All project planning involves the setting of defined goals, their scheduling and control. The
difficulty with litigation, unlike any other commercial project, is the existence of an opponent
who is seeking to defeat your plans at every step. As originally stated by Helmuth von Moltke1
"no plan of operations extends with certainty beyond thefirst encounter with the enemy's main strength."
The difficulties in managing a lawsuit are magnified when dealing with cross-border litigation. Cross-border litigation can point up differences not only in the substantive law of another jurisdiction, but also in its procedure, its culture, its language and the legal environment in which its lawyers practise. The latter consideration may be the most important, as it touches on the manner in which things actually do or do not get done in the other jurisdiction, notwithstanding the letter of the law or the wording of that jurisdiction's procedural rules.
All of these differences go to expand the gap between what "should" happen in the eyes of the client and what really does happen. Managing cross-border litigation must then start with an appreciation of how the differences may ultimately affect this gap. When one speaks of "managing" litigation, this usually translates into the client seeking ways to reduce costs. Particularly in today's corporate world, the "win at all costs" approach to cases is rare. The theory is that litigation should be conducted to advance corporate purposes, not prove principles. The only exception to cost constraints is the rare animal that has become known as "bet the company" litigation. While cost is certainly a significant factor to be considered and managed, in cross-border litigation it is not the only factor.
Effectively putting your case before the court in the foreign jurisdiction and narrowing the gap between what "should" happen and what may happen is the goal. Eliminating or minimizing the divide between theory and reality is the real challenge of managing cross-border litigation.
Normally one does not think in terms of litigation in Canada or the U.S. as being "foreign," as the expectation is that there will be little difference in either the substantive or procedural laws. In many respects, however, litigating in Canada has both the benefit and drawback of being somewhat similar to litigation in the U.S. but with sufficient dissimilarities to provide traps for the unwary.
EARLY CASE ASSESSMENT
As with any litigation, cross-border litigation requires early case assessment. Early case assessment means a full and frank discussion respecting both the potential outcome of the litigation and the time and cost involved. This requires not only the participation of local counsel but also the willingness to listen to local counsel and not filter his or her recommendations by reference to experience in other jurisdictions. Communication in any litigation is important, but in cross-border litigation, it is essential. Early case assessment does not simply mean obtaining a legal opinion as to the likely result of the litigation. It includes an assessment of the business goal at stake, the likelihood of reaching that goal, the cost of doing so and the involvement of management in getting there.
In conducting an early case assessment, it is vital to also determine what witnesses will be necessary in the foreign jurisdiction to prove the case. Witness statements and sworn declarations may be necessary where witnesses are located in other jurisdictions. It is also very important to be able to find witnesses a year or two after they have first been interviewed. Documents must also be secured at the earliest possible time, as the difficulties attendant with documentary production across borders will also prove time-consuming and frustrating.
Early case assessment in cross-border litigation should involve at least the following considerations:
- whether the client wants to be, or has to be, in the foreign jurisdiction;
- the likely legal result;
- the ease or difficulty of assembling, preparing and presenting the case;
- an estimate of the cost;
- an estimate of the time to complete the litigation; and
- an estimate of the time and attention required of senior management and other company personnel in the case.
DO WE HAVE TO BE THERE?
There is a distinction between the U.S. test of "minimum contacts" and the Canadian test of "real and substantial connection" to determine if a particular court will assume jurisdiction. Assumed jurisdiction takes place in those situations in which the parties have not otherwise agreed to submit to the jurisdiction of the court. The usual manner in commercial cases for a party to submit to the jurisdiction of the court is by the use of a forum selection clause in the contract. The Supreme Court of Canada has upheld the efficacy of forum selection clauses and will enforce them except in very limited circumstances. In the case of Z.I. Pompey Industrie v. ECU-Line N.V.2, the Court held that on an application for a stay to uphold a forum selection clause, a court should not delve into whether one party has deviated from or fundamentally breached an otherwise validly formed contract. To make such inquiries would render forum selection clauses illusory, since most disputes will involve allegations that, if proved, will make the agreement terminable or voidable by the aggrieved party. Issues respecting an alleged fundamental breach of contract, or deviation therefrom, or fraud, should generally be determined under the law and by the court chosen by the parties in the contract.
