As a rule, Canadian courts will enforce forum selection clauses. In a recent decision, however, the Ontario Court of Appeal found justification to derive from the general principle.

In the case of Quickie Convenience Stores Corp. v. Parkland Fuel Corporation, the appellant (Quickie Convenience Stores) owned and operated a chain of convenience stores, several of which included gasoline service stations.[1] Fifteen of these service stations received their fuel from the respondent (Parkland Fuel Corporation).[2] The parties had various lease and sublease agreements as well as fourteen credit/debit card agreements.[3] The leases contained an assignment clause and, in most instances, both a forum selection clause and a choice of law clause.[4] The litigation arose from the appellant’s desire to sell eight of its Ontario stations and seven of its Quebec stations and the respondent seeking to obtain a five-year extension to the existing agreements.[5]

Specifically, the parties agreed in their contract to apply the law of Ontario to eleven of the leases, the law of Quebec to two of the leases. The applicable law for two other leases was not determined.[6] The leases also contained a forum selection clause, which was Toronto for the leases applying the law of Ontario, and Montreal for the leases applying the law of Quebec.[7]

The law in Ontario, a common law jurisdiction, would have allowed the assignments. The respondent resisted on the basis that law of Quebec, a civil law jurisdiction, may be different, and on the basis that Quebec was the proper forum.

In its decision, the Ontario Court of Appeal ruled in favour of the appellant.

The partial relief issue[8]

The appellant wanted relief with respect to the fourteen leases and the Ontario Court of Appeal decided he should have obtained it at least for eleven Ontario gas stations. In contrast, the application judged had dismissed the application without dealing with the Ontario gas stations, which is inconsistent with Rule 38.10(1) Rules of Civil Procedure. This Rule allows application judges to grant relief or dismiss or adjourn applications, in whole or in part, and with or without terms. Moreover, considering that two of the leases had no choice of law clause or a forum selection clause, the application judge could have ruled on these leases. In other words, only the two gas stations with Montreal forum clauses and Quebec choice of law clauses should have been properly excluded from the application judge’s reasoning.

The Quebec gas station leases[9]

The Court of Appeal ruled that the appellant should have obtained the assignment of the two gas stations that contained the Quebec choice of law and Montreal forum selection clauses.

Justice Nordheimer explained that the application judge erred by taking the test that relates to the context in which a court will depart from a forum selection clause and used it in determining the impact of the choice of law clause.

In the case of Z.I. Pompey Industrie v. ECU-Line N.V., the Supreme Court ruled that foreign selection clauses are generally to be enforced unless the party seeking to avoid the forum selection clause shows “strong cause” why the clause should not be enforced.[10] In the Quickie Convenience Stores case, the Court of Appeal was of the opinion that the application judge failed to properly apply the strong cause test to determine whether he ought to give effect to the forum selection clause. The appellant satisfied the strong cause test because here there were two forum selection clauses and it was not efficient to litigate in two different forums, especially because there was no evidence that the law between Quebec and Ontario was different on this matter. With this ruling, the court avoids encouraging a multiplicity of procedures.

This case shows that the forum selection and choice of law questions continue to be intertwined and confused by the courts.

[1] Quickie Convenience Stores Corp. v. Parkland Fuel Corporation, 2020 ONCA 453 at para. 3 [Quickie Convenience Stores Corp.]

[2] Ibid.

[3] Ibid, at para. 5

[4] Ibid, at para. 7

[5] Ibid, at para. 9-10

[6] Ibid, at para. 8

[7] Ibid.

[8] Ibid, at para. 21-25

[9] Ibid, at para. 26-34

[10] Z.I. Pompey Industrie v. ECU-Line N.V., 2003 SCC 27

Article by  Martin Aquilina with assistance from Sandra Zaki.