Spar Aerospace Ltd. v. American Mobile Satellite Corp., 2002 SCC 78, [2002] 4 SCR 205

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, 2^e 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 independently of the national reputation the respondent enjoyed (A.R., at pp. 99-100).  In particular, Bush testified that more than half of the company’s Canadian space operations and between 80 to 85 percent of its spacecraft work was located at the Ste-Anne-de-Bellevue facility (A.R., at pp. 86-90).

34                               More support for the respondent’s position is found in its evidence 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 (see Mr. Bush’s testimony, A.R., at p. 114).  The appellants did not successfully rebut this evidence.

35                               In addition, the subcontract between the respondent and Hughes Aircraft 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.  Therefore, 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.

36                               The appellant STS relies on European case law to assert that only direct damage and not indirect damage can be used to link the action to the jurisdiction.  In my view, there is nothing in the wording of art. 3148(3) to suggest that such a limitation was intended.  Therefore, I do not agree with the appellant’s submission that the damages are either too indirect or too nominal in this case to meet the requirements for asserting jurisdiction.  Such a finding would require a premature assessment of the evidence, as outlined above.

37                               In their arguments, the appellants seem to conflate the issue of the “damage” suffered in Quebec with the issue of the amount of damages claimed in Quebec.  In this case, we are only concerned with the former as art. 3148 requires that “damage” be suffered in Quebec in order to ground jurisdiction.  The amount of damages that the respondent is claiming is not a concern for the jurisdiction question but may be one of many factors to be considered in a forum non conveniens application, as set out below.  Based on the analysis set out above, I agree with the Superior Court that the damage to the respondent’s reputation sufficiently meets the “damage” requirement of art. 3148.

(ii)   The “injurious act” ground under art. 3148(3)

38                               Motient and Viacom argue that the Quebec Court of Appeal erred in both its interpretation of the term “injurious act” and its application of this criterion to the alleged attack on the respondent’s reputation.  The appellants submit that “injurious act” refers to the “physical acts of the defendant or the person or thing under his care, supervision or ownership, the material elements of the fault in question, or the specific events causing Respondent’s damage” (Motient’s factum, at para. 26).  Turning to the application of art. 3148, Motient and Viacom claim that no “injurious act”, as they define it, occurred in Quebec.  Although the Court of Appeal characterized the damage to reputation as an “attack on” or “interference” with the respondent’s reputation in Quebec, they say that the respondent is not claiming an attack on its reputation but rather damage to its reputation as a consequence of events which occurred in the United States.

39                               Hughes Communications put forward the argument that if there was a loss of reputation, it was a loss incurred by the respondent and not by one of its operations.  In addition, the Court of Appeal failed to distinguish between the “injurious act” and its consequences.  Hughes Communications argues that “[h]ere, the alleged loss of reputation would be the consequence of injurious acts committed in the United States” (Hughes Communications’ factum, at para. 29).

40                               STS argues that the Court of Appeal erred because the attack on reputation is not the source of the damage, rather, it is the damage that the respondent alleges to have resulted from the damage to the satellite.  Such an indirect damage is insufficient to establish the jurisdiction of the court in a place where the respondent merely has an establishment which is not even the location of its corporate head office.

41                               The respondent does not directly address this question of whether or not the Court of Appeal erred in confirming jurisdiction on the “injurious act” ground.  Instead, it seems to place more emphasis on the ground of “damage” to confirm the jurisdiction of the Quebec courts, as accepted by the motions judge above.

42                               Given the legislative history and context of art. 3148(3) C.C.Q., I prefer the reasoning of the motions judge to that of the Court of Appeal.  Prior to the adoption of the C.C.Q. in 1994, the international jurisdiction of Quebec courts was governed by art. 68 C.C.P., which granted jurisdiction if:  (1) the defendant was domiciled in Quebec; (2) if the whole cause of action arose in Quebec; (3) for actions in contract, if the contract was made in Quebec.  Though art. 68 still applies to govern jurisdiction for disputes in the province, the C.C.Q. now sets out a code governing private international law.  Unlike art. 68 C.C.P., which requires that the whole cause of action arise in Quebec, art. 3148(3) C.C.Q. sets out four different grounds for the Quebec courts to assume jurisdiction:  (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.  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; see H. P. Glenn, “Droit international privé”, in La réforme du Code civil (1993), vol. 3, 669, at p. 754.