In those cases where the parties have not agreed to the jurisdiction of the court, the courts in Canada will assume jurisdiction if the "real and substantial connection" test is met. The "connection" may be a personal connection with the defendant or it may be a connection with the subject matter of the action. Where a plaintiff seeks to have the court take jurisdiction based on the defendant's personal connection with the forum, a fleeting or relatively unimportant connection will not be sufficient. Personal connection would include circumstances where the defendant had a plant or office in the jurisdiction, or was carrying on business there.
A Canadian court will also take jurisdiction where there is a real and substantial connection with the subject matter of the action. For example, it will be sufficient to satisfy the test if harm is occasioned in the Canadian jurisdiction by a defendant who "knew or ought to have known damage could occur in that jurisdiction by reason of his actions."
The real and substantial connection test and the U.S. minimum contacts test go to the issue of jurisdiction simpliciter. If a court determines it has jurisdiction, it may still decline to exercise it if a forum non conveniens argument can be made. In this regard, the laws of Canada and the U.S. are similar, although practice indicates it is becoming harder and harder to convince a court that there is another jurisdiction that ought to hear the case once the applicable "minimum contacts" test or "real and substantial connection" test has been met.
In appropriate circumstances, the parties may wish to consider an antisuit injunction. The Supreme Court of Canada case in Amchem Products Inc. v. British Columbia (Workers Compensation Board)3 sets out the test for the granting of an antisuit injunction in Canada. An antisuit injunction, if granted, enjoins a party from continuing suit in another jurisdiction. In essence, a Canadian court will only entertain an application for an antisuit injunction where a "serious injustice" will occur because of the failure of a foreign court to decline jurisdiction applying the appropriate forum non conveniens test. In other words, it is necessary to go first to the foreign court and ask the foreign court to decline jurisdiction on the basis of forum non conveniens. Only if that court declines to stay its proceedings and only if it has done so with disregard to the Canadian court's view of forum non conveniens will an antisuit injunction application be considered.
In Canada, all law dealing with property and civil rights comes within the exclusive jurisdiction of the provinces, and this can vary from province to province. While at its base, the common law has developed more or less in a similar fashion in each province, there is always the concern that a particular point or nuance, which can change the outcome of your case, will not be discovered until the legal process is well under way. In particular, provincial legislation may well have altered the common law in different ways in different provinces. A written legal opinion from a lawyer qualified to practice in the particular jurisdiction is recommended.
The law relating to the award and assessment of punitive damages was examined by the Supreme Court of Canada in Whiten v. Pilot Insurance Co. (Whiten) and Sylvan Lake Golf & Tennis Club Ltd. v. Performance Industries Ltd., which were released concurrently. The Court reiterated the Canadian position that punitive damages are awarded against a defendant in exceptional cases for "malicious, oppressive and high-handed" misconduct that represents a marked departure from ordinary standards. The court also confirmed that while an award of punitive damages in a contract case is rare, it is possible. Affirming previous decisions, the court also stipulated that in order to obtain a punitive damages award there must be an "actionable wrong" in addition to the breach that is being sued upon. While punitive damages clearly form part of the law of Canada, it is rare for a punitive damage claim to ever exceed $1 million.
In Canada, it is usual for the losing party to pay the legal costs, including attorney's fees, of the winning party on a scale that is fixed by the court. This usually amounts to between 50% and 75% of the winning party's actual legal bill. It is usual for costs to follow the event, and it is also becoming more common that costs of procedural motions be not only awarded, but also payable forthwith.
PROCEDURAL AND PRACTICAL
CONSIDERATIONS IN PROVING YOUR CASE SERVICE OF U.S. PROCESS
If you have a U.S. action but the defendant is in Canada, it is worthy of note that, while Canada is a signatory to the Hague Convention on Service Abroad, there is no need to proceed through diplomatic channels to have a Canadian served in Canada with U.S. process. The rules of court for most provinces permit personal service by a private process server. If a U.S. court properly has jurisdiction over a Canadian defendant, the U.S. rules of procedure will usually be recognized in Canada as sufficient. The one area where care must be taken, however, is in ensuring that the Canadian defendant actually received sufficient notice of the claim. Problems can occur if a default judgment in the U.S. is obtained against a Canadian defendant and that judgement then has to be brought to Canada to be enforced. If there is any question that the Canadian defendant did not have proper or adequate notice, the court may refuse recognition.4
If you have a U.S. action and need a person's testimony, you should note that a summons or subpoena from a U.S. court served on a Canadian in Canada has no force and effect. Canada is not a signatory to the Hague Convention on the Taking of Evidence, and instead, if evidence from an individual is required, letters of request or letters rogatory must be sought from the local Canadian court having jurisdiction over that person. A careful and early analysis of who will be needed to prove your case and how that evidence can be properly put before the court must be conducted.
