International lis alibi pendens (“lis pendens”) applies to proceedings in two different jurisdictions that involve the same cause of action between the same parties. A party in such a situation may contest the jurisdiction of the second seized court thereby causing the court to halt the proceedings before it. The purpose behind lis pendens is to mitigate the risk of potentially conflicting judgments rendered by the two unrelated courts.
In Québec, lis pendens is codified in Article 3137 of the Code civil du Québec (the “C.C.Q.”), which provides courts the power to implement a stay subject to three minimum requirements. It is noteworthy that even after a party establishes the three requirements, the court still retains residual discretion to determine whether to implement a stay. In R.S. v. P.R., the Supreme Court of Canada (the “SCC”) clarified the burden, scope and evidence appropriate for the third requirement, namely, the potential for recognition by the Québec court. Moreover, a majority of the Court examined whether the residual discretion can be exercised using the same criteria that apply in a forum non conveniens (“FNC”) analysis.
R and S were married in Belgium and later moved to Québec. They both brought applications for divorce. R filed his application in the Belgian Tribunal de la Famille and S filed hers in Québec days later. By way of a letter, R revoked all inter vivos gifts that he made to S during the marriage, an amount valued at over $33 million, which was allowed under Belgian law by Article 1096 of the Code civil belge (the “C.C.B.”), even if done in bad faith.[i]
R applied to the Québec Superior Court to stay S’s proceeding in Québec on the basis of lis pendens as permitted by Article 3137 of the C.C.Q., which has three requirements: 1) the preceding action involves the same parties, facts, and subject matter, 2) it is pending before a foreign authority, and 3) it can result in a decision which may be recognized in Québec.[ii]
The Superior Court looked at Article 3155 C.C.Q. to assess whether the applicant had met his burden in establishing the third lis pendens requirement of Article 3137. Article 3155 provides that a decision rendered outside Québec cannot be recognized in Québec if the outcome of the decision is manifestly inconsistent with public order as understood in international relations.[iii] The trial judge used her discretion to deny a stay of proceedings. The Court of Appeal reversed the judgment citing that the trial court’s decision to reject the stay was premature. Leave to appeal to the SCC was granted.
Firstly, the SCC set out to determine who has the burden of proof and the degree of proof required for the three requirements necessary for a stay under Article 3137 C.C.Q. In doing this, the SCC examined the conditions required for establishing the third lis pendens requirement. Secondly, it set out to determine principles that form a judge’s discretion once the requirements are met.[iv]
Arguments of the Supreme Court
To answer the first question, the SCC held that the burden of proof for proving the three requirements initially lies with the party seeking to benefit from the stay. To establish the third lis pendens requirement, the burden of proof required is not an onerous one for the individual requesting the stay. A prognosis or plausibility of a decision’s recognition is sufficient.[v]
For the scope of the third requirement of Article 3137, the SCC scrutinized the trial judge’s reliance on Article 3155 of the C.C.Q. The Court opined that “the requirement of consistency with public order simply means that the court must ensure that the solution provided by the foreign judgment can be harmoniously incorporated into the legal order of the Québec forum.”[vi] A foreign decision “will not be recognized if its outcome runs counter to the moral, social, economic or even political conceptions that underpin Québec’s legal order.”[vii] Although it was unclear whether the Belgian court’s decision would ultimately be recognized in Québec, the majority found that the respondent had still discharged his burden in showing is was possible that the Belgian judgment would be recognized.
The majority of the Court noted that “a trial judge must then exercise the discretion provided for in Article 3137 C.C.Q. to determine whether it is appropriate to order a stay.”[viii] This discretion rests even when it is obvious under the third criteria analysis that a foreign decision may be recognized in Québec.[ix] An instance where it would be appropriate for a judge to exercise this discretion would be whether Québec was more closely related to the dispute, which is the essence of an FNC analysis.
The analysis needed to exercise this discretion is similar to that required in 3135 as FNC and lis pendens are closely related. As such, the criteria developed for FNC also apply to lis pendens. Where they differ is that, unlike in FNC, it is not necessary to show that “the authorities in another country are in a better position to decide the dispute in order to obtain a stay.”[x]
In a concurring judgment, Madam Justice Abella took the position that the third Article 3137 requirement was not met. She disagreed that the respondent had met the third 3137 requirement because the Belgian law letting a spouse revoke gifts could not be enforced in Québec. She looked to international law, as well as the principles behind domestic legislative regimes to make this determination.
In deciding this, she found that “not every foreign decision that reaches a result different from what it would likely be under Québec law will be found to violate international public order”.[xi] However, Abella referred to the Universal Declaration of Human Rights, Protocol No. 7 to the Convention for the Protection of Human Rights and Fundamental Freedoms, and the Convention on the Elimination of All Forms of Discrimination against Women in establishing that the violation of spousal equality resulting from a unilateral revocation of gifts would be manifestly incompatible with public order as understood in international relations.[xii]
In addition, Abella looked at the intent behind Québec family law regimes. She noted that a base tenet of Québec family law is to address the vulnerability of spouses, which provides for a compensatory mechanism entitling each spouse to claim their contribution to the other spouse’s patrimony. She observed that “the spousal property regime in Québec allows the spouses to choose together which regime they wish to apply to their property […] It is a regime based both on consensus between the parties and the equality of the spouses”; a decision based on an application of 1096 C.C.B. would run contrary to this.[xiii]
Thus, Justice Abella took the position that it would be impossible to foresee an outcome applying Article 1096 C.C.B. that would be recognizable in Québec. She therefore did not then see it necessary to rule on the residual discretion afforded by Article 3137.
Conclusion and Implications
The SCC ultimately allowed S’s appeal and restored the trial court’s decision to dismiss R’s application for a stay even though the applicant had met all three requirements of Article 3137. The importance of this decision for private international law cases in Canada cannot be understated. Indeed, this is the first time the SCC has opined on the international lis pendens requirements listed in Article 3137 of the C.C.Q., and while R.S. v. P.R. was a family law dispute, the principles that formed the decision’s basis may affect commercial cases involving lis pendens in Québec or potentially Canada as a whole.
[i] R.S. v. P.R. 2019 SCC 49 at para 12.
[ii] Code civil du Québec 1991, c. 64, art. 3137.
[iii] Supra note i at para 51.
[iv] Supra note i at para 36.
[v] Supra note i at para 97.
[vi] Supra note i at para 52.
[vii] Supra note i at para 53.
[viii] Supra note i at para 98.
[ix] Supra note i at para 98.
[x] Supra note i at para 72.
[xi] Supra note i at para 104.
[xii] Supra note i at para 126-129.
[xiii] Supra note i at para 141.
Article by Martin Aquilina, with assistance from Alexander Krush.