43                               As no such claim is advanced in this case, it is my opinion that 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”.  As noted above, I agree with the finding of the motions judge that the respondent made a prima facie case that it suffered damage in Quebec, so as to allow a Quebec court to assert jurisdiction over this matter.

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.?

44                               Prior to examining the substantive aspects of this issue, I note that the appellants face an important limitation to the scope of their argument.  As the Chief Justice dismissed the appellants’ application to state a constitutional question (Hughes Communications Inc. v. Spar Aerospace Ltd., S.C.C., No. 28070, October 9, 2001), the appellants are precluded from arguing whether or not “there is a constitutional limit on the jurisdiction of provincial courts over non-resident defendants corresponding to the rule of private international law requiring a real and substantial connection between the subject matter of an action and the jurisdiction in which it is prosecuted” (Notice of Motion to State a Constitutional Question, Schedule “A”).  As this Court’s jurisprudence establishes, if the Court is not faced with a direct constitutional question, it generally limits the scope of its inquiry to the interpretation of a statutory provision in accordance with the sovereign intent of the legislature.  (See:  Moysa v. Alberta (Labour Relations Board), [1989] 1 S.C.R. 1572, at p. 1580, where Sopinka J. remarked that “If the facts of the case do not require that constitutional questions be answered, the Court will ordinarily not do so.  This policy of the Court not to deal with abstract questions is of particular importance in constitutional matters”.  See also:  Bell ExpressVu Limited Partnership v. Rex, [2002] 2 S.C.R. 559, 2002 SCC 42, at para. 62, where Iacobucci J. stated that “when a statute comes into play during judicial proceedings, the courts (absent any challenge on constitutional grounds) are charged with interpreting and applying it in accordance with the sovereign intent of the legislator”.)

45                               The alternative argument advanced by Motient and Viacom is that jurisdiction cannot be assumed by Quebec courts on the basis of either an “injurious act” or “damage” in Quebec under art. 3148 because this Court has enunciated a further constitutional requirement in Morguard and Hunt, that there must be a “real and substantial connection” between the forum and the action in order for jurisdiction to be assumed.  The appellants argue that no such connection exists on the facts of this case. The Quebec Court of Appeal, at para. 20, seemed to recognize this requirement by referring to art. 3164 and the requirement therein that the [translation] “dispute is substantially connected with the country whose authority is seised of the case”.

46                               Motient and Viacom contend that the Quebec Court of Appeal erred in finding that the alleged damage to reputation was substantial.  This is a case where the most tenuous of connections between the dispute and the Quebec forum exist.  In addition, a claim for a “nominal amount” of $50,000 does not constitute a substantial link between the dispute and Quebec.  The appellants further submit that the respondent’s decision to bring its claim commenced in the province of Quebec is motivated by the fact that in contrast to common law jurisdictions, there is no principle prohibiting the recovery of pure economic loss in Quebec.  This advantage would make the forum more attractive to corporations who have branch offices in Quebec, even though the losses will ultimately be suffered by the head office in another jurisdiction.

47                               Hughes Communications adds that it is manifest from the respondent’s pleadings that there is no real connection, much less a “real and substantial connection”, between this claim and Quebec.  The respondent is domiciled in Ontario; all the appellants are domiciled in the United States; and the alleged negligence occurred in the United States. Hughes Communications notes that in Hunt, the doctrine of full faith and credit was described as being a constitutional imperative, therefore, the requirement of a “real and substantial connection” as a condition for assuming jurisdiction must also be a constitutional imperative.  Moreover, even if no constitutional restrictions were involved, comity requires that jurisdiction be appropriately assumed.