For a number of years, there was an issue in Canada as to whether letters of request would be honoured where the evidence that was sought was more in the nature of discovery rather than evidence necessary for trial. In recent years, there has been a relaxation in both legislation and the manner in which the courts are interpreting letters of request. The issue turns one of those areas in which, while similar, the Canadian practice with respect to discovery is not the same as that in the U.S. In most Canadian provinces, oral or written examination is restricted to a party, and, where that party is a corporation, only one representative of the corporation is required to be discovered. That individual must, however, answer all questions touching the matters at issue whether within his or her personal knowledge or not. There is an obligation to be informed and answer based not only on personal knowledge but on information and belief obtained from others. Under the U.S. Federal Rules of Procedure, direct evidence is obtained by deposing all of the individuals with that direct knowledge. Accordingly, in a U.S. proceeding, a letter of request to a Canadian court will be dealt with within the context of the Canadian procedural rules. It is not unusual for a Canadian court to grant a letter of request but restrict scope to fit more closely with the Canadian practice. So, for example, when a letter of request from a U.S. court in respect of Ontario residents who were not a party to a U.S. action was received, the Canadian court restricted its order to two specific documents and required an undertaking that the documents would not be used for any purpose other than the prosecution of the U.S. action.5
The issuance of letters rogatory is not a pro forma exercise. The moving party needs to provide reasons for the request with evidence as to why letters rogatory are needed. It is not a "rubber stamp."6
TRIAL BY JUDGE ALONE
In Canada, most commercial matters are heard by a judge sitting without a jury. Other than personal injury cases and criminal matters, it is rare that a jury will be involved in a civil trial. In some jurisdictions in Canada, if a matter is of a particular commercial nature, a special commercial court judge will hear it. This has the effect of making the trial slightly more "legal," as the judge will not be as affected by those factors that one takes into account when presenting a case to a jury. On the other hand, in Canada, a judge typically will relax the rules of admissibility more so than an American judge will. A Canadian judge will also be more disposed to permit expert evidence by way of expert reports than his or her American colleague.
OTHER PRACTICAL CONSIDERATIONS
In no particular order, the following matters should be considered in the management of cross-border litigation:
- Where are the relevant documents? Who will assemble, code and review them? Can this be done in a low-cost jurisdiction?
- What computerized system is available for document management, and is it compatible and accessible by all members of the team?
- Are word-processing systems compatible, and can a common format for materials and briefs be established?
- Where should the experts come from? How will they have access to the documents?
Estimating the cost of any project is difficult; estimating the cost of litigation is worse. Lawyers traditionally underestimate the cost of litigation by overestimating their own efficiency, underestimating the inefficiencies of working with a team in different jurisdictions and underestimating the ability of their opponents to thwart their plans at every turn. The gap between expectation and reality can be measured by the increased cost necessary to get from one step to the next over the opposition of the other side. This is not to say that cost estimating should not be done, as it is an essential part of the early evaluation process. Management needs as much information as possible before fully committing the corporation to the foreign litigation.
Experience has shown that cross-border litigation simply takes longer. The benefits of instantaneous communication by e-mail notwithstanding, it seems that the greater the distance, the longer the process. Here again it is essential to take the advice of local counsel. In some jurisdictions, a moderately complex commercial matter, moved along by both sides, can be heard within 12 months. In other jurisdictions, it will be three years. It is also relevant to understand the relationship between local counsel and the lead attorney. If local counsel is in the same firm, the matter will tend to have a higher priority than the case in which the local attorney has only been hired for this particular case and has no real connection or continuing involvement with either the client or the lead attorney's firm.
In Canada, summary judgment is available, but in general it would appear that Canadian judges are more reluctant to grant summary judgment motions than are their U.S. counter-parts. In Canada, the test is whether there is a "genuine issue for trial." There appears to be a greater tendency in Canada for judges to permit matters to proceed to trial if there is any question that the evidence must be weighed or finding of fact on contested evidence must be determined. The use of summary judgment motions in Canada is not as prevalent as it is in the U.S.
INVOLVEMENT OF MANAGEMENT
In cross-border litigation, there is usually more management time spent than might otherwise be the case. Strategy meetings, the review of documents, pre-trial conferences, depositions and trial may well take place outside of the jurisdiction where the company management resides. This will involve travel time and management involvement which can, in some cases, become not only significant but oppressive. An evaluation of management time should form part of the early case assessment.
SELECTING THE RIGHT TEAM DETERMINING TRIAL COUNSEL
Usually in cross-border litigation, there will be at least two counsel, one representing the client in its home jurisdiction and the second being local counsel in the jurisdiction in which the litigation is to be heard. It is important to establish at a very early stage in the proceedings who will be lead counsel at trial and who will be the overall manager of the litigation. While these discussions can be difficult, they cannot be avoided. The role of various counsel must be established as soon as possible.
The establishment of who is to be lead counsel at trial may be separate and apart from the decision as to who is going to manage the team. Obviously the client must have a substantial role in this endeavour, but amongst the professionals, it must be decided who is to have what task and who will make the managerial decisions. This case manager may be a different person from the person tasked with the responsibility of actually arguing the case. The team leader (or leaders, if the role is to be shared) has responsibility to:
- motivate all team members, being sensitive to cultural and social differences that may exist among them;
- set objectives and deadlines;
- monitor the progress of each team member;
- evaluate and manage costs on a monthly basis;
- continuously review the team's performance against the litigation plan; and
- report on the progress on a regular basis to the rest of the team.
The skills needed to carry out these tasks may well be different from the skills needed to actually argue the case.
In choosing the team members, it is important to focus initially on the cost of staffing and a determination of where staffing should take place. If the wrong resources are used, or the right resources are in the wrong location, little will get done well or on time. The time to carefully evaluate staffing is at the beginning of an action. Once the case is well under way, or if a deadline is approaching, Brooks' Law applies: Adding people to a late project only makes it later.
There can be no silos. Cultural and social differences may make this difficult, but it is important that the team leaders not only have a plan but that all members of the team know the plan, have bought into the plan and are communicating their understanding of their role in the plan. This includes lawyers' assistants, clerks, paralegals and personnel within the client's organization.
The team leader must also know the people on the team. That means more than simply knowing their names: It includes knowing who can perform and who cannot. In many cases, this will involve attending at the offices of the law firm in the other jurisdiction and having the opportunity to evaluate each member of the team. This should not be left up to the "foreign" office.
EXECUTING THE PLAN
In order to effectively carry out cross-border litigation, it is necessary to have a disciplined approach within an established framework. This translates down to the following steps:
- Hold regular team meetings with all members of the team to follow up. This can be by teleconference, videoconference or in an e-mail chat room, but it is essential that it occur at a regularly scheduled time. This becomes important, given that various people may be in different time zones. Sometimes all team members should be on the call and at other times only team leaders, but the meetings should be scheduled on a weekly or biweekly basis at a fixed time.
- Billings should be regular, usually every 30 days. It should be understood by all members of the team, regardless of their locations, that their times must be in by a certain date and that all time for all team members will be billed to that date. One account should be sent to the client capturing all time and expenses for all team members, regardless of their locations. On a regular basis, the accounts should be measured against the budget.
- A standardized method of collecting, cataloging and referring to documents should be established as early as possible. A common software system should be employed, if at all possible. Most major law firms have the capability of having their various offices review all documents and research resources, but if this is not available, Web sites and extranets can be leased for that purpose.
- There should be a regular legal review of the initial legal opinion, again with input from all members of the team, to ensure that this opinion does not require modification given changed facts or circumstances.
1 Hughes, Moltke on the Art of War: Selected Writings, 1995 Presidio Press.
2  1 S.C.R. 450
3  1 S.C.R. 897
4 Beals v. Saldanha  3S.C.R.416
5 See Pecarsky v. Lipton Wiseman Altbaum & Partners (1999) 38 C.P.C. (4th) 170 (Ontario Superior Court of Justice)
6 Safety-Kleen Corp. v. Kroeze (November 19, 2003), (unreported, Ontario Superior Court of Justice)