of jurisdiction. It is doubtful that a plaintiff who succeeds in proving one of the four grounds for jurisdiction listed in art. 3148(3) would not be considered to have satisfied the “real and substantial connection” criterion, at least for the purposes of jurisdiction simpliciter, given that all of the grounds (fault, injurious act, damage, contract) seem to be examples of situations constituting a real and substantial connection between the province of Quebec and the action.
The doctrine of forum non conveniens, as codified at art. 3135 C.C.Q., also serves as an important counterweight to the broad basis for jurisdiction set out in art. 3148. Under art. 3135, a Quebec court which has jurisdiction to hear the dispute may exceptionally decline jurisdiction if it considers that the courts of another country are in a better position to decide. In this case, the motions judge considered the relevant factors and found that no other jurisdiction was clearly more appropriate than Quebec and that no exceptional exercise of this power was warranted. There is no reason to disturb this decision. Given the exceptional nature of the doctrine as reflected in the wording of art. 3135 and in light of the fact that discretionary decisions are not easily disturbed, the appellants have not established the conditions that would have compelled the Quebec Superior Court to decline jurisdiction on the basis of forum non conveniens.
Cases Cited
Referred to: Hilton v. Guyot, 159 U.S. 113 (1895); Spencer v. The Queen, [1985] 2 S.C.R. 278; Morguard Investments Ltd. v. De Savoye, [1990] 3 S.C.R. 1077; Holt Cargo Systems Inc. v. ABC Containerline N.V. (Trustees of), [2001] 3 S.C.R. 907, 2001 SCC 90; Hunt v. T&N PLC, [1993] 4 S.C.R. 289; Tolofson v. Jensen, [1994] 3 S.C.R. 1022; Amchem Products Inc. v. British Columbia (Workers’ Compensation Board), [1993] 1 S.C.R. 897; Air Canada v. McDonnell Douglas Corp., [1989] 1 S.C.R. 1554; Rosdev Investments Inc. v. Allstate Insurance Co. of Canada, [1994] R.J.Q. 2966; Moysa v. Alberta (Labour Relations Board), [1989] 1 S.C.R. 1572; Bell ExpressVu Limited Partnership v. Rex, [2002] 2 S.C.R. 559, 2002 SCC 42; Quebecor Printing Memphis Inc. v. Regenair Inc., [2001] R.J.Q 966; Moran v. Pyle National (Canada) Ltd., [1975] 1 S.C.R. 393; Antwerp Bulkcarriers, N.V. (Re), [2001] 3 S.C.R. 951, 2001 SCC 91; M.N.C. Multinational Consultants Inc./Consultants Multinational inc. v. Dover Corp., Sup. Ct. Montréal, No. 500‑17‑001977‑977, April 21, 1998, J.E. 98‑1179; Gestion M.P.F. inc. v. 9024‑3247 Québec inc., Sup. Ct. Longueuil, No. 505‑05‑002963‑962, July 2, 1997, J.E. 97‑1706; Transport McGill ltée v. N.T.S. inc., C.Q. Montréal, No. 500‑02‑018173‑950, November 13, 1995, J.E. 96‑166; Morales Moving and Storage Co. v. Chatigny Bitton, [1996] R.D.J. 14; Spiliada Maritime Corp. v. Cansulex Ltd., [1987] 1 A.C. 460; Lexus Maritime inc. v. Oppenheim Forfait GmbH, [1998] Q.J. No. 2059 (QL); Matrox Graphics Inc. v. Ingram Micro Inc., Sup. Ct. Montréal, No. 500‑05‑066637‑016, November 28, 2001, AZ‑50116899, J.E. 2002‑688; Consortium de la nutrition ltée v. Aliments Parmalat inc., [2001] Q.J. No. 104 (QL); Encaissement de chèque Montréal ltée v. Softwise inc., [1999] Q.J. No. 200 (QL); SNI Aérospatiale v. Lee Kui Jak, [1987] 3 All E.R. 510; Lamborghini (Canada) Inc. v. Automobili Lamborghini S.P.A., [1997] R.J.Q. 58; Barré v. J.J. MacKay Canada ltée, Sup. Ct. Longueuil, No. 505‑17‑000355‑984, September 28, 1998, J.E. 99‑27; Sam Lévy & Associés Inc. v. Azco Mining Inc., [2001] 3 S.C.R. 978, 2001 SCC 92.