48                               STS observes that the new C.C.Q. provides not only rules for the jurisdictional competence of the Quebec courts, but also for the competence of foreign authorities for the purpose of recognition and enforcement of foreign judgments (art. 3164). In the case of foreign courts, the Quebec legislature imposed an additional criterion:  that the dispute be substantially connected with the country whose authority is seised of the case.  The Quebec Court of Appeal recognized that this requirement applies equally to the jurisdiction of Quebec courts but refused to apply the concept to narrow the scope of art. 3148. In addition, all of the appellants argue that the decision of the Court of Appeal is at odds with another case decided recently by a majority of the same court:  Quebecor Printing Memphis Inc. v. Regenair Inc., [2001] R.J.Q. 966.

49                               For its part, the respondent submits that Morguard and Hunt have no relevance since the issue in those cases concerned the recognition of judgments from a sister province and not the jurisdictional competence of a Canadian court.  At any rate, if the appellants wish to challenge the constitutionality of art. 3148 then they must address the question to the Attorney General, pursuant to art. 95 C.P.C.  This was not done in the case at bar as the Chief Justice dismissed the appellants’ application to state a constitutional question.  In any event, the criterion of a “real and substantial” link is a common law principle that should not be imported into the civil law.  Similarly, it would be contrary to principles of interpretation to add this criterion into art. 3148 where it is also not specifically mentioned.

50                               Turning to the substantive arguments, I cannot accept the appellants’ arguments that the “real and substantial connection” requirement set out in Morguard and Hunt is an additional criterion that must be satisfied in determining the jurisdiction of the Quebec courts in this case.  My conclusion with respect to this issue is based on two considerations:  (i) the context of the “real and substantial connection” and its relationship with the principles of comity, order and fairness; and (ii) the nature of the private international law scheme set out in Book Ten of the C.C.Q.

(i)    The context of the “real and substantial connection” and its relationship with the principle of comity

51                               I agree with the appellants that Morguard and Hunt establish that it is a constitutional imperative that Canadian courts can assume jurisdiction only where a “real and substantial connection” exists:  see La Forest J. in Hunt, supra, at p. 328:  “courts are required, by constitutional restraints, to assume jurisdiction only where there are real and substantial connections to that place” (emphasis added).  However, it is important to emphasize that Morguard and Hunt were decided in the context of interprovincial jurisdictional disputes.  In my opinion, the specific findings of these decisions cannot easily be extended beyond this context.  In particular, the two cases resulted in the enhancing or even broadening of the principles of reciprocity and speak directly to the context of interprovincial comity within the structure of the Canadian federation; see Morguard, supra, at p. 1109, and Hunt, supra, at p. 328.

52                               In Morguard, La Forest J. agreed with the flexible approach taken by Dickson J. (as he then was) with respect to the application of the “real and substantial connection” criterion in Moran v. Pyle National (Canada) Ltd., [1975] 1 S.C.R. 393, and wrote at p. 1106:

At the end of the day, he rejected any rigid or mechanical theory for determining the situs of the tort.  Rather, he adopted “a more flexible, qualitative and quantitative test”, posing the question, as had some English cases there cited, in terms of whether it was “inherently reasonable” for the action to be brought in a particular jurisdiction, or whether, to adopt another expression, there was a “real and substantial connection” between the jurisdiction and the wrongdoing.

He also delimited the decision to only address the modern interprovincial context (at p. 1098):

. . . there is really no comparison between the interprovincial relationships of today and those obtaining between foreign countries in the 19th century. Indeed, in my view, there never was and the courts made a serious error in transposing the rules developed for the enforcement of foreign judgments to the enforcement of judgments from sister-provinces.  The considerations underlying the rules of comity apply with much greater force between the units of a federal state, and I do not think it much matters whether one calls these rules of comity or simply relies directly on the reasons of justice, necessity and convenience to which I have already adverted.  [Emphasis added.]

53                               In Hunt, supra, at p. 321, La Forest J. stated that a central idea in Morguard was comity.  It is apparent from his reasons in both cases, however, that federalism was the central concern underlying both decisions.  At p. 1099 of Morguard, La Forest J. commented that adopting the traditional English rules in the Canadian context seemed to “fly in the face of the obvious intention of the Constitution to create a single country”.  In Hunt, at p. 322, he listed four factors that supported “a more cooperative spirit in recognition and enforcement . . . (1) common citizenship, (2) interprovincial mobility of citizens, (3) the common market created by the union as reflected in ss. 91(2), 91(10), 121 and the peace, order and good government clause, and (4) the essentially unitary structure of our judicial system with the Supreme Court of Canada at its apex”.  At p. 323 of Hunt, La Forest J. drew a clear distinction between the rules pertaining to an international situation and the rules applicable to interprovincial disputes:

. . . I do not think litigation engendered against a corporate citizen located in one province by its trading and commercial activities in another province should necessarily be subject to the same rules as those applicable to international commerce.

54                               Morguard and Hunt have been cited by this Court in a number of cases which seem to confirm that the “real and substantial connection” was specially crafted to address the challenges posed by multiple jurisdictions within a federation.  See Tolofson, supra, where La Forest J. observed, at p. 1064:

The nature of our constitutional arrangements — a single country with different provinces exercising territorial legislative jurisdiction — would seem to me to support a rule that is certain and that ensures that an act committed in one part of this country will be given the same legal effect throughout the country.  This militates strongly in favour of the lex loci delicti rule. In this respect, given the mobility of Canadians and the many common features in the law of the various provinces as well as the essentially unitary nature of Canada’s court system, I do not see the necessity of an invariable rule that the matter also be actionable in the province of the forum.  That seems to me to be a factor to be considered in determining whether there is a real and substantial connection to the forum to warrant its exercise of jurisdiction.  Any problems that might arise could, I should think, be resolved by a sensitive application of the doctrine of forum non conveniens.

See also Antwerp Bulkcarriers, N.V. (Re), [2001] 3 S.C.R. 951, 2001 SCC 91, at para. 51, where Binnie J. for the Court remarked:  “The Trustees rely on the principles of international comity but, as pointed out by this Court in Morguard, supra, the considerations underlying rules of comity apply with even greater force between the units of a federal state than they do internationally”.  In my view, there is nothing in these cases that supports the appellants’ contention that the constitutional “real and substantial connection” criterion is required in addition to the jurisdiction provisions found in Book Ten of the C.C.Q.

(ii) The private international law scheme of Book Ten of the C.C.Q.

55                               As mentioned above, Book Ten of the C.C.Q. sets out the private international law rules for the Province of Quebec and must be read as a coherent whole and in light of the principles of comity, order and fairness.  In my view, it is apparent from the explicit wording of art. 3148, as well as the other provisions of Book Ten, 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 assertion of jurisdiction.

56                               Looking at the wording of art. 3148 itself, it is arguable that the notion of a “real and substantial connection” is already subsumed under the provisions of art. 3148(3), given that each of the grounds listed (fault, injurious act, damage, contract) seems to be an example of a “real and substantial connection” between the province of Quebec and the action.  Indeed, I am doubtful that a plaintiff who succeeds in proving one of the four grounds for jurisdiction would not be considered to have satisfied the “real and substantial connection” criterion, at least for the purposes of jurisdiction simpliciter.

57                               Next, from my examination of the system of rules found in Book Ten, it seems that the “real and substantial connection” criterion is captured in other provisions, to safeguard against the improper assumption of jurisdiction.  In particular, it is my opinion that the doctrine of forum non conveniens, as codified at art. 3135, serves as an important counterweight to the broad basis for jurisdiction set out in art. 3148.  In this way, it is open to the appellants to demonstrate, pursuant to art. 3135, that although there is a link to the Quebec authorities, another forum is, in the interests of justice, better suited to take jurisdiction.

58                               There is abundant support for the proposition that art. 3148 sets out a broad basis for jurisdiction. As Emanuelli, supra, remarks at p. 91:

[translation] In practice, a number of recent judicial decisions have based the jurisdiction of Quebec courts on the fact that damage had been suffered in Quebec.  This criterion, which has been broadly interpreted in the case law, thus enables the international jurisdiction of these courts to be expanded.  In fact, in the majority of cases, it enables the plaintiff’s courts to assume jurisdiction. [Emphasis added.]

(See 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; and Morales Moving and Storage Co. v. Chatigny Bitton, [1996] R.D.J. 14 (C.A.).)

59                               This approach was confirmed in the minority reasons of Philippon J. (ad hoc) in Quebecor Printing, supra.  Philippon J. would have dismissed the appeal, based on the interconnected scheme of the various provisions of Book Ten and, in particular, the interplay between the jurisdictional and forum non conveniens questions.  Philippon J.’s approach allows for a broad basis for jurisdiction, and tests the “real and substantial connection” requirement more stringently when examining the forum non conveniens argument.  As he explained, in para. 32:

[translation] Such an application of the concept of damage can result in the recognition of a jurisdiction that proves to be disproportionate.  If that happens, it is at the stage of applying the doctrine of forum non conveniens that the problem must be dealt with, as in the case where, by analogy, according to the authors Goldstein and Groffier, a collateral obligation of minimal value could be a basis to assume jurisdiction.  [Footnote omitted.]

(See also Goldstein and Groffier, supra, at p. 359.)

60                               In Glenn, “Droit international privé”, supra, at p. 754, the author also remarks on the interplay between the jurisdictional criteria under art. 3148 and the forum non conveniens doctrine under art. 3135:

[translation] The complexity of modern-day civil liability disputes raises the possibility that the application of article 3148, and in particular para. 3, can be moderated by the concepts of forum non conveniens and forum of necessity (arts. 3135 and 3136).

61                               I note that STS argues that the criterion of damage in art. 3148(3) should be read narrowly and refers to cases decided by the European Court of Justice under the Convention on jurisdiction and the enforcement of judgments in civil and commercial matters, September 27, 1968 (“Brussels Convention”).  In my view, it is important to note that, unlike the C.C.Q., the Brussels Convention does not provide the same safeguard against the inappropriate exercise of jurisdiction, namely, the power to stay actions on the basis of forum non conveniens or otherwise (see Cheshire and North’s Private International Law, supra, at pp. 330-31).  It is perhaps understandable, then, that the European Court of Justice would seek to interpret the jurisdictional ground of the Brussels Convention in a narrower fashion than would a court who enjoys a further discretionary power to decline jurisdiction.

62                               In addition, it is important to bear in mind that other private international law rules set out under Book Ten of the C.C.Q. also appear to ensure that the “real and substantial connection” criterion is respected.  For example, a substantial connection requirement is also a prerequisite for the recognition of the jurisdiction of foreign courts under art. 3164 C.C.Q.  Also, in matters of choice of law, art. 3126 C.C.Q. calls for an application of the principle of lex loci delicti, the law of the jurisdiction where the tort or wrong is considered to have occurred; see:  H. Reid, Dictionnaire de droit québécois et canadien (2nd ed. 2001), at p. 333.  Article 3082 C.C.Q. serves as an exception to this rule in circumstances where it is clear that the matter is only remotely connected with the legal system prescribed by art. 3126 and is much more closely connected with the law of another country.  Therefore, by giving effect to the proximity principle, it seems that art. 3082 operates in the context of choice of law in a manner similar to which art. 3135 (forum non conveniens) functions in the context of choice of jurisdiction.

63                               In the case at bar, it seems reasonable to conclude that the requirement for a “real and substantial connection” between the action and the authority asserting jurisdiction is reflected in the overall scheme established by Book Ten.  In my view, the appellants have not provided, nor does there seem to be, given the context of this case, any basis for the courts to apply the Morguard constitutional principle in order to safeguard against this action being heard in a forum with which it has no real and substantial connection.

64                               At this point, assuming for the sake of argument that this appeal would fall to be decided under a pure “real and substantial connection test”, without any reference to the provisions of the code, it is interesting to note that the result would not change.  For example, the connecting factors listed below in the review of the application of the doctrine of forum non conveniens point to a sufficient connection with the Quebec forum, which would support the decision of the trial judge to retain jurisdiction over the claim.  As this case concerns the initial assumption of jurisdiction by a court, it would be premature to enter into any discussion of the application of the “real and substantial connection test” in respect of the recognition and enforcement of interprovincial judgments.  The question may have to be addressed when it comes up, in a proper case, where issues arising out of the drafting of arts. 3164 and 3168 C.C.Q. could be reviewed in light of the constitutional principle of comity which governs the recognition and enforcement of interprovincial judgments.

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.?

65                               Only two of the four appellants, Motient and Viacom, sought to dismiss the proceedings on the basis of forum non conveniens before the motions judge.  The Quebec Court of Appeal did not hear the parties on the question because it was of the opinion that there was no merit to the argument, presumably on the basis of the motions judge’s reasons and because only two of the appellants argued this ground.

66                               Before this Court, Motient and Viacom argue that the motions judge erred in requiring that the applicant be able to point to the existence of the one “most appropriate forum” because such reasoning would virtually bar the application of the doctrine in multi-jurisdictional or multi-party disputes.  Case law recognizes that there may well be cases where the best that can be achieved is to select an appropriate forum since no one forum is clearly more appropriate than others.  The appellants argue that there are two other clearly more appropriate fora, namely California and Virginia.

67                               The respondent contends that a judge presented with a motion on the ground of forum non conveniens must consider a number of factors to determine if there is an exceptional situation that warrants the declining of jurisdiction, none of which are individually determinant.  If after considering the applicable factors the court does not have a clear impression that a foreign jurisdiction would be better suited to hear the case, the court must refuse to decline jurisdiction.  The respondent argues that the motions judge correctly determined that the appellants did not demonstrate that another forum was more appropriate.

68                               The provision in question reads as follows:

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.

69                               Aside from the requirement that the party relying on the doctrine must bring an application for dismissal, the two key parts of art. 3135 include its exceptional nature and the requirement that another country be in a better position to decide (see E. Groffier, La réforme du droit international privé québécois:  supplément au Précis de droit international privé québécois (1993), at p. 130).

70                               These two features of the forum non conveniens doctrine set out in art. 3135 are consistent with the common law requirements set out by the House of Lords in the seminal case, Spiliada Maritime Corp. v. Cansulex Ltd., [1987] 1 A.C. 460, at p. 476, as well as this Court in Amchem, supra, at pp. 919-921, and Holt Cargo, supra, at para. 89.  In Holt Cargo, this Court interpreted s. 50  of the Federal Court Act, R.S.C. 1985, c. F-7 , which essentially includes the same two requirements.  It reads as follows:

50. (1) The Court may, in its discretion, stay proceedings in any cause or matter,

(a) on the ground that the claim is being proceeded with in another court or jurisdiction; or      

(b) where for any other reason it is in the interest of justice that the proceedings be stayed.

In the case at bar, I agree with the respondent’s submission that the motions judge did not err in finding that no other jurisdiction was clearly more appropriate than Quebec and that no exceptional exercise of this power was warranted.

71                               With respect to the first requirement, a number of cases have set out the relevant factors to consider when deciding whether or not the authorities of another country must be in a better position to decide the matter.  The motions judge (at para. 18) referred to the 10 factors listed by the Quebec Court of Appeal in the recent case, Lexus Maritime inc. v. Oppenheim Forfait GmbH, [1998] Q.J. No. 2059 (QL), at para. 18, none of which are individually determinant:

1)    The parties’ residence, that of witnesses and experts;

2)       the location of the material evidence;

3)    the place where the contract was negotiated and executed;

4)    the existence of proceedings pending between the parties in another jurisdiction;

5)    the location of Defendant’s assets;

6)    the applicable law;

7)    advantages conferred upon Plaintiff by its choice of forum, if any;

8)    the interest of justice;

9)    the interest of the parties;

10)  the need to have the judgment recognized in another jurisdiction.

72                               Motient and Viacom dispute the motion judge’s conclusion with respect to several factors.  First, none of the appellants are domiciled or resident in Quebec and the respondent is domiciled in Ontario.  Second, the respondent no longer owns or operates the branch office and plant which manufactured the satellite payload in Quebec.  Third, the fault alleged against the appellants would have been committed in either California or Virginia and the majority of witnesses for the defence reside in the United States:   in Virginia, California, Pennsylvania and New York. And finally, neither Motient nor Viacom have any significant assets in Quebec and any potential judgment rendered would have to be executed abroad.

73                               In this case, I agree with the motions judge that since all the witnesses and parties are from different places, there is not one single preferable location in this respect. The evidence of the tortious act and its immediate consequences is likely to be found in either Virginia or California.  The assets of the defendants are all located in the United States. It is not yet known which law will be applicable to the action, so this factor is not determinant.  Since the defendants’ assets are likely to be found in several different jurisdictions in the United States, recovery by the respondent of any damages that it is awarded will require potentially more than one jurisdiction to recognize the judgment.  I also note that the respondent’s witness, Gerald Bush, testified that Motient sent representatives to stay at the Ste-Anne-de-Bellevue facility for more than a year (A.R., at pp. 92-94).  In my opinion, the apparent willingness of Motient to displace some of its staff to conduct business with the respondent in Quebec seems at odds with its current complaint of forum non conveniens.

74                               The appellants attempt to argue that $50,000 for damage to reputation is not a substantial enough amount of damages for the action to be linked to the Province of Quebec.  Although I agree that the amount of the damages can potentially be a factor to consider in deciding an art. 3135 application, I do not believe it is relevant in the case at bar.  The appellants have not proven that the claim for these damages is frivolous and there are no other proceedings pending between the parties in another jurisdiction, which may be relevant if the respondent were trying to needlessly divide the claim.  In any case, the $50,000 claim for damage to reputation may increase as the pleadings of the respondent characterize the $50,000 damages claim as being “nominal” only “provisionally” and “subject to Plaintiff’s right to amend” because it was not able to precisely quantify them when the action was filed.

75                               The appellants Motient and Viacom nonetheless contend that the courts should not apply reasoning to the effect that the applicant must point to the existence of the one “most appropriate forum”, since this makes it nearly impossible to displace the forum asserted by the plaintiff.  I cannot agree with the premise of the appellants’ argument.  In Amchem, supra, at pp. 911-12, Sopinka J. recognized that in international commerce, frequently there is no single forum that is clearly the most convenient or appropriate for the trial of the action, but rather several which are equally suitable alternatives.  He appeared at p. 931 to endorse the idea that in such cases there is a presumption in favour of the forum selected by the plaintiff, which wins by default if there is no clearly preferable alternative.

76                               Recent Quebec cases confirm this approach. In Lexus Maritime, supra, at para. 19, the Quebec Court of Appeal held that [translation] “. . . if no clear impression emerges tending towards one single foreign forum, the court should accordingly refuse to decline jurisdiction particularly where the connecting factors are questionable” (footnotes omitted) (cited in Matrox Graphics Inc. v. Ingram Micro Inc., Sup. Ct. Montréal, No. 500-05-066637-016, November 28, 2001, AZ-50116899, J.E. 2002-688, at para. 23, per Morneau J.; Consortium de la nutrition ltée v. Aliments Parmalat inc., [2001] Q.J. No. 104 (QL) (Sup. Ct.), at para. 18, per Tessier J.; and Encaissement de chèque Montréal ltée v. Softwise inc., [1999] Q.J. No. 200 (QL) (Sup. Ct.), at para. 34, per Grenier J.).

77                               In addition, it should be kept in mind that, when applying art. 3135, the motions or trial judge’s discretion to decline to hear the action on the basis of forum non conveniens is only to be exercised exceptionally.  This exceptional character is reflected in the wording of art. 3135 and is also emphasized in the case law. In particular, in Amchem, supra, at p. 931, Sopinka J. noted that the first step of the test for an anti-suit injunction set out in SNI Aérospatiale v. Lee Kui Jak, [1987] 3 All E.R. 510 (P.C.), which involves asking whether the domestic forum is the natural forum, should be modified when a stay of proceedings is requested on the ground of forum non conveniens:

Under this test [the test for forum non conveniens] the court must determine whether there is another forum that is clearly more appropriate. The result of this change in stay applications is that where there is no one forum that is the most appropriate, the domestic forum wins out by default and refuses a stay, provided it is an appropriate forum. [Emphasis added.]

78                               Sopinka J.’s reasoning is consistent with the approach taken by the Quebec courts in the case Lamborghini (Canada) Inc. v. Automobili Lamborghini S.P.A., [1997] R.J.Q. 58, at pp. 67-68, where the Court of Appeal described the nature of art. 3135:

[translation] Article 3135 C.C.Q. does not establish a sovereign rule of judicial discretion, which continues to be subordinate to the rules of jurisdiction established by the law and collateral to it.

However, the mechanism established in article 3135 remains flexible. It does not specifically set out immutable or limiting factors, but allows the court to consider the circumstances.  If it concludes that the defendant has clearly established that the circumstances of the case as a whole allow the court to find that a foreign court or a court in another province is a more appropriate forum, the court may stay the proceeding in Quebec by deciding that it must instead be commenced or continued outside the territorial jurisdiction of the Quebec courts.  The application of article 3135 C.C.Q. presupposes that the defendant has been properly brought before the Quebec forum.  Once that has been done, the article gives the defendant an opportunity to avoid this “natural” jurisdiction, established in accordance with the legal connecting factors, by requesting that the case be referred to a foreign court, if the defendant can show that that court is the most appropriate.  However, the application of the article does not permit the creation of a jurisdiction that would not otherwise exist, but instead creates selective restrictions on the jurisdiction resulting from the application of the connecting factors recognized by the law.

(Also cited in Barré v. J.J. MacKay Canada ltée, Sup. Ct. Longueuil, No. 505-17-000355-984, September 28, 1998, J.E. 99-27, at p. 6.)

79                               Academic commentary also shares the view that the doctrine of forum non conveniens is to be applied exceptionally.  In “Interpreting the rules of private international law”, supra, at p. 55, Talpis and Castel remark that:

The starting point should be the principle that the plaintiff’s choice of forum should only be declined exceptionally, when the defendant would be exposed to great injustice as a result.  Quebec courts must find a balance between the advantages and disadvantages for the parties when the plaintiff chooses a Quebec court.  They should only decline jurisdiction if the balance tilts toward the foreign court. [Emphasis added.]

80                               In this case, I see no error on the part of the motions judge and therefore no reason to disturb her exercise of discretion.  As Binnie J. observed in Holt Cargo, supra, at para. 98:

In summary, the trial judge considered the relevant factors in reaching his conclusion that the Federal Court was the appropriate forum to resolve the respondent’s claim.  He committed no error of principle and did not refuse “to take into consideration a major element for the determination of the case”:  Harelkin v. University of Regina, [1979] 2 S.C.R. 561, at p. 588; Friends of the Oldman River Society v. Canada (Minister of Transport), [1992] 1 S.C.R. 3, at p. 77.  In the absence of error, we are not entitled to interfere with the exercise of his discretion.

See also Sam Lévy & Associés Inc. v. Azco Mining Inc., [2001] 3 S.C.R. 978, 2001 SCC 92, at para. 58, and Lexus Maritime, supra, at para. 16, where the Quebec Court of Appeal remarked:  [translation] “. . . the court of first instance has a broad discretion”.

81                               I emphasize the exceptional quality of the forum non conveniens doctrine. As the authors J. A. Talpis and S. L. Kath point out in their article “The Exceptional as Commonplace in Quebec Forum Non Conveniens Law:  Cambior, a Case in Point” (2000), 34 R.J.T. 761, by ignoring the “exceptionality” requirement, courts may unwittingly create uncertainty and inefficiency in cases involving private international law issues, resulting in greater costs for the parties.  In my opinion, such uncertainty could seriously compromise the principles of comity, order and fairness, the very principles the rules of private international law are set out to promote. 

82                               Given the exceptional nature of the doctrine as reflected in the wording of art. 3135 C.C.Q., and in light of the fact that discretionary decisions are not easily disturbed, in my view, 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.

VII.   Conclusion and Disposition

83                               For these reasons, at the end of the hearing, I agreed with my colleagues that the appeal should be dismissed with costs.

Appeal dismissed with costs.

Solicitors for the appellant Hughes Communications Inc.:  Irving, Mitchell & Associates, Montréal.

Solicitors for the appellant Viacom Inc.:  Spiegel Sohmer, Montréal.

Solicitors for the appellant Motient Corporation:  Woods & Partners, Montréal.

Solicitors for the appellant Adaptative Broadband Corporation:  Lavery, de Billy, Montréal.

Solicitors for the respondent Spar Aerospace Limited:  Gowling Lafleur Henderson, Montréal.