Statutes and Regulations Cited
Civil Code of Québec, S.Q. 1991, c. 64, arts. 3082, 3126, 3135, 3136, 3137, 3139, 3148, 3155, 3164, 3168.
Code of Civil Procedure, R.S.Q., c. C‑25, arts. 46, 68, 95, 163.
Federal Court Act, R.S.C. 1985, c. F‑7, s. 50 .
1968 Brussels Convention on jurisdiction and the enforcement of judgments in civil and commercial matters, September 27, 1968, Official Journal of the European Communities, Notice No. 98/C 27/01.
Authors Cited
Castel, Jean‑Gabriel. Droit international privé québécois. Toronto: Butterworths, 1980.
Castel, Jean‑Gabriel, and Janet Walker. Canadian Conflict of Laws, 5th ed. Toronto: Butterworths, 2002 (loose‑leaf updated August 2002, Issue 2).
Cheshire and North’s Private International Law, 13th ed. by Sir Peter North and J. J. Fawcett. London: Butterworths, 1999.
Davies, D. J. Llewelyn. “The Influence of Huber’s De Conflictu Legum on English Private International Law”, in J. F. Williams and A. D. McNair, eds., The British Year Book of International Law, vol. 18. London: Oxford University Press, 1937, p. 49.
Dicey and Morris on the Conflict of Laws, vol. 1, 13th ed. Under the general editorship of Lawrence Collins. London: Sweet & Maxwell, 2000.
Emanuelli, Claude. Droit international privé québécois. Montréal: Wilson & Lafleur, 2001.
Glenn, H. Patrick. “Droit international privé”, dans La réforme du Code civil, vol. 3, Priorités et hypothèques, preuve et prescription, publicité des droits, droit international privé, dispositions transitoires. Textes réunis par le Barreau du Québec et la Chambre des notaires du Québec. Ste‑Foy, Qué.: Presses de l’Université Laval, 1993, 669.
Goldstein, Gérald, et Ethel Groffier. Droit international privé, t. 1, Théorie générale. Cowansville, Qué.: Yvon Blais, 1998.
Groffier, Ethel. La réforme du droit international privé québécois: supplément au Précis de droit international privé québécois. Cowansville, Qué.: Yvon Blais, 1993.
Morris, J. H. C. The Conflict of Laws, 5th ed. by David McClean. London: Sweet & Maxwell, 2000.
Reid, Hubert. Dictionnaire de droit québécois et canadien avec table des abréviations et lexique anglais‑français, 2e éd. Montréal: Wilson & Lafleur, 2001.
Scoles, Eugene F., et al. Conflict of Laws, 3rd ed. St. Paul, Minn.: West Group, 2000.
Story, Joseph . Commentaries on the Conflict of Laws, Foreign and Domestic, in Regard to Contracts, Rights, and Remedies, and Especially in Regard to Marriages, Divorces, Wills, Successions, and Judgments. Boston: Hilliard, Gray, 1834.
Talpis, Jeffrey A., and J.‑G. Castel. “Interpreting the rules of private international law”, in Reform of the Civil Code, vol. 5B, Private International Law. Translated by Susan Altschul. Text written for the Barreau du Québec and the Chambre des notaires du Québec. Montréal: Barreau du Québec, 1993.
Talpis, Jeffrey A., and Shelley L. Kath. “The Exceptional as Commonplace in Quebec Forum Non Conveniens Law: Cambior, a Case in Point” (2000), 34 R.J.T. 761.
Talpis, Jeffrey A., with the collaboration of Shelley L. Kath. “If I am from Grand‑Mère, Why Am I Being Sued in Texas?” Responding to Inappropriate Foreign Jurisdiction in Quebec‑United States Crossborder Litigation. Montréal: Thémis, 2001.
Tetley, William . “Current Developments in Canadian Private International Law” (1999), 78 Can. Bar Rev. 152.
Yntema, Hessel E. “The Comity Doctrine” (1966‑67), 65 Mich. L. Rev. 1.
APPEAL from judgments of the Quebec Court of Appeal, [2000] R.J.Q. 1405, [2000] Q.J. No. 1717 (QL), [2000] Q.J. No. 1781 (QL), [2000] Q.J. No. 1782 (QL), [2000] Q.J. No. 1783 (QL), affirming a decision of the Superior Court, [1999] Q.J. No. 4580 (QL), J.E. 99‑2060. Appeal dismissed.
Colin K. Irving and Catherine McKenzie, for the appellant Hughes Communications Inc.
Joshua C. Borenstein, for the appellant Viacom Inc.
James A. Woods and Christian Immer, for the appellant Motient Corporation.
Jean Bélanger and Louis Charette, for the appellant Adaptative Broadband Corporation.
Marc‑André Blanchard, for the respondent Spar Aerospace Limited.
The judgment of the Court was delivered by
LeBel J. —
I. Introduction
1 This appeal examines the private international law issues that arise when a business venture between multi-jurisdictional parties meets with a calamitous end, leading to the filing of an extra-contractual action claiming damages in the province of Quebec. Specifically, this case engages a number of preliminary issues to be determined before the merits of the action are considered, including: whether Quebec courts can assert jurisdiction in the matter pursuant to art. 3148 of the Civil Code of Québec, S.Q. 1991, c. 64 (“C.C.Q”); whether there must be a real and substantial connection between the action and the province of Quebec; and whether jurisdiction should be declined on the basis of the doctrine of forum non conveniens, pursuant to art. 3148 C.C.Q.
2 On October 4, 1999, Duval Hesler J. of the Quebec Superior Court dismissed the appellants’ motions, confirming the jurisdiction of the Quebec courts. The appellants’ appeals to the Quebec Court of Appeal were dismissed on May 24, 2000. On June 11, 2002, the appellants’ further appeal to this Court was dismissed. These are the reasons following that decision.
II. Facts
3 The appellant and respondent companies are involved in various aspects of the manufacture and operation of satellites. In November 1990, one of the four appellants, Motient Corporation (“Motient”, previously conducting business under the name “American Mobile Satellite Corporation”), entered into a contract with Hughes Aircraft Company (“Hughes Aircraft”, which is not a party to this litigation) for the construction of a satellite by the latter. On September 3, 1991 (with amendments agreed to on January 8, 1993), Hughes Aircraft entered into a subcontract with the respondent, Spar Aerospace Limited (“Spar”), for the manufacture of the communication payload of the satellite at its Ste-Anne-de-Bellevue establishment in the province of Quebec (“Quebec”).
4 The satellite was launched into orbit on April 7, 1995. The in-orbit testing that followed was successful and Motient accepted the spacecraft. Motient then engaged the second appellant, Viacom Inc. (“Viacom”, formerly Westinghouse Electric Corporation), to conduct ground station testing with the third appellant, Satellite Transmissions Systems (“STS”). Motient contracted with the fourth appellant, Hughes Communications Inc. (“Hughes Communications”), to monitor and control the satellite’s performance. Unfortunately, during the testing, serious damage was caused to the satellite and Hughes Aircraft refused to pay the respondent performance-incentive payments provided for in the subcontract agreement, beyond the initial payment of $148,113.58 made around November 2, 1995.
5 The respondent commenced an action in Quebec alleging that signals from the ground station to the satellite pushed the latter into overdrive, causing severe damage. The respondent holds the appellants responsible for a number of problems, including: the improper calibration of the transmitting equipment, insufficient wiring, inadequate surveillance, and the lack of a communication system between the ground station in Virginia and Hughes Communications in California. In its lawsuit, the respondent claims $819,657 for loss of performance incentives, $50,000 for loss of future profits caused by loss of reputation and $50,000 for expenses incurred in investigating the damages to the satellite.
6 The appellants all brought declinatory motions challenging the jurisdiction of the Quebec courts to hear this matter, pursuant to art. 163 of the Code of Civil Procedure, R.S.Q., c. C-25 (“C.C.P.”), and art. 3148 C.C.Q. In addition, two of the appellants (Motient and Viacom) sought to have the action dismissed on the basis of the doctrine of forum non conveniens pursuant to art. 3135 C.C.Q.
7 The challenge to jurisdiction was based on a number of facts. First, the respondent’s head office was located in Toronto in the province of Ontario, and none of the appellants have their place of business in Quebec. Motient was located in Virginia, Hughes Communications in California, Viacom in Pennsylvania and STS in New York. Secondly, although none of the appellants are party to the “Fixed Price Subcontract” to manufacture the payload between “Hughes Aircraft Company, El Segundo, California U.S.A. and Spar Aerospace Limited, Ste-Anne-de-Bellevue, Quebec, Canada”, this contract is significant as it indicates that it governed by the laws of California (art. 23). Thirdly, the respondent was sued by a number of insurers in relation with the same event before a California court and unsuccessfully challenged its jurisdiction. However, that lawsuit was settled out of court.
III. Statutory Provisions
8 Civil Code of Québec, S.Q. 1991, c. 64
3135. Even though a Québec authority has jurisdiction to hear a dispute, it may exceptionally and on an application by a party, decline jurisdiction if it considers that the authorities of another country are in a better position to decide.
3148. In personal actions of a patrimonial nature, a Québec authority has jurisdiction where
(1) the defendant has his domicile or his residence in Québec;
(2) the defendant is a legal person, is not domiciled in Québec but has an establishment in Québec, and the dispute relates to its activities in Québec;
(3) a fault was committed in Québec, damage was suffered in Québec, an injurious act occurred in Québec or one of the obligations arising from a contract was to be performed in Québec;
(4) the parties have by agreement submitted to it all existing or future disputes between themselves arising out of a specified legal relationship;
(5) the defendant submits to its jurisdiction.
However, a Québec 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 or to an arbitrator, unless the defendant submits to the jurisdiction of the Québec authority.
IV. Judgments Below
A. Quebec Superior Court, [1999] Q.J. No. 4580 (QL)
9 In her reasons dismissing the appellants’ motions, Duval Hesler J. first reviewed the legal principles governing the appellants’ motions to dismiss the action on the grounds of want of jurisdiction and the doctrine of forum non conveniens. She noted that art. 3148 C.C.Q. establishes broader jurisdictional criteria than the previous criteria set out in art. 68 C.C.P. Under art. 3148 C.C.Q., a Quebec authority has jurisdiction if a plaintiff suffers damage in Quebec, even though the act or omission occurred elsewhere. The onus is on the defendant to prove that the courts do not have jurisdiction. In the present case, Duval Hesler J. found that the Quebec courts can properly assert jurisdiction under art. 3148 C.C.Q. as the respondent’s pleadings, as well as the discoveries, made it clear that its business in Ste‑Anne‑de‑Bellevue was adversely affected by the alleged events.
10 Turning to the forum non conveniens issue, the motions judge noted that the onus is on the defendant to prove that the doctrine of forum non conveniens applies. She also indicated that the application of the doctrine of forum non conveniens, codified by art. 3135 C.C.Q., remained exceptional and required a finding that the authorities of another jurisdiction are better positioned to adjudicate the matter at bar. Duval Hesler J. found that no forum clearly stood out as being more appropriate from the facts alleged. Indeed, no consensus among the appellants was reached. She went on to note that the payload was manufactured in Quebec; the radio waves were sent from Virginia; none of the parties resided in the same place; and though the laws of California apply to the contract between Hughes Aircraft and Spar, none of the appellants were party to it. In these circumstances, Duval Hesler J. held that there was no cause for a change of forum and dismissed the appellants’ motions.
B. Quebec Court of Appeal, [2000] R.J.Q. 1405 (Delisle and Otis JJ.A. and Denis J. (ad hoc))
11 The appellants appealed the motion judge’s decision to the Quebec Court of Appeal on the basis that any damage alleged by the respondent pursuant to art. 3148 C.C.Q. is suffered at its domicile or head office in Toronto, Ontario. The respondent countered that the absence of residence or domicile in Quebec does not automatically exclude jurisdiction since the corporation can nonetheless suffer damage to its particular establishment in Quebec.
12 The Court of Appeal declined to choose between the above arguments. Instead, it noted that para. 3 of art. 3148 makes reference to two different concepts: “fault” and “injurious act”. While the first concept requires a breach of an obligation, the second refers to the act which causes damage and does not consider the notion of obligation. In this case, the Court of Appeal found that the alleged attack to the respondent’s reputation in Quebec was an “injurious act” pursuant to art. 3148(3) and that because it occurred in Quebec, reparation may be sought in Quebec. The Court of Appeal went on to note that the damages resulting from the “injurious act” must be substantial in order to establish jurisdiction, based on the wording of art. 3164. It concluded that jurisdiction was correctly established in this case because the damages sought by the respondent for harm to its reputation were substantial.
V. Issues
13 1. Do the Quebec courts have competence in the present matter pursuant to the factors set out in art. 3148(3) C.C.Q.?
2. Should the criterion of a “real and substantial connection” be used when determining whether or not a Quebec authority has international jurisdiction under art. 3148 C.C.Q.?
3. Even if the Quebec courts are competent in the present matter, should jurisdiction be declined on the basis of the doctrine of forum non conveniens, pursuant to art. 3135 C.C.Q.?
VI. Analysis
A. Overview of General Principles of Private International Law
14 The private international law rules engaged in the case at bar are derived largely from a web of interrelated principles that underlie the private international legal order. The following is a brief overview of these fundamental principles and discusses how they are manifested in modern private international law rules.
15 One of the key principles underpinning the various private international law rules is international comity. One of the earliest and most influential works on the topic was Dutch jurist U. Huber’s 1689 essay, De conflictu legum diversarum in diversis imperiis (for translation and elaboration, see D. J. L. Davies, “The Influence of Huber’s De Conflictu Legum on English Private International Law”, in The British Year Book of International Law (1937), vol. 18, p. 49). Huber opined that, based on the customs of mutual deference and respect between nations, comity attenuates the principle of territoriality by allowing states to apply foreign laws so that rights acquired under them can retain their force, provided that they do not prejudice the states’ powers or rights. (See C. Emanuelli, Droit international privé québécois (2001), at pp. 20-21; G. Goldstein and E. Groffier, Droit international privé, t. I, Théorie générale (1998), at p. 20; H. E. Yntema, “The Comity Doctrine” (1966-67), 65 Mich. L. Rev. 1; and E. F. Scoles et al., eds., Conflict of Laws (3rd ed. 2000), at pp. 14-15.) This approach was enthusiastically supported by American J. Story’s influential 1834 text, Commentaries on the Conflict of Laws, Foreign and Domestic, ch. 11, at para. 35 (quoted in J.-G. Castel, Droit international privé québécois (1980), at p. 15; see also: Scoles et al., supra, at pp. 18-19; and Emanuelli, supra, at p. 22.)
16 Despite its importance, comity has proven a difficult concept to define in legal terms (see: J.-G. Castel and J. Walker, Canadian Conflict of Laws (5th ed. (loose leaf)), at pp. 1.13-1.14). Some authors have questioned its utility in the determination of private international law issues, especially in matters concerning the applicability of foreign law. See, for example, Cheshire and North’s Private International Law (13th ed. 1999), at p. 5, where the authors state that “The word itself is incompatible with the judicial function, for comity is a matter for sovereigns, not for judges required to decide a case according to the rights of the parties.” And in Dicey and Morris on the Conflict of Laws (13th ed. 2000), vol. 1, at p. 5, it is observed that:
Story used it to mean more than mere courtesy, but something rather less than equivalent to international law. Dicey was highly critical of the use of comity to explain the conflict of laws (“a singular specimen of confusion of thought produced by laxity of language”) . . . . [Footnotes omitted.]
17 Notwithstanding these limitations, comity is still considered a useful guiding principle when applying the rules of private international law. For example, the notion of comity is invoked today as a guiding principle in the context of anti-suit injunctions, as noted by the editors of Dicey and Morris, supra, at p. 6:
More recently, comity has been invoked to justify the caution which is required in the exercise of the power to grant injunctions to restrain proceedings in foreign courts. Comity requires that the English forum should have a sufficient interest in, or connection with, the matter in question to justify the indirect interference with the foreign court which such an injunction entails. [Footnote omitted.]
18 On a more practical level, it has been remarked that “the theory has performed a useful function in freeing our subject from parochialism, and making our judges more internationalist in outlook and more tolerant of foreign law than they might otherwise have been”. (See J. H. C. Morris, The Conflict of Laws (5th ed. 2000), at p. 535.)
19 The notion of comity has retained its vitality in the jurisprudence of Canadian courts. This Court has adopted the following definition of the concept:
. . . the recognition which one nation allows within its territory to the legislative, executive or judicial acts of another nation, having due regard both to international duty and convenience, and to the rights of its own citizens or of other persons who are under the protection of its laws.
(Hilton v. Guyot, 159 U.S. 113 (1895), at p. 164)
(See Spencer v. The Queen, [1985] 2 S.C.R. 278, at p. 283, per Estey J.; Morguard Investments Ltd. v. De Savoye, [1990] 3 S.C.R. 1077, at p. 1096, per La Forest J.; and Holt Cargo Systems Inc. v. ABC Containerline N.V. (Trustees of), [2001] 3 S.C.R. 907, 2001 SCC 90, at para. 69, per Binnie J.)
20 This Court has indicated that “the twin objectives sought by private international law in general and the doctrine of international comity in particular [are] order and fairness”. (See Holt Cargo, supra, at para. 71, per Binnie J.; Morguard, supra, at p. 1097; and Hunt v. T&N PLC, [1993] 4 S.C.R. 289, at p. 325, per La Forest J.) When giving effect to these two objectives, Binnie J. observed that “the Court gave pre-eminence to the objective of order” (Holt Cargo, supra, at para. 71). As noted by La Forest J. in Tolofson v. Jensen, [1994] 3 S.C.R. 1022, at p. 1058: “Order is a precondition to justice.”
21 The three principles of comity, order and fairness serve to guide the determination of the principal private international law issues: jurisdiction simpliciter, forum non conveniens, choice of law, and recognition of foreign judgments. Given that these three principles are at the heart of the private international legal order, it is not surprising that the various issues are interrelated. For example, W. Tetley points out that the “‘forum non conveniens’ doctrine (founded on the ‘real and substantial connection’ test), is now also an essential feature of Canadian conflicts theory and practice”. (See W. Tetley, “Current Developments in Canadian Private International Law” (1999), 78 Can. Bar Rev. 152, at p. 155.) Also, in Amchem Products Inc. v. British Columbia (Workers’ Compensation Board), [1993] 1 S.C.R. 897, Sopinka J. observed, at p. 933, that the criterion of “juridical advantage” is a factor to be considered both in deciding whether to decline jurisdiction on the basis of the doctrine of forum non conveniens and in determining whether or not an injustice would result if a plaintiff is allowed to proceed in a foreign jurisdiction, in the context of an anti-suit injunction.
22 The various rules governing the private international law order of Quebec are found primarily in Book Ten of the C.C.Q., subsuming or complementing the rules of civil procedure found in the Code of Civil Procedure. See J. A. Talpis and J.-G. Castel, “Interpreting the rules of private international law” in Reform of the Civil Code, vol. 5B, Private International Law (1993). These rules cover a broad range of interrelated topics, including: the jurisdiction of the court (art. 3136, 3139 and 3148 C.C.Q.); the discretionary powers of the court to eliminate inappropriate fora (under the doctrine of forum non conveniens codified in art. 3135 C.C.Q., through the recourse to the lis pendens power in art. 3137, or by issuance of an anti-suit injunction pursuant to art. 3135 C.C.Q. and art. 46 C.C.P.); and they allow Quebec courts to recognize and enforce foreign decisions (art. 3155 C.C.Q.).
23 As the basic rules of private international law are codified in Quebec, courts must interpret those rules by first examining the specific wording of the provisions of the C.C.Q. and then inquiring whether or not their interpretation is consistent with the principles which underlie the rules. Given that the provisions of the C.C.Q. and of the C.C.P. do not refer directly to the principles of comity, order and fairness, and that the principles are at best, vaguely defined, it is important to emphasize that these principles are not binding rules in themselves. Instead, they inspire the interpretation of the various private international law rules and reinforce the interconnected nature of the issues. (For a discussion on the relationships between the various private international law rules, see: J. A. Talpis, “If I am from Grand-Mère, Why Am I Being Sued in Texas?” Responding to Inappropriate Foreign Jurisdiction in Quebec-United States Crossborder Litigation (2001), at pp. 22 and 43-69). With these background principles in mind, I now turn to the issues at bar.
B. Application of Private International Law Rules
1. Do the Quebec courts have competence in the present matter pursuant to the factors set out in art. 3148(3) C.C.Q.?
24 Although three of the four appellants made independent arguments on this issue (Viacom adopted the written arguments of Motient), their basic position is that both the Quebec Superior Court and the Quebec Court of Appeal erred in their respective interpretations of art. 3148(3) C.C.Q. Those provisions read as follows:
3148. In personal actions of a patrimonial nature, a Québec authority has jurisdiction where
. . .
(3) a fault was committed in Québec, damage was suffered in Québec, an injurious act occurred in Québec or one of the obligations arising from a contract was to be performed in Québec; [Emphasis added.]
25 Although there are four possible grounds for asserting jurisdiction under art. 3148(3), only two remain relevant to this appeal and are examined in turn. The first is the “damage” ground, which was accepted by Duval Hesler J. of the Quebec Superior Court, leading her to confirm the jurisdiction of the Quebec courts. The second is the “injurious act” ground, which was accepted by the Quebec Court of Appeal, also resulting in the confirmation of the Quebec courts’ jurisdiction.
(i) The “damage” ground under art. 3148(3)
26 The appellants Motient and Viacom submit that “none of the damages claimed by Respondent can be said to have been ‘suffered in Quebec’”, but rather, they were suffered at the respondent’s domicile or head office in Toronto, Ontario. Under the civil law of Quebec, legal persons have a patrimony; although a corporation may have several places of business, it can have but one patrimony. While no clear rule exists in Quebec for the localization of damage, or for the localization of the corporate patrimony, one approach suggests the localization of economic loss with the respondent’s patrimony and the localization of damage to reputation at the place of the respondent’s domicile. In addition, the appellants note that the respondent is no longer manufacturing satellites at the Ste-Anne-de-Bellevue establishment because it has sold the division along with the establishment itself.
27 The appellant Hughes Communications argues that, in this case, jurisdiction would have been denied by the Quebec Court of Appeal had it not been for the presence of the claim for a nominal sum for loss of reputation. It submits that it is inconsistent with order and fairness that the addition of so minor a claim to an action can confer jurisdiction where otherwise none would exist.
28 According to the appellant STS, it is possible to situate the damage in a particular location when it is tangible, but it is more difficult to situate the damage when tangible goods have been damaged in a particular location and financial interests are damaged somewhere else as an indirect result of the material damage. STS argues that the respondent is an indirect victim. The direct victim is Motient, whose satellite was damaged. STS submits that the loss of incentive payments is not sufficient to establish a solid link with the Quebec courts.
29 The respondent submits that it has suffered damage to its reputation in Quebec, which has resulted in a loss of profits, loss of clientele and loss of future profits. It emphasizes that the Quebec legislature did not indicate the nature or the amount of the damage that must be suffered in order for Quebec courts to assert jurisdiction under art. 3148(3).
30 Despite the interesting arguments raised by the appellants, I agree with the respondent that the motions judge did not err when she found that the Quebec courts can assert jurisdiction on the basis of “damage” having been suffered in Quebec. There is ample support for the motions judge’s decision given the procedural context of the jurisdictional rules of Quebec, as well as in the evidence presented by the respondent.
31 First, it appears that the procedural context for challenging jurisdiction at a preliminary stage supports the idea that art. 3148 establishes a broad basis for finding jurisdiction. In order to challenge jurisdiction in a preliminary motion, one must bring a declinatory motion to dismiss under art. 163 C.C.P. Case law has established that a judge hearing such a motion is not to consider the merits of the case, but rather, is to take as averred the facts that are alleged by the plaintiff to bring it within the jurisdictional competence of the Quebec courts (see Air Canada v. McDonnell Douglas Corp., [1989] 1 S.C.R. 1554, at p. 1558; and Rosdev Investments Inc. v. Allstate Insurance Co. of Canada, [1994] R.J.Q. 2966 (Sup. Ct.), at p. 2968).
32 The declinatory motion allows the defendants to challenge the facts alleged by the plaintiff. Indeed, in the case at bar, the appellants adduced evidence to demonstrate that the incentive payments were made to the respondent’s head office in Toronto and not to the respondent’s establishment in Ste-Anne-de-Bellevue. Nevertheless, the fact remains that the role of the motions judge is to refrain from evaluating the evidence of parties unless the facts are specifically contested by the parties. In my opinion, reading in limitations with respect to the amount and nature of the damage that must be suffered in the jurisdiction before the court can assert its competence may improperly require the motions judge to prematurely decide the merits of the case.
33 In the case at bar, I agree with the motions judge that the respondent made a prima facie case that it suffered damage in Quebec. Although the respondent’s head office is in Ontario, the evidence provided by Gerald Bush (Vice-President and General Manager of Spar) demonstrates that the operation in Ste-Anne-de-Bellevue had established its own reputation